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Practice Directions

Part II     Practice Directions (Continued)

Section B
Hong Kong Residential Properties
(The following PDs apply to licensees handling the sale and purchase or the leasing of residential properties in Hong Kong)

2.25 A licensee should observe and comply with the provisions in the PR in handling the sale and purchase or the leasing of a property in Hong Kong used wholly or primarily for human habitation and use Forms 1-6 in the Schedule to the PR.

2.26

2.26.1 A licensed estate agent should, before accepting appointment from a person to act for that person, inform that person that he is a licensed estate agent and his licence number.
(s.5(1), PR)
2.26.2 A licensed salesperson should, before doing any estate agency work for a person, inform that person that he is a licensed salesperson and his licence number.
(s. 5(2), PR)
2.27     Forms
2.27.1
(a)   In acting for a vendor in the sale of a property, or in acting for a purchaser when the vendor is not represented by any estate agent, a licensed estate agent should complete Form 1.
(b)   In acting for a landlord in the leasing of a property, or in acting for a tenant when the landlord is not represented by any estate agent, a licensed estate agent should complete Form 2.
(c)   In acting for a vendor in the sale of a property, a licensed estate agent should enter into Form 3 with the vendor.
(d)   In acting for a purchaser in the purchase of a property, a licensed estate agent should enter into Form 4 with the purchaser.
(e)   In acting for a landlord in the leasing of a property, a licensed estate agent should enter into Form 5 with the landlord.
(f)   In acting for a tenant in the leasing of a property, a licensed estate agent should enter into Form 6 with the tenant.


2.27.2 The forms should be completed in accordance with the directions and instructions, accompanied by such documents, and supplied to such person, if so required, in the manner as specified in the respective forms.
(s.3 (2), PR)
2.27.3 A licensed estate agent who supplies a form should obtain the information required to be included in the form as soon as is practicable and ensure the accuracy of the information so obtained as well as other information in the form.
(s. 3(3), PR)
2.27.4 No forms are required to be used in the following situations:

(a)   the sale and purchase or the leasing of a car parking space alone;
(b)   the leasing of a property that is not a self-contained unit (a self-contained unit is an independent dwelling with separate cooking facilities and bathroom with or without lavatory); and
(c)   a first sale of an undivided share in land in which a residential property forms part.

(s. 3(4), PR)
2.28     Property Information
2.28.1 A licensed estate agent should, as regards any property in relation to which he has entered into an estate agency agreement:

(a)   when acting for a vendor, for so long as he acts for the vendor, have in his possession or under his control information prescribed in Form 1 (in the case of sale and purchase) or Form 2 (in the case of leasing);
(b)   be reasonably satisfied as regards the accuracy of the information in (a) above;
(c)   supply the information in (a) above to persons specified in Form 1 (in the case of sale and purchase) or Form 2 (in the case of leasing) in accordance with the provisions in the form;
(d)   inform a client who is the vendor of each offer received before the client expressly instructs him not to do so or before any requirement under the estate agency agreement requiring him to do so no longer applies to him, whichever is the earlier;
(e)   disclose to a client full particulars of any pecuniary or other beneficial interest he has in the property concerned and any benefit (including any commission or any interest of whatever kind) which will accrue to him should the property be disposed of; and
(f)   if acting for both the vendor and the purchaser, inform both of such clients that he is so acting, and at the request of either client provide to the requesting client any information as regards the property concerned provided by the other client, unless he has been expressly instructed by that other client not to do so.

(s. 36(1), EAO)
2.28.2 When a licensee employed by an estate agent in the capacity of a salesperson does estate agency work in relation to a property, he should observe and comply with 2.28.1(d), (e) and (f) above.
(s. 36(3), EAO)
2.28.3 Where a manager acts in relation to a property, he should comply with 2.28.1 above as if he were the licensed estate agent who entered into the relevant estate agency agreement.
(s. 38(3), EAO)
2.29     Estate Agency Agreements
2.29.1 A licensed estate agent should enter into an estate agency agreement with a vendor on the happening of one of the following events, whichever is the earliest: (a) within 7 working days after accepting the vendor's instruction to sell or lease a property; (b) prior to advertising; (c) prior to the signing of an agreement for sale and purchase or a lease.
(s. 6(1), PR)
2.29.2 A licensed estate agent should enter into an estate agency agreement with a purchaser on the happening of one of the following events, whichever is the earlier: (a) prior to arranging an inspection of a property by the purchaser; (b) prior to the signing of an agreement for sale and purchase or a lease.
(s. 6(2), PR)
2.29.3 A licensee should, before entering into an estate agency agreement with a person who is not legally represented, explain to him the different types of agency appointment in the agreement and their implications and effects, and the terms and conditions in the agreement to ensure his awareness of his rights and obligations. If the person does not understand any part of the explanation given the licensee should recommend the person to seek legal advice.
(s. 6(3), PR)
2.29.4
(a)   When personally presenting an unexecuted estate agency agreement for signature by a client but when it is to be so signed the document does not become an executed estate agency agreement, a licensed estate agent should immediately deliver a copy of it, and of any document referred to in it, to the client.
(b)   When sending an unexecuted estate agency agreement to a client for his signature, a licensed estate agent should also send a copy of the unexecuted estate agency agreement, and of any document referred to in it, to the client.

