Agents must check agreements thoroughly

2017-05

Estate agents should ensure that all parties agree to all the information and terms provided in a tenancy agreement, and they should explain accurately to clients each clause.

Otherwise, they might be subjected to disciplinary action by the Estate Agents Authority.

Two salespersons acted separately for the landlord and the tenant and arranged for their clients to enter into a tenancy agreement relating to a shop.

The provisional tenancy and tenancy agreements were both prepared by the salesperson who acted for the tenant.

Before the signing of the tenancy agreement, the salesperson who acted for the landlord verbally explained to her client that by giving one month’s notice or one month’s rent in lieu of notice, both parties could terminate the tenancy agreement after 12 months of the tenancy period.

However, the salesperson who acted for the landlord failed to check whether the break clause written in the tenancy agreement contained the same wording or meaning.

Eight months later, the tenant terminated the tenancy with the landlord by paying one month’s rent in lieu of notice.

The landlord then discovered that the break clause stated in the tenancy agreement was not the same as that described by the salesperson who acted for him.

According to the break clause in the tenancy agreement, both parties could terminate the tenancy by giving at least 12 months’ notice, or by paying one month’s rent, provided that the written notice shall not be served before the expiration of one month of the term of tenancy.

Feeling aggrieved, the landlord lodged a complaint with the EAA.

The EAA disciplinary committee took the view that the salesperson failed to verify the break clause in the tenancy agreement for the landlord and made a misrepresentation of the terms to the landlord.

Hence, she breached paragraph 3.4.1 of the Code of Ethics, which states that: “Estate agents and salespersons should protect and promote the interests of their clients.”

As a result, the disciplinary committee reprimanded the salesperson, fined her HK$3,000, attached a condition to her license and required her to obtain in 12 months 12 points from the Continuing Professional Development Scheme.