| Monograph : Conveyancing |
Contents |
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| (11) Sub-sale
and Sub-purchase |
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Sub-sale and sub-purchase,
sometimes known as confirmor sale, occurs when a purchaser/confirmor
enters into an agreement for sale and purchase of a
property with the owner/vendor but before completion
sub-sells the property to a sub-purchaser.
Considerations for purchaser/confirmor
| 1. |
There may be provisions in the agreement
with the owner/vendor that prohibit sub-sale. A
purchaser should first ascertain whether there is
such prohibition before entering into any agreement
with a sub-purchaser. |
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| 2. |
If the sub-purchaser fails to complete, the purchaser
is still obliged to complete under the agreement
with the owner. The purchaser may not have sufficient
time to obtain a mortgage to complete and he may
not have ready money to pay the balance of the price. |
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| 3. |
Completion of the sub-sale should take place on
the same completion date as provided in the agreement
with the vendor, but at an earlier time than that
stated in the agreement with the owner/vendor. This
will ensure that the purchaser/confirmor will have
sufficient time to complete and deliver the balance
of purchase price and other relevant document to
the owner/vendor at or before the time for completion
as stipulated in the agreement with the owner/vendor. |
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| 4. |
In relation to a residential property, if the
purchaser/confirmor has applied for deferred payment
of stamp duty, he will have to pay stamp duty on
the agreement with the owner/vendor within seven
days of signing the sub-sale agreement. |
Considerations for sub-purchaser
| 1. |
A sub-purchaser may not have an opportunity
to inspect the property before entering into a sub-sale
agreement with the purchaser. A sub-purchaser should
be advised of the usual provision in the sub-sale
agreement that the sub-purchaser is deemed to have
inspected the property and accepted its physical
condition on an "as is" basis. |
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| 2. |
The terms of a sub-sale agreement are usually
subject to those of the agreement between the purchaser/confirmor
and the owner/vendor. The sub-purchaser is bound
by whatever terms the purchaser/confirmor has accepted
under the agreement with the owner/vendor, for example,
if the purchaser/confirmor has accepted substantial
alterations to the property, the sub-purchaser may
have to accept the same under the sub-sale agreement. |
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| 3. |
It should be ensured that the balance of the purchase
price payable by the sub-purchaser on completion
is sufficient to cover the balance of purchase price
payable by the purchaser/confirmor under the head
agreement between the owner/vendor and the purchaser/confirmor
before releasing any deposit to the purchaser/confirmor. |
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| 4. |
If the purchaser/confirmor fails to complete,
the transaction may fall through and the sub-purchaser
may have to institute legal proceedings against
the purchaser/confirmor for recovery of the deposits
paid under the sub-sale agreement and damages. |
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| 5. |
It may be advisable to procure the purchaser/confirmor
to execute a power of attorney in favour of the
sub-purchaser so that the latter can complete the
purchase with the owner/vendor as the attorney of
the purchaser/confirmor in the event that the purchaser/confirmor
fails to complete. |
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