(s. 47(1),(2), EAO)
2.29.5
(a)   When personally presenting an unexecuted estate agency agreement for signature by a client and when it is so signed the document becomes an executed estate agency agreement, a licensed estate agent should immediately deliver a copy of the executed agreement, and of any document referred to in it, to the client.
(b)   A licensed estate agent should within 7 days following the execution of an estate agency agreement give a copy of the executed estate agency agreement, and of any document referred to in it, to the client, unless 2.29.5(a) applies or an unexecuted estate agency agreement had been sent to the client for signature and upon such signing the agreement became an executed estate agency agreement.
(s.48(1), (2), EAO)
2.30   First Sale of Undivided Share in Land in which Residential Property Forms Part
2.30.1 In a first sale of an undivided share in land in which a property forms part by a vendor of the property who is usually the developer, a licensed estate agent should enter into a written agreement with the vendor stating that:

(a)   the agent shall obtain the information in Part 1 of Form 1 in the Schedule to the PR in accordance with the provisions of that Form or from the vendor in case he is unable to obtain any such information in accordance with the said provisions after taking all reasonable steps and exercising all due diligence;
(b)   the agent shall be supplied with Part 2 of Form 1 from the vendor unless the property is a unit in an uncompleted building;
(c)   whether the agent is also permitted to act for the purchaser; and
(d)   if the agent also acts for the purchaser, he shall disclose any pecuniary or other beneficial interest he has in the property in the agreement, or in writing when such interest subsequently arises.

