Hong Kong property agents risk disciplinary action if the information they give clients is inaccurate

2021-11-30

• Providing any misleading information to in order to close a deal quickly or attract consumers brings disrepute to the trade, warns EAA
• Buyers or tenants can also do their own research instead of solely relying on the information provided by the estate agents

When listing a property or looking for one for sale, purchase or lease, both the vendor/landlord and the buyer or tenant will most likely consider the relevant market data. Such information could affect their decision making.

If estate agents decide to provide the relevant market data to their clients, they must ensure that the information provided is accurate. Otherwise, they may be subject to disciplinary action by the Estate Agents Authority (EAA).

Estate agents and salespersons should always exercise due care and diligence when ascertaining the accuracy of the information they provide to their clients. According to the Code of Ethics issued by the EAA, estate agents and salespersons should protect their clients against fraud, misrepresentation or any unethical practices in connection with real estate transactions.

Also, in engaging and accepting an appointment as an agent, estate agents and salespersons must not provide any inaccurate or misleading information to their clients so as to protect and promote the interests of their clients.

Some crucial information, such as the property’s surrounding development plan (which might include any other development, transport, infrastructure and even school networks) and reference property transaction figures, are not included in the land search record or the prescribed property information form.

However, such information may affect clients’ consideration as to whether they choose that property or not and, if so, at what price or rent.

In addition, the maintenance of the building, the facilities in public areas and whether there is any sound or air pollution, will also affect consumers’ decisions to purchase or rent the property, particularly if it is not available for inspection. Therefore, if estate agents intend to provide such information to their clients, they must not casually provide any hearsay information unless they are sure that such information is accurate.

Here, I would like to share a non-compliant case of a salesperson who provided inaccurate transaction information to a client which resulted in disciplinary action against the salesperson.

A landlord appointed a salesperson to lease her property at HK$48,000 per month. Subsequently, the salesperson informed the landlord that a potential tenant was willing to rent the property at HK$45,000 per month. At the same time, the salesperson told the landlord that another property similar to hers in the same building was recently rented out at a monthly rent of HK$43,000 for her reference.

Based on the information provided by the salesperson and the fact that the potential tenant was willing to handle repair of the property on his own, the landlord agreed to rent the property at HK$45,000 per month and entered into a formal tenancy agreement with the tenant.

However, the landlord later discovered that the other similar property in the same building which the salesperson mentioned was actually rented out at HK$48,000 per month instead of HK$43,000 as claimed. As the landlord felt that she was misled by the salesperson, she lodged a complaint with the EAA against the latter.

The EAA Disciplinary Committee was of the view that the salesperson had failed to ensure that the rental information supplied to the landlord in relation to other units of the same building did not misrepresent the value of the property concerned.

As such, the salesperson was in breach of section 11(b) of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation, which stipulates that “a licensee shall, where information and comparables on residential property prices and rentals have been supplied to a client for reference or comparison, ensure that the information or comparables supplied do not misrepresent the value of the residential property concerned”.

The Disciplinary Committee decided to reprimand the salesperson and imposed a condition on her licence which required her to obtain 12 points under the Continuous Professional Development Scheme within 12 months.

I would like to remind consumers that it is important to understand all the relevant information of the property concerned before making a decision on the transaction.

In order to better understand the property market, consumers can also do their own research instead of solely relying on the information provided by the estate agents. For example, they can compare transaction figures from sources accessible to the public as provided by the government and reported by the media.

As for estate agents, when they disseminate transaction figures to their clients, or in promotional materials or for the media as a reference, they must ensure that the information is accurate. Providing any misleading information to clients in order to close a deal quickly or attract consumers is unprofessional and will bring disrepute to the trade.