Beware of property purchases with a history involving deeds of gift or assignments at nil consideration as they may involve risks.
Estate agents should keep a watchful eye when handling such transactions and advise their clients to seek legal advice.
In one case, an agent acted for both parties in a residential deal.
Although the agent knew from a land search that the property involved an assignment at nil consideration, he did not inform the purchaser. Nor did he advise the purchaser to seek legal advice.
He arranged for both parties to sign a provisional agreement for sale and purchase. However, the purchaser was later informed by his lawyer that the property involved an assignment at nil consideration and the related risks in buying it.
He also realized that the agent failed to give him a copy of the land search result.
Dissatisfied, he lodged a complaint with the Estate Agents Authority.
In this case, the agent failed to comply with the Code of Ethics, which states that licensees should protect and promote the interests of their clients, carry out their instructions in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in a transaction.
Moreover, he failed to provide a copy of the land search result to the purchaser immediately prior to signing the provisional agreement, thus breaching the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation.
As a result, the agent concerned was reprimanded and fined by the EAA Disciplinary Committee.