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New EAA guidelines aimed at consumers and
management of estate agencies

EAA, together with the Consumer Council, has released the "Notes to Purchasers of First-hand Properties". Issued in the form of a checklist, it provides useful information for consumers purchasing first-hand residential properties and advises them to think very carefully before buying.

The checklist, aimed at educating the public on issues regarding the purchase of first-hand properties, is inserted in sales brochures at first-sale sites. It is also available on the EAA website.

For its part, EAA will continue to take enforcement action at first-sale sites.

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At a press conference, EAA, Housing, Planning and Lands Bureau, Consumer Council and Real Estate Developers Association of Hong Kong jointly introduce the new Notes to Purchasers of First-hand Properties. (From left) Ms Sandy Chan, Chief Executive Officer, EAA; Mrs Pamela Chan, Chief Executive of the Consumer Council; Mr Thomas Chan, Permanent Secretary for Housing, Planning and Lands (Housing); Mr Stewart Leung, Vice-Chairman of the Executive Committee of the Real Estate Developers Association of Hong Kong.

Furthermore, EAA has issued a Practice Circular (No. 06-03(CR)) to remind managers of estate agencies and estate agency employers of their duties under Section 15 of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (Practice Regulation).

Section 15 of the Practice Regulation stipulates that "a licensed estate agent shall establish proper procedures or systems to supervise and manage his business of doing estate agency work to ensure that his employees or persons under his control comply with the provisions of the Ordinance (Estate Agents Ordinance)."

In a number of cases, the misconduct of estate agency employees or their failure to comply with the Ordinance and Practice Regulation, as well as the Estate Agents (Licensing) Regulation and/or the Code of Ethics, can be attributed to the lack of a proper system or procedures, supervision and control by employers or the management of estate agencies.

According to the Practice Circular, the following breaches might be attributed to a lack of effective control by the estate agency employer or management:

Fighting and unruly behaviour at first-sale sites — the estate agency employer and/or the management fail(s) to keep a record of all employees deployed at a particular first-sale site on a particular day, thereby failing to establish a proper system for maintaining effective control of their employees at the site.
Conducting estate agency work by unlicensed persons — the estate agency employer and/or the management fail(s) to ensure that persons without licences, such as mortgage brokers without holding any estate agent’s or salesperson’s licences or those whose licences have expired without renewal, do not carry out estate agency work.
Failure to conduct and/or supply a land search and failure to provide correct property information — the estate agency employer fails to provide resources for conducting land searches or the estate agency employer and/or the management fail(s) to monitor compliance of such regulations by their employees.
Issuance of misleading or false advertisements — the estate agency employer and/or the management fail(s) to check the accuracy of advertisements issued by staff.

The Practice Circular reminds licensees of the requirements of Section 15 of the Practice Regulation, that is, an estate agent must properly manage his business to ensure that his employees comply with the provisions of the Estate Agents Ordinance. An employee engaging in inappropriate conduct or circumventing the rules of his employment may be prima facie evidence of a failure on the part of his employer or management to observe Section 15 of the Practice Regulation.

In considering whether an employer or management is in breach of the Section, EAA would look into whether they have established proper procedures or systems and whether due diligence was exercised to ensure staff followed these procedures or systems. Failure to provide proper staff training on compliance may also be considered as a breach of Section 15. A proper system is defined as one that includes adequate and continuous monitoring and enforcement.

The Practice Circular is available on the EAA website.

 
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