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1. Regarding Confirmor
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| a. |
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Practitioners should remind the confirmor
to examine the agreement for sale and purchase between
the vendor and the confirmor to see if there is any restriction
on subsale. |
| b. |
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In the event of the sub-purchaser being
unable to complete the subsale, the confirmor should be
ready to complete the sale in accordance with the agreement
for sale and purchase with the vendor. Otherwise, the
confirmor will be in breach of his/her agreement for sale
and purchase with the vendor. |
| c. |
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On completion, if the confirmor needs to
transfer the balance of purchase price payable by the
sub-purchaser to the vendor, sufficient time should be
allowed for making the said transfer. It is advisable
that the completion time for the subsale agreement should
precede that for the original agreement for sale and purchase. |
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| 2. Regarding Sub-purchaser |
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| a. |
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The sub-purchaser would normally have no
opportunity to inspect the relevant property before he/she
enters into the subsale agreement. Practitioners should
alert the sub-purchaser to the risks of no inspection
and try to arrange for an inspection before completion. |
| b. |
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Practitioners should explain to the sub-purchaser
that the terms of the subsale agreement are subject to
those of the original agreement for sale and purchase.
For example, if the confirmor has accepted any structural
alteration in the original agreement, the sub-purchaser
has to accept the same under the subsale agreement. Attention
should be paid to whether the balance of purchase price
payable by the sub-purchaser is sufficient to cover the
balance of purchase price payable by the confirmor under
the original agreement. |
| c. |
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If the confirmor is unable to complete,
the transaction may be delayed or fall through. In such
an event the sub-purchaser will not be able to purchase
the property and may have to resort to legal proceedings
to obtain the refund of the deposits and any damages. |
| d. |
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The sub-purchaser may request the confirmor
to execute an irrevocable power of attorney so that in
the event that the confirmor is unable to complete the
sub-purchaser may complete the transaction as the attorney
of the confirmor. The sub-purchaser should be advised
to seek legal advice. |
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| 3. Ascertain Confirmor
has Power to Sell |
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To ascertain whether the confirmor has
power to sub-sell, an agent should carry out a land search
of the relevant property before arranging for the confirmor
and the sub-purchaser to enter into a subsale agreement.
The agreement for sale and purchase entered into between
the vendor and the confirmor should also be examined to
determine the terms of the agreement, including but not
limited to any restriction on subsale. |
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| 4. Disclosure
of Commission |
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If an agent acts for both the vendor and
the confirmor in the original sale and purchase and also
for both the confirmor and the sub-purchaser in the subsale,
then the agent has to disclose to all the parties any
commission receivable from the others in accordance with
section 36(1)(a)(vii) of the Estate Agents Ordinance.
That includes disclosing to the vendor any commission
receivable from the confirmor and the sub-purchaser. |
