Ascertain risks before acquisition

2017-02

BUYING properties involving a deed of gift or assignment at nil consideration may involve risks – such as difficulties in obtaining a sufficient mortgage from a bank. Estate agents handling related property transactions should inform purchasers to seek legal advice. Otherwise, they may be subject to disciplinary action by the Estate Agents Authority.

A salesman acted as a dual agent in a residential property transaction. He conducted a land search in respect of the property which showed that the property involved an assignment at nil consideration.

However, he did not inform the buyer of the relevant fact and the related risks, nor did he advise the purchaser to seek legal advice. He then arranged for the vendor and the purchaser to sign the provisional agreement for sale and purchase.

The purchaser later learned through his lawyer that the property involved an assignment at nil consideration and the risks of buying the property.

He also found that the licensee did not provide him with a copy of the property’s land search result. Dissatisfied with the salesman’s service, he lodged a complaint with the EAA.

The EAA disciplinary committee was of the view that the salesman failed to comply with paragraph 3.4.1 of the Code of Ethics, which states that licensees should protect and promote the interests of their clients, carry out the latter’s instructions in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in the transaction.

Moreover, as the salesman did not provide a copy of the land search result to the purchaser immediately prior to signing the PASP, he was also in breach of section 13(4) under the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation.

The committee reprimanded the licensee, fined him HK$4,000 in total and attached a condition to his license, requiring him to acquire 12 points in core subjects under the Continuing Professional Development Scheme within 12 months.

(9 Febuary 2017)