Hong Kong property agents mustn’t mislead buyers or face disciplinary action by watchdog

2018-11-06

Stepping into autumn, a number of new residential properties in Hong Kong have been launched for sale by different property developers.

Participating in the sale of these first-hand residential properties, estate agents must not make any misrepresentation to prospective purchasers or else they may be disciplined by the Estate Agents Authority (EAA).

The EAA has always been concerned about the conduct of property agents in the sale of first-hand residential properties, not only at the of the purchase process when orders are registered at the first-sale sites, but also with the information they provide to consumers. Practice guidelines have been issued to agents that they must not provide prospective buyers with false or misleading information.

The following are two cases in which property agents had breached the rules and were sanctioned by the EAA.

The first case involved two property agents (A and B) who had persuaded a prospective buyer to make a purchase in a new development. The buyer was aware that there would be another new development in front of the property he was looking at. He specifically asked agent A whether the view of flats above a certain level would be blocked by the new development. The agent told him that flats on the 25th floor and above would not be affected by the new development.

The buyer nonetheless, asked for a second opinion, posing the same question to agent B and further inquiring about the building height of the new development. Agent B said the new development would range from 16 to 30 storeys, and ]would not obstruct the view for flats on the 30th floor and above the of the project the buyer was interested in.

However, according to the information from the Buildings Department, the height of the new development would range from 16 to 33 storeys. The buyer was disappointed with both agents for providing him inaccurate information and lodged a complaint with the EAA.

The EAA Disciplinary Committee found that the two agents had not exercise due care and due diligence to verify the information given to buyer, which breached the authority’s code of ethics. The licences of the agents were suspended for seven days, with an attached condition that required them to obtain 12 points under the Continuing Professional Development (CPD) Scheme in 12 months.

In the second case, during a discussion with a prospective buyer and her fiancé on registering their intent to purchase a unit in a new development, the salesperson told them that she and her fiancé had to submit separate registrations as they were unmarried. The couple was also told they could not make a joint purchase of the property.

It was only when the buyer asked her lawyer to include her fiancé’s name in the subsequent sale and purchase agreement that she found out she was misled by the salesperson. According to the developer of the project, there was no restriction on unmarried couples registering for joint purchases.

The EAA Disciplinary Committee found that the salesperson had made a misrepresentation to the client, again breaching that authority’s code of ethics, which stipulates that “property agents and salespersons should avoid any practice which may bring discredit and/or dispute to the estate agency trade”.

She was reprimanded and fined HK$3,000 (US$382.89), and conditions were also attached to her licence requiring her to obtain 12 points under the EAA’s CPD Scheme in 12 months.

To minimise the risk of providing false or misleading information to clients, property agents should refer to the information in the sales brochure and documents provided by the developer only, and they should take all reasonable steps and exercise all due diligence to verify the information before replying to their clients’ queries.

(Published in South China Morning Post)