Client hits the roof over silence on illegal structure

2018-08-23

When handling the leasing of residential properties, estate agents should take steps to ascertain whether there are unauthorized building works on the property and if so, inform their clients of the risks and consequences involved.

They should also remind clients to seek legal advice before proceeding with a transaction. Otherwise, they may be subject to disciplinary action by the Estate Agents Authority.

An agent arranged for a tenant to inspect a village house with an enclosed rooftop structure. Despite knowing that it was an unauthorized structure, he did not alert the tenant to the risks involved or remind the tenant to seek legal advice before proceeding with the transaction.

After signing the tenancy agreement, the tenant learned from his solicitor that the rooftop structure was unauthorized and did not have the approval of the Buildings Department. He lodged a complaint with the EAA.

The disciplinary committee found that the agent had failed to remind the tenant to seek legal advice regarding the risks involved in renting a property with unauthorized building works before proceeding with the lease transaction. He had failed to comply with practice circular No 10-01(CR) and was in breach of paragraph 3.2.1 of the code of ethics issued by the EAA, which stipulates: “Estate agents and salespersons should be fully conversant with the Estate Agents Ordinance, its subsidiary legislation, this Code of Ethics, and other guidelines issued by the EAA from time to time and shall observe and comply with them in the course of their practice.”

In addition, he failed to insert the correct address of the property in both the provisional and final tenancy agreement. He was therefore in breach of paragraph 3.5.1 of the code of ethics, which states that estate agents and salespersons shall, in fulfilling their duties, exercise due care and due diligence.

The committee decided to reprimand the salesperson and attach conditions to his license requiring him to obtain 24 points under the EAA’s continuing professional development scheme within 24 months.

(Published in The Standard)