Property particulars

Recommendations applicable to completed units sold in the first-hand market

Chapter 4 – The general approach to the first-hand market and the provision of sales brochures

8.9 For "left-over" flats (ie flats which were first marketed when uncompleted but are left unsold after issue of the occupation permit) the developer should make available the latest sales brochures and a Vendor's Information Form. However, up-to-date sales brochures should always be made available for completed flats marketed for the first time after the issue of the occupation permit. The sales brochures (and the Vendor's Information Form, where applicable) must be made available by developers from the time the completed properties are offered for sale. All the information in the sales brochure (and the Vendor's Information Form, where applicable) must be accurate at the time the flats are first marketed. (Recommendation 6)

8.10 If there have been any material changes in the information in the sales brochure between the date of its printing and the time of sale, a note to that effect should be attached to the sales brochure or the price list. (Recommendation 7)

8.11 The developer may apply to the relevant authorities in certain circumstances for exemption from the requirement to produce a sales brochure. For instance, where a purchaser buys in bulk from the developer with no intention to re-sell any of those units to the public, there should not be any need for the developer to produce a sales brochure in respect of those units. The application for exemption should be accompanied by a written undertaking from the purchaser not to re-sell the units within a specified period to be determined by the Government. (Recommendation 8)

8.12 The obligation on a developer to provide sales brochures should apply equally to someone buying in bulk from the developer at the first sale of completed residential properties involving strata title. (Recommendation 9)

8.13 If developers, by themselves or through estate agents, advertise the sale of local completed residential properties otherwise than by means of a sales brochure, the advertisement should advise purchasers to refer to the sales brochure (and the Vendor's Information Form, where applicable). Information given in the advertisement must be consistent with that given in the sales brochure (and the Vendor's Information Form, where applicable). (Recommendation 10)


Chapter 5 – Methods of measurement of floor area to be used by developers

8.14 In respect of local completed residential properties offered for sale in the first-hand market, "saleable area" in relation to a unit enclosed by walls should mean the floor area of that unit (including the floor area of any balconies and verandahs) measured from the exterior of its enclosing walls (except where those enclosing walls separate two adjoining units, in which case the measurement shall be taken from the middle of those walls), and shall include the internal partitions and columns within a unit, but shall exclude the common parts outside its enclosing walls. Provided that if any of the enclosing walls abut onto a common area, then the whole thickness of the enclosing walls which so abut shall be included. (Recommendation 11)

8.15 In respect of local completed residential properties offered for sale in the first-hand market, "saleable area" should mean:

(1) in relation to any cockloft, the floor area of that cockloft measured from the interior of its enclosing walls;

(2) in relation to any bay window which does not extend to the floor level of a unit, the area of that bay window measured from the exterior of its enclosing walls or glass windows and from the point where the bay window meets the wall dropping to the floor level of a unit, but excluding the thickness of that wall;

(3) in relation to any car park space, the area of that car park space measured from the interior of its demarcating lines or enclosing walls, as the case may be; and

(4) in relation to any yard, terrace, garden, flat roof or roof, the area of that yard, terrace, garden, flat roof or roof measured from the interior of its boundary lines. Where the boundary consists of a wall, it shall be measured from the interior of that wall. (Recommendation 12)

8.16 Where the property includes any item incorporated in the definition (such as a cockloft, bay window, car park space, yard, terrace, garden or flat roof), the saleable area of each of them should be specified and described separately in the sales literature. (Recommendation 12)

8.17 (1) The definition of saleable area should be recognised as the standard method to describe saleable area in all sales literature in respect of local completed residential properties;

(2) the saleable areas should be included in sales literature; and

(3) any areas exempted from the calculation of gross floor area should be excluded from the calculation of saleable areas of the individual units. (Recommendation 13)

However, if any areas exempted from the calculation of gross floor area are situated within the enclosing walls of a unit and for the exclusive use of its occupiers, such areas may be taken into account when calculating the saleable area of the unit. (Recommendation 13)


Chapter 6 – Disclosure requirements for completed units offered for sale by developers

8.18 (1) The sales brochure should contain floor plans which:

(a) specify the external dimensions of individual units;

(b) are drawn to scale and are reasonably legible;

(c) show separately non-typical floors, the entrance floors, and the roof;

(d) show the location, the number and the minimum dimensions of the car park spaces;

(e) show the orientation of the building and the location of ingress and egress points;

(f) show the structural walls; and

(g) show any known features within the unit that would materially affect a reasonable purchaser's enjoyment of the property, such as exposed pipes.

