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Monograph : Encumbrances Contents
 
(2) Conveyancing Practice
 
  1. Usual encumbrances to be discharged on completion
     
    Encumbrances usually expected to be discharged on completion of the sale and purchase and examples of instruments that discharge such encumbrances include: -
     
   
a. Discharge/release of a subsisting legal charge/mortgage;
   
b. Partial release to discharge the property from the legal charge/mortgage which remains subsisting over other undischarged securities;
   
c. Discharge/release of charging orders or memorandum of charge of outstanding management fees.
     
  2. To discharge encumbrances/cure title problems
     
   
a. A vendor may take some time to ascertain the amount and mode of discharge or removal of some less common encumbrances (those other than a legal charge/mortgage) and an estate agent should remind the parties to consider the amount of time required to arrange for the discharge of such encumbrances so as to agree on an appropriate time for completion.
   
b. Where it is not clear whether the encumbrance will be discharged or removed by the vendor before completion, an estate agent should advise the prospective purchaser to consult his solicitors before entering into a provisional agreement for sale and purchase and, in particular, whether the deposit should be paid to a stakeholder pending completion.
   
c. Sometimes removal of the matter giving rise to the encumbrance does not cure all problems. For example, after the removal of illegal structures affecting a property, it remains to be decided whether the vendor can still convey substantially the same property agreed to be sold. This is a matter to be decided on the facts of each case.
   
d. Some encumbrances only involve financial liability (for example a charge to secure payment of outstanding management fees). In these cases, the vendor may be required to give an undertaking for their discharge on or before completion. To secure performance of the vendor's undertaking, an appropriate from the deposit may sometimes need to be stakeheld pending discharge of the encumbrances.
     
  3. Estate agents' duties with respect to encumbrances
     
   
a. It should be noted that estate agents are required under the Estate Agents Ordinance to provide information on subsisting encumbrances such as mortgages and court orders to their clients.
   
b. In addition, estate agents should advise their vendor clients to disclose information relating to the property and the building concerned, such as structural alterations to the property or any notice/order issued by the incorporated owners/manager or competent authority requiring any works to be done to the property or common areas of the building and the costs involved (if known) etc, in the Property Information Form prescribed by EAA.
   
c. It is prudent for an estate agent to remind his vendor client that if a vendor fails to disclose any encumbrance known to him to exist, he may not be able to give good title or to sell the property in accordance with the agreement for sale and purchase of the property and the purchaser may rescind the sale and purchase agreement.
   
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