(s. 7(1), PR)
2.30.2 If a licensed estate agent acts for both the vendor and the purchaser, he should inform both of such clients that he is so acting, and at the request of either client provide to the requesting client any information as regards the property concerned provided by the other client, unless he has been expressly instructed by that other client not to do so.
(s. 7(2), PR)
2.31     Seeking Instructions
2.31.1 A licensee should not supply any false or misleading information in relation to a property when seeking instructions from a client.
(s. 8(1), PR)
2.31.2 A licensee should not pass to a sub-listing agent any information of a vendor or his property supplied by the vendor without the prior written consent of the vendor. (A sub-listing agent is a licensee who obtains an instruction from a principal agent in respect of the listing of a property)
(s. 8(3), PR)
2.31.3 A licensee should not solicit an instruction from a vendor if he knows or should have known that the property concerned is subject to an exclusive agency granted to another licensed estate agent under an estate agency agreement unless the licensee has drawn the vendor's attention to the fact that he may be liable for additional commission if he enters into another estate agency agreement in respect of the property.
(s. 8(4), PR)
2.31.4 A licensed estate agent should keep a record of all listings of properties and copies of all estate agency agreements entered into for not less than 3 years from the receipt of the listings or the entering into of the estate agency agreements, as the case may be. EAA officers authorised in writing can inspect such record. A licensee should answer any question and supply any information requested by the officer in relation to such inspection.
(s. 8(2), PR)
2.32     Advertising
2.32.1 A licensed estate agent should not issue an advertisement relating to his estate agency business which includes any false or misleading statement.
(s. 9(1), PR)
2.32.2 A licensed estate agent should obtain a vendor's written consent before issuing any advertisement in respect of his property.
(s. 9(2), PR)
2.32.3 A licensed estate agent should not advertise a property at a price or rental or on terms different from that instructed by the vendor.
(s. 9(3), PR)
2.32.4 A licensed estate agent should not issue an advertisement in respect of a property to be sublet without stating in the advertisement that the property is to be sublet.
(s. 9(4), PR)
2.32.5 A licensed estate agent should remove all advertisements issued by him as soon as is practicable after the property concerned is no longer available for sale or purchase or leasing, or the relevant estate agency agreement is terminated, whichever is the earlier.
(s. 9(5),PR)
2.32.6 A licensed estate agent who acts as a sub-listing agent should comply with 2.32.3, 2.32.4 and 2.32.5 above.
(s. 9(6),PR)
2.33     Property Inspection and Viewing
2.33.1 A licensee should assist in making arrangement for property inspection and viewing by a purchaser (including a car parking space and common areas if applicable) and accompany the purchaser for such inspection and viewing unless otherwise instructed by the purchaser.
(s. 10(a), PR)
2.33.2 A licensee should obtain the vendor's consent before arranging an inspection and viewing of a property.
(s. 10(b), PR)
2.33.3 A licensee should establish what is to be included in the sale or leasing of a property before the signing of an agreement for sale and purchase or a lease and prepare a written inventory thereof.
(s.10(c), PR)
2.34     Conduct of Negotiation
2.34.1 A licensee should not claim that a purchaser has made an offer unless the offer exists.
(s. 11(a), PR)
2.34.2 A licensee should ensure that information or comparables on property prices or rentals supplied to a client for reference do not misrepresent the value of the property concerned.
(s. 11(b), PR)
2.34.3 A licensee should not exercise any undue influence on a vendor or a purchaser so as to induce him to enter into an agreement for sale and purchase or a lease.
(s. 11 (c), PR)
2.34.4 A licensee should keep a written record of all offers in respect of a property.
(s. 11 (d), PR)
2.34.5 A licensee should present an offer to a client for acceptance as soon as is practicable after receiving it.
(s. 11(e), PR)
2.34.6 A licensee should inform a client of all offers received in the order he receives them and present them in an objective and unbiased manner, unless an agreement for sale and purchase or a lease has been entered into in respect of the property concerned.
(s. 11(f), PR)
2.35     Agreements for Sale and Purchase and Leases
2.35.1 A licensee should, before a client who is not legally represented enters into an agreement for sale and purchase or a lease, explain the meaning of each clause and draw to his client's attention the meaning of any essential terms and provisions, and recommend his client to seek legal advice if his client does not understand any part of the explanation.
(s. 13(1), PR)
2.35.2 After the signing of an agreement for sale and purchase or a lease, a licensee should not continue to market the property concerned, or be obligated to disclose any further offers to the vendor concerning the property.
(s. 13(2), PR)
2.35.3 A licensee should take all practicable steps to ensure that the name of the vendor is correct to avoid fraudulent misrepresentation of identity. If the vendor is an individual, such steps may include collecting a copy of his Hong Kong Identity Card or other identification document.
(s. 13(3), PR)
2.35.4 A licensee acting for a vendor should conduct an up-to-date land search of the property concerned immediately before an agreement for sale and purchase or a lease is entered into, and give a copy of the same to the purchaser.
(s. 13(4), PR)
2.36     Commission
2.36.1 A licensee acting as a sub-listing agent should not demand payment of any commission from the client concerned of the principal agent.
(s. 14(1), PR)
2.36.2 A licensee should not recommend to a client the use of the services of any other person where a pecuniary or other beneficial interest may accrue to the licensee in consequence of the recommendation, or the use of the services by the client, without first disclosing that interest to the client at the time of the recommendation.
(s. 14(2), PR)
2.36.3 A licensed estate agent should issue a written receipt immediately to a client for any commission paid by the client, and retain a copy of such receipt for not less than 3 years after it is issued. This direction also applies to an invoice for commission issued by a licensed estate agent.
(s. 14(3),(4), PR)
2.37     Keeping of Accounts and Records
2.37.1 A licensed estate agent should keep proper accounts as to moneys received or held, or paid by him, for or on account of clients. EAA officers authorised in writing can inspect such accounts. A licensee should answer any question and supply any information requested by the officer in relation to such inspection.
(s. 12(1), PR)
2.37.2 A licensed estate agent should, if required to do so by the EAA, furnish to the EAA a certificate issued by a professional accountant as to whether proper accounts have been kept in accordance with 2.37.1 above.
(s. 12(8), PR)
2.37.3 A licensed estate agent should issue a written receipt to a client immediately for any moneys received, and retain a copy of the receipt for not less than 3 years after the receipt is issued.
(s. 12(2), PR)
2.37.4 A licensed estate agent should deposit all moneys received or held for a client in a trust account maintained at an authorised institution, and retain a copy of the deposit slip for not less than 3 years after the deposit was made. (An authorised institution means a bank, a restricted licence bank, or a deposit-taking company under the Banking Ordinance (Cap. 155)).
(s. 12(3), (4), PR)
2.37.5 A licensed estate agent should not withdraw money from a trust account except in accordance with his client's instructions and by a cheque or by electronic funds transfer.
(s. 12(5), PR)
2.37.6 If no money has been received or held on behalf of clients during a financial year of a licensed estate agent, the agent should, if required to do so by the EAA, send to the EAA a statutory declaration to that effect within a specified period.
(s. 12(6), PR)
2.37.7 A licensed estate agent should only release deposit money in accordance with the terms of the agreement for sale and purchase or the lease, or with the purchaser's instructions.
(s. 12(7)(a), PR)
2.37.8 A licensed estate agent should ensure that the identity of the vendor and of the owner of a property are the same, or, if they are different, the vendor has authority to sell the property, before releasing any deposit money.
(s. 12(7)(b), PR)
2.37.9 A licensed estate agent should return a purchaser's cheque or deposit money as soon as is practicable if the purchaser's offer to purchase or lease the property concerned is not accepted by the vendor.
(s. 12(7)(c), PR)
2.38     Effective Control
2.38.1 A licensed estate agent should establish proper procedures or systems to supervise and manage his estate agency business to ensure that his employees or persons under his control comply with the EAO and its subsidiary legislation.
(s. 15, PR)
2.39     Compliance by Partnership
2.39.1 Where 2 or more licensed estate agents are members of a partnership, the provisions under 2.14.2, 2.16, 2.17, 2.29.4 and 2.29.5 above shall be regarded as having been complied with by each of the members if, but only if, each such provision has been complied with by at least one of such members.
(s.16, PR)