Raymond T.L. Tse & Co., Solicitors

We currently offer Conveyance Services in Hong Kong.

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Background Information

Hong Kong has a vibrant property market. There are over 100,000 real property transactions over the recent years. Since a real property costs one's fortune, many people pay tremendous attention on it and set it as their top priority for buying it. While most people's focus is on how to select a suitable property, they often neglect the steps and procedures of conveyancing transactions, resulting in too complicated to understand. We would explain below some of the steps involved when you are buying a property in Hong Kong.

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A long detail description is explained below: You could click the following links to approach respective procedures:

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1. Preparation Before Buying Property

2. Signing Provisional Agreement At Estate Agent Office

3. Signing Formal Agreement At Solicitors' Office

4. Preparation Before Completion

5. Executing Assignment/Mortgage At Solicitors' Office

6. Final Inspection of Property Before Completion

7. After Completion

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1. Preparation Before Buying Property

You should ask the estate agent for a copy of the FULL Land Search Record. Check the following information:

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           ----> Name of the Registered Owner, time & price the current registered owner                      that bought this property.

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           ----> If the vendor is a conformor who has just bought the property and is now                      selling the property to you, the confirmor's name will be stated as a                                purchaser of An Agreement at the last page of the land search under the                        heading "Encumbrance".

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           ----> The Year of Completion of the building. Look for the date of the                                        occupation permit or the year of the Deed of Mutual Covenant.

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           ----> Whether any building/maintenance order(s) has/have been registered by                       the Government Department against the property. If yes, the frequency of                      such orders.

 

Next, you should ask the estate agent of a copy of the floor plan. If the estate agent does not have a copy floor plan, ask the estate agent to copy the 1st Assignment from the Land Search and it usually contain a copy of the floor plan. Check for the following information:

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            ----> Whether the actual layout and area of the property are different from the                       floor plan. Discrepancies indicate unauthorized alterations.

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            ----> Locations of kitchen and rooms.

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            ----> Whether balconies are enclosed.

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            ----> Whether structures are erected over the roof. 

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After that, inspect the property (preferably with your family members and friends together, as different people will focus on different aspects of the property) during daytime (better and clearer view) and /or during rainfalls (easy to check leakage problem of the ceiling and windows). See further an article (Chinese Version) on inspecting property.

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Then, you should enquire with the management office/caretaker whether: 

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            ----> major renovations are being discussed and/or will be implemented soon.

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            ----> there has been any report of water leakage problem from upper floors to                     the property, or from the property to lower floors

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            ----> serious crime (eg. murder, theft) has been committed inside the property.

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Enquire with your banker as to the approximate mortgage percentage for this type of property with the building age.

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Finally, you should discuss with your family members the exact member of persons and names to be put as "purchaser(s)".

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2. Signing Provisional Agreement At Estate Agent Office

You should discuss the rate and payment time of the commission. The commission rate is negotiable, from less than 1% to about 1%.

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Read and check the terms of the Preliminary Agreement carefully.

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Check whether the vendor is selling as registered owner or as confirmor.

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Carefully set the amount of the initial deposit: 

            ----> Do not set initial deposit at a very high value (if you are not certain                                   whether to proceed with the purchase, especially in fluctuating market                           conditions). A low figure would be about 3% of purchase price.

            ----> Do not set initial deposit at a very low value (if you really love the property                     and are afraid the vendor would call off the deal, especially in rising                                 market.) Consider a higher figure of more than 5% of purchase price.                             Consider further to delete the "double-compensation" clause, so as to                           create a binding, nob-binding, non-breaking preliminary agreement.

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Set the date to attend the solicitors' office and to sign Formal Agreement. Usually takes 7-14 days from the date of Preliminary Agreement would be appropriate.

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Set the amount of further deposit to be paid upon signing Formal Agreement. Usually, the total sum of initial and further deposits will be 10% of the purchase price.

