A Study Guide to Estate Agency Law and Practice
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1 A Study Guide to Estate Agency Law and Practice
2 Estate Agents Authority A Study Guide to Estate Agency Law and Practice
3 Contents Page Foreword Disclaimer Copyright List of abbreviations v v v vi - vii Part 1: The Real Estate Agency Trade in Hong Kong The Real Estate Trade and Its Socio-Economic Development Development of Real Estate Agency Practice in Hong Kong The Relationship Between the Real Estate Agency Trade and Other Professions and Sectors Statistics on Supply and Demand in the Property Market Role and Functions of Estate Agents Estate Agents Ordinance Professionalism of Estate Agency Trade Community Expectations Part 2: Estate Agents Ordinance and Subsidiary Legislation The Estate Agents Ordinance and Subsidiary Legislation The Estate Agents Authority Membership of the Authority Complaints Handling Statement of Particulars of Business Important Definitions in the EAO Licensing Requirements The Licence Duties of Estate Agents The Estate Agency Agreement Offences and Penalties Appeals Disputes about Commission i
4 Contents Part 3: The Code of Ethics Practice Regulations First Sales Practice Circulars issued by the Authority on First Sales Other Laws Governing Estate Agency Practice and Conveyancing Procedures Page Other Laws Governing Estate Agency Practice The Law of Contract Misrepresentation Negligence Other Ordinances Relating to Estate Agency Practice Conveyancing Procedures Part 4: Conveyancing Steps Sale and Purchase Agreement / Assignment Completion Mortgage Property-related Taxation Introduction to the Land Registration System, Land Search and Property-related Information Systems Title to Land and Land Search The Land Register Types of Ownership Making a Gift of Property Searching the Land Register Analysis of a Land Search Additional Information from Searches Statistical and Other Information Notes to this part are set out in Appendix 1 ii
5 Contents Part 5: Part 6: Part 7: Introduction to Building-related Knowledge, Property Classification and Property Management Forms of Government Leases Lot Particulars Government Lease Conditions Special Categories Town Planning Ordinance Buildings Ordinance Regulation of Existing Buildings Alterations and Additions Changes in User New Sites and Re-developments Property Management Building Management Ordinance Principles and Practice of Property Valuation Supply and Demand Possible Values of Landed Properties Methods of Valuation Site Valuation Methods Valuation Reports The Property Market and Sales Methods Leasing and Tenancy Matters Tenancies and Leases Tenancies by Contract and by Operation of Law Domestic and Commercial Tenancies Stamp Duty Page iii
6 Form CR109 Covenants and Conditions Rights of the Tenant Obligations of the Tenant Rights of the Landlord Obligations of the Landlord Termination of Tenancy Renewal of Tenancy Page Part 8: Effective Agency Management and Supervision of Salespersons to Ensure Compliance Vicarious Liability Regulation of Employment Data Protection Observance of Other Legislation Management of Property Information Handling of Complaints and Disputes Appendix 1: Notes to Part Sample Land Search Charges for Land Registry Services Basic Hong Kong Statistics, Census and Statistics Department Population Statistics, Housing Department Housing Authority Programmes Contacting Relevant Government Departments / Public Bodies iv
7 Foreword The Estate Agents Authority (the Authority) is a statutory body responsible for licensing and regulating the estate agency trade in Hong Kong. To promote the development of the trade, the Authority also publishes reference materials on topics related to the practice of estate agents. This guide contains basic concepts for a wide range of topics pertaining to estate agency practice, and is, therefore, a reference for licensees who wish to refresh their knowledge and grasp the essentials quickly and easily. The guide may also be a useful revision book for individuals preparing for the Estate Agents Qualifying Examination and the Salespersons Qualifying Examination. Since the qualifying examinations may require more in-depth understanding of certain topics and the guide presents only a summary of the basic concepts, candidates are reminded to refer to the relevant syllabi (as outlined in the Estate Agents and Salespersons Qualifying Examinations Handbook, for further