(2) The sales brochure should also contain:

(a) schedules listing the saleable area of the unit and of any bay window areas, roof areas, flat roof areas, open yard areas, air-conditioning plant within the building, etc; and

(b) a note that the internal area of units on the upper floors may be slightly greater than that of the lower floors, if that is the case.

(3) Certified copies of the latest approved building plans should be made available for free inspection at the sales office during normal office hours.

(4) There should be a legal obligation on the developer upon completion to inform purchasers of the saleable area (as provided by the Authorised Person). (Recommendation 14)

8.19 Where there is no right of inspection before entering into a preliminary sale and purchase agreement, the sales brochure should contain:

(i) at least details of the fittings and finishes as stated in Appendix XII B of Legal Advisory Conveyancing Office Circular Memorandum No 40 (LACO CM 40);

(ii) a description of air-conditioners where supplied and descriptions, such as locations, of air-conditioning plants; and

(iii) information on the flush water/sewage treatment plants where they are supplied, including information on the maintenance of the treatment plants. (Recommendation 15)

8.20 The sales brochure should also state the brands and countries of origin of the fittings and finishes to be used. (Recommendation 15)

8.21 In addition, photographs of the fittings and finishes should be shown in the sales brochure. (Recommendation 15)

8.22 If there are discrepancies between the Chinese and English versions of the specifications of fittings and finishes in the sales brochure, purchasers can choose which language version they rely on. (Recommendation 16)

8.23 Where there is no right of inspection before entering into a preliminary sale and purchase agreement and mock-up or sample flats are provided, the mock-up of at least one flat should be accurately representative of the actual unit in all aspects, including quality and dimensions. The Authorised Person of the development project should certify a schedule of specifications of such mock-up flats. The developer should have a duty to keep a record of the certified schedule. (Recommendation 17)

Location plan

8.24 (a) A location plan should be provided in all sales brochures. The location plan should include up-dated information on prominent environmental features in the vicinity (eg public park, swimming pool, refuse collection point, etc).

(b) The date and the reference number of the latest outline zoning plans at the date of printing of the sales brochure should be stated in all sales brochures. There should also be a note stating that outline zoning plans are subject to change and that the latest outline zoning plans at the date of printing of the sales brochure are available for free inspection during normal office hours at the sales office. (Recommendation 18)

Layout plans

8.25 All sales brochures should provide a layout plan drawn to scale, showing communal facilities (and their completion dates if possible) undeveloped land and its intended and permitted use within the boundary of the development, and the scale used. The layout plans provided in sales brochures should be the latest approved plans at the date of printing of the sales brochure. The expected completion dates of communal recreational facilities should be included in the layout plans. (Recommendation 18)

Uses of land

8.26 (a) If there are specific covenants in the Government Lease requiring the developer to put land inside or outside the boundaries of the development to particular uses, the developer should state accurately those particular uses in the sales literature.

(b) The developer should be required to state accurately in the sales brochure the intended uses of the land within the boundaries of the development which are known to the developer at the date of printing of the sales brochure.

(c) Except for specific uses required of developers by the terms of the Government Lease, developers should not be required to disclose the intended uses of land outside the boundaries of the development.

