SCMP Tuesday, January 9, 2001

Home safeguards

Aspirations for home ownership are high in Hong Kong. First-time purchasers often get a foot on the property ladder by finding a flat in the second-hand market. And it is that sector where the Law Reform Commission believes further safeguards are necessary. Greater protection has already been introduced through laws which require estate agents to give buyers seven basic particulars about the property. But owners know their homes better than anyone else. Under these proposals, they, too, have to supply accurate information about them.
The procedure is common elsewhere, sometimes as a matter of market practice, sometimes required by law. Here, a voluntary scheme is suggested, because property will be more saleable if it comes with written information from the seller. Those who decline to fill in the Vendors Information Form are likely to find it more difficult to clinch a deal than those who willingly provide relevant facts.
The proposal to allow purchasers to withdraw from deals within a three-day cooling-off period is aimed to protect them. However, the commonly used provisional sale and purchase agreement already stipulates that either the purchaser or the seller can rescind the deal before a formal agreement is signed. If purchasers opt out, they forfeit their preliminary deposit; if sellers withdraw from sales, they refund the deposit and pay a penalty equivalent to the deposit to the purchasers.
Since the formal sale and purchase agreement is usually signed 10 days after the provisional one, and the deposit is negotiated between the buyer and the seller, the existing practice already gives both parties a much longer de facto cooling-off period, and provides protection against the other side reneging. Perhaps that could be formalised so the seller could not make further claims against the buyer after confiscating the deposit.
The greatest advance may be if the administration accepts the suggestion to set up a centralised property information system. At present, data is dispersed between several departments, making it a laborious business to collate all facts. A one-stop office would revolutionise the market, making transactions a less exacting experience for both buyers and sellers.