details of requirements. Candidates are also advised to consult other reference materials such as the Estate Agents Ordinance and its subsidiary legislation, the Code of Ethics, Practice Circulars, Monographs and Letters to Licensees issued by the Authority, so as to obtain in-depth knowledge of the relevant laws and trade practices. Disclaimer This guide is intended to serve as a reference for licensees who wish to refresh or enhance their professional knowledge, and for individuals preparing for the Estate Agents and Salespersons Qualifying Examinations who may have difficulty obtaining a general grasp of the relevant laws and trade practices. It should not be construed as a source of legal advice or a comprehensive textbook for the examinations. The Authority does not warrant that this guide may lead to a particular level of examination attainment. While every effort has been made to ensure that the contents of this guide are accurate and relevant, it is only intended to be a book for licensees quick reference, or a revision aid for examination candidates. Readers are strongly advised to seek legal advice or make their own enquiries on matters encountered in specific situations and do their own in-depth research in case of doubt. The Authority shall not be held liable for any loss or damage incurred or suffered in connection with, arising from, or in reliance on, any error, omission, statement or misstatement contained in the whole or any part of this guide. Unless otherwise specified in the guide, the text is intended to describe the state of law and practice as at 1 August The male pronoun is used to cover references to both the male and female. No gender preference is intended. Copyright The copyright of this guide vests in the Authority. No part of this guide may be copied, reprinted, excerpted in any way or in any place for any commercial purpose. v
8 List of abbreviations Abbreviation Appeal Regulation the Authority BA BC BMO BO CC CE CECO CO the Code Commission Regulation CPO DCF DDO DMC DPA EAO EO Exemption Order FSDO GDV GFA HA HKC HKID HKSAR HO HOS HS IRIS Licensing Regulation Full Version Estate Agents (Registration of Determination and Appeal) Regulation the Estate Agents Authority Building Authority building covenant Building Management Ordinance Buildings Ordinance certificate of compliance certificate of exemption Control of Exemption Clauses Ordinance Companies Ordinance the Code of Ethics Estate Agents (Determination of Commission Disputes) Regulation Conveyancing and Property Ordinance discounted cash flow Disability Discrimination Ordinance deed of mutual covenant development permission area Estate Agents Ordinance Employment Ordinance Estate Agents (Exemption from Licensing) Order Family Status Discrimination Ordinance gross development value gross floor area Hong Kong Housing Authority Hong Kong Cases Hong Kong Identity Card Hong Kong Special Administrative Region Housing Ordinance Home Ownership Scheme Hong Kong Housing Society Integrated Registration Information System Estate Agents (Licensing) Regulation vi
9 List of abbreviations Abbreviation LRO LT(C)O Management Code MO OC OI OZP PASP PBO PDPO Planning Regulations PO Practice Regulation PRH PSPS PV RDO REDA RO RPFSO SDO the Secretary SPA SPOB SRPA Supplies Code TP board TPO TPS TTN UCO Full Version Land Registration Ordinance Landlord and Tenant (Consolidation) Ordinance Management Code of Practice on Building Management and Maintenance Misrepresentation Ordinance Owners' Corporation Owners Incorporation outline zoning plan provisional or preliminary agreement for sale and purchase Prevention of Bribery Ordinance Personal Data (Privacy) Ordinance Building (Planning) Regulations Partnership Ordinance Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation Public Rental Housing Private Sector Participation Scheme present value Race Discrimination Ordinance Real Estate Developers Association of Hong Kong Rating Ordinance Residential Properties(First-hand Sales) Ordinance Stamp Duty Ordinance the Secretary for Transport and Housing sale and purchase agreement Statement of Particulars of Business Sales of First-hand Residential Properties Authority Management Code of Practice on Procurement of Supplies, Goods and Services Town Planning Board Town Planning Ordinance Tenants Purchase Scheme Transitional Termination Notice Unconscionable Contracts Ordinance vii
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