(d) If the developer chooses to disclose in the sales literature any information about the use of land outside the boundaries of the development, the information so disclosed must be accurate at the date of putting the property up for sale. (Recommendation 18)

8.27 Artistic impressions in whatever form should give accurate representations of the surroundings of the property development. (Recommendation 19)

8.28 The sales brochures should give the following details about the clubhouse and other facilities in the development:

(i) whether they are communal facilities;
(ii) who has ownership;
(iii) who has responsibility for their management; and
(iv) the duration of the management agreement. (Recommendation 20)

8.29 All sales brochures should state the date of completion of sale and purchase and the date of vacant possession. The dates need not be expressed in terms of actual dates in the calendar. Instead, they can be expressed by reference to a time frame, such as a certain period of time from the signing of the formal ASP. (Recommendation 21)

8.30 If any of the payment terms is dependent on the occurrence of a contingent event (such as execution of the assignment), the sales brochure or the price list should state the date of the happening of that event. (Recommendation 21)

8.31 Where developers impose any fees or charges on transfer of title from the original purchaser to a sub-purchaser, or on the cancellation of the purchase agreement, the amount of such fees or charges and the procedures for transfer should be specified clearly in the sales brochure. (Recommendation 22)

8.32 (a) Where the developer quotes in any sales literature or advertisement a list of banks providing initial finance, the sales literature should contain a general description of the finance schemes available from the banks so quoted. Where the interest is specified, it should be the rate per annum.

(b) Where the developer arranges finance, whether solely or to top up other loans, details of those facilities and the interest rates per annum should be disclosed in the sales literature.

(c) Where the developer provides initial finance but later arranges for replacement finance, purchasers should be informed in the sales literature of the possibility of the costs of replacement finance which may be passed on to them. (Recommendation 23)

8.33 The rate of interest per annum chargeable under the formal ASP for late payment of any part of the purchase price should be stated in the sales brochure. (Recommendation 24)

8.34 If the preliminary agreement is binding as a sale, the purchaser should be entitled to a cooling-off period of three working days after signing the preliminary agreement for local completed residential properties in the first-hand market. A purchaser can elect to cancel the preliminary agreement within the cooling-off period subject to forfeiture of five per cent of the purchase price or the amount of the preliminary deposit, whichever is the lower. (Recommendation 25)

8.35 Sales brochures should state that the preliminary agreement for sale and purchase is subject to a cooling-off period of three working days after signing the preliminary agreement. Sales brochures should also state that a purchaser can elect to cancel the preliminary agreement within the cooling-off period subject to forfeiture of five per cent of the purchase price or the amount of the preliminary deposit, whichever is the lower. (Recommendation 26)

8.36 If there is no right of inspection prior to signing of the preliminary agreement, the purchaser of a completed residential unit in the first-hand market should not be liable to forfeiture of his preliminary deposit where he takes advantage of the cooling-off period to cancel the preliminary agreement. (Recommendation 27)

8.37 Sales brochures should state the duration of the Defect Liability Period and when it will start to run. (Recommendation 28)

8.38 If the developer is wound up, the benefits of any warranties made to the developer by his contractors should be passed on to the Owners' Corporation or the Manager of the development. (Recommendation 29)

8.39 Notwithstanding any term in the building contract between the developer and the contractor prohibiting the assignment of the developer's rights against the contractor, the purchasers should have the right to take direct legal action against the contractor for any defects in the units. (Recommendation 29)

8.40 Sales brochures should state the salient provisions of the Deed of Mutual Covenant (DMC). The list should include those clauses in the DMC imposing financial obligations and those touching upon everyday usage of the property. (Recommendation 30)

8.41 The developer should deposit copies of the English and Chinese versions of the DMC at the sales office or the solicitors' office for free inspection during normal office hours. The sales brochure should contain a statement to the effect that the English and Chinese versions of the DMC are so available for inspection. (Recommendation 31)

8.42 If there is actual or potential responsibility for maintaining slopes or other areas, there should be clear notification to purchasers in the sales brochure of that responsibility. The sales brochure should also disclose any existing notice from the authorities to repair and maintain slopes or other areas at the date of its printing. Moreover, if there is responsibility in the Government Lease for maintaining slopes or other areas, that responsibility should be spelt out in the sales brochure. (Recommendation 32)