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Set the completion date. Allow at least 1 to 2 months between Formal Agreement and completion date. This longer period of time is necessary to enable your solicitors to check the title deeds; and for the vendor's solicitors to rectify/remedy some title defects and/or imperfections (eg. to obtain missing title deeds; to seek clarification from Government Departments or from previous banks/parties).

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Record carefully the furniture/fixture and electrical appliances to be left by the vendor and to be sold to you. Some people set a price for these furniture/fixture and electrical appliance but the price must be a reasonable amount. mark down the brand names and model numbers on a separate sheet. Take photos, if possible, as evidence.

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Unless the property is tenanted, ensure that vacant possession will be given to you upon completion.

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3. Signing Formal Agreement At Solicitors' Office

You must bring along your original/carbon copy Preliminary Agreement and give it to your solicitor. 

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Request from your solicitor for a copy of the full land search, if the estate agent has not given you a copy.

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Consider whether you need to add more names as the purchasers. Nomination document will have to be prepared by your solicitors. 

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Arrange the further deposit to be paid:

            ----> to your solicitors' client bank account by cheque or direct transfer at the                       bank. Your solicitors will pay over the further deposit to the vendor; or

            ----> to the vendor by cashier order issued directly in the vendor's name.                               Make sure the name(s) of the vendor(s) is/are correctly spelt.

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Finally, you should sign the Formal Agreement as early as possible, at least 1-2 working days before the scheduled date to sign Formal Agreement.

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4. Preparation Before Completion

Approach your bank well in advance for mortgage loan. You should be prepared for the bank's possible request for co-borrower(s)/guarantor(s), please select fixed-amount guarantee format.

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Check with your bank:-

            ----> whether the bank's interest rate is within the range of other well-known                         bans. Banks have different preferential rates for different loan size and                         for different types of borrowers.

            ----> whether cash rebate will be given and if yes, the rebate amount.

            ----> whether the bank would charge a handling fee if you cancel the mortgage                     application after the bank's valuation inspection. The handling fee may be                     refunded to your bank account after successful drawdown of mortgage                         loan through your solicitors.

            ----> whether the bank would charge a penalty fee if you redeem the mortgage                     loan early. Banks usually charge penalty fees for early redemption within                      1st-3rd years of mortgage drawdown, but this penalty period is negotiable.

            ----> whether the 1st year insurance premium is waived by the bank. Some                           banks would even waive all insurance premium for the whole mortgage                         period, if the management office of the Building or the Estate has already                     taken out a block insurance package. Check with your bank and the                                 management office.

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Call your solicitor to see whether your solicitor has obtained the title deeds and if yes, obtain a copy of the floor plan. Check the layout and area of the property. Inform your solicitor if you consider there is/are discrepancy(ies) between the present property conditions and the floor plan. Your solicitor will advise you to obtain a survey report to verify whether unauthorized structures exist in the property.

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If requested by your bank for valuation inspection of the property, arrange with the estate agent for the bank's surveyor and your decoration technician to inspect the property. 

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Make sure the bank's approval/instruction letter reach your solicitors at least 1-2 weeks before completion. Check the mortgage loan amount, the interest rate and other terms of the mortgage,

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Finally, arrange for the balance of purchase price (less than mortgage loan) to be paid by your cheque or direct bank transfer to your solicitors' client bank account at least 2 working days before the completion date.

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5. Executing Assignment/Mortgage At Solicitors' Office

Attend your solicitors' office at least 3 working days before completion. Your solicitors require some time to arrange for mortgage draw-down from the bank.

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If your bank requires co-borrower(s)/guarantor(s), please arrange these co-borrower(s)/guarantor(s) to attend the solicitors' office separately from you to sign the Guarantee(s). Your solicitors would warn them against any undue influence, which your bank/solicitors would hope to avoid and to prevent later dispute by the co-borrower(s)/guarantor(s).

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Make arrangement for the balance of purchase price (less than mortgage loan) to be paid by your cheque or direct bank transfer to solicitors' client bank account at least 2 working days before completion date.

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Obtain a copy of the floor plan, if you have not got it earlier. Check the documents. Sign in the same manner as you sign the Formal Agreement.