8.43 If an uncompleted development has a DMC, developers should have an obligation to keep its terms unchanged when the development later becomes completed with the issue of the occupation permit. (Recommendation 33)

8.44 Sales brochures should state the following:

(1) the permitted uses of the individual units as stated in the approved building plans, together with any restrictions on use contained in the Government lease or Conditions of Grant of the land;

(2) the original term of the Government lease and its date of expiry;

(3) the rent provisions in the Government lease; and

(4) that the renewed Government rent may be an apportioned amount of three percent of the rateable value of the building. (Recommendation 34)

8.45 Sales brochures should also contain a general notification to the effect that the Government lease will impose various financial obligations on purchasers and that they are advised to consult their professional advisers accordingly. These financial obligations include:

(1) The construction and maintenance of pedestrian subways and footbridges;

(2) The construction and maintenance of escalators, stairways and lifts for the disabled;

(3) The maintenance of slopes, toe-walls and retaining walls;

(4) The maintenance of private open spaces and toilets; and

(5) The maintenance of internal roads. (Recommendation 34)

8.46 The price lists of all units offered for sale should be made available to prospective purchasers by developers or their estate agents prior to the payment of any reservation fee or the signing of any preliminary agreement. We recommend that if developers advertise that a certain number of units will be offered for sale, that number of units should be available for sale to the public. (Recommendation 35)

Name of main contractors, Authorised Person and his firm

8.47 The names of the main contractors and the Authorised Person and his firm should be disclosed in the sales brochure. For present purposes, the Authorised Person means the person occupying that position at the time of printing of the sales brochures. (Recommendation 36)

Responsibility for transaction fees

8.48 Whenever the sales brochure contains information about the prices of the units, it should also state with whom the responsibility for legal costs and stamp duties lies. (Recommendation 37)

Scales of legal costs and stamp duties

8.49 Information on the scales of legal costs (if any) and stamp duties should be provided by developers to purchasers upon request and a note to this effect should appear in the price list or other sales literature containing information about the prices of the units. (Recommendation 37)

Date of printing of sales brochure

8.50 The sales brochure should carry its date of printing. (Recommendation 37)

Supplementary charges upon taking possession

8.51 The sales brochure should provide an itemised list of supplementary charges payable by purchasers upon taking possession of their units. If the exact amounts of such charges are unknown, the obligation to pay them should be disclosed in the sales brochure. (Recommendation 37)

Licence fees to Government and charges for rights of way

8.52 Where applicable, the sales brochure should state any way leave charges, licence fees or waiver fees payable to Government for a water supply or drainage system going through Government land and/or pump room situated on Government land and any fees or charges payable to adjoining lot owners for rights of way or easements. The amount of such charges or fees should also be stated, if known. (Recommendation 37)

Car park spaces

8.53 The sales brochure should contain a description of the car park spaces within the development, including their respective numbers for sale or rent, and those for visitors. If the developer has not yet decided at the date of the printing of the sales brochure any of these matters, the sales brochure should clearly state this fact. Moreover, any descriptions of car park spaces in the sales brochure should be binding on the developer. (Recommendation 38)

8.54 Our recommendations in respect of the first-hand market should be implemented by legislation. (Recommendation 39)

8.55 There should be both criminal and civil sanctions against those who fail to comply with the proposed legislation. We consider that the determination of the appropriate level of criminal penalty is a matter for the Administration to decide, but the maximum fine should be substantial enough to act as an effective deterrent. A breach of the proposed legislation should constitute a statutory tort. Purchasers should be able to claim damages for loss suffered as a result of a breach of the proposed legislation, but rescission should not be an available remedy. There should be clear provision in the new legislation that nothing in that legislation will detract from the rights of the purchaser under the formal ASP, and that no clauses in the ASP will detract from the statutory remedies in the legislation. (Recommendation 40)

Recommendations applicable to all completed units, both in the first-hand and second-hand markets

Chapter 7 – The importance of public education

8.56 The Government should launch publicity programmes to educate the public on the need to exercise due care in buying properties. The publicity programmes should alert the public to the need to: