EAA Publications
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| The Freshman |
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| Agent should disclose interest
to secure public confidence |
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It is provided in the Estate
Agents Ordinance that an estate agent must disclose to his client
whether he has any pecuniary or other beneficial interest in
the property in respect of which he is acting. The Ordinance
also requires that if any of the agent's spouse, parents, children,
brothers, sisters, and the employees and major shareholders,
partners and directors of the company he belongs to, has pecuniary
or other beneficial interest in the relevant property, the agent
also has to make disclosure.
Some time ago Mr Mak, a property owner, advertised in a number
of newspapers to sell his residential unit in Tsing Yi, setting
the price at $4.2 million. A few days later, an estate agent
called Mr Mak and told him that a prospective purchaser, which
was a limited company, was ready to offer $3.8 million for the
unit. Mr Mak was not satisfied with the offer. The agent then
claimed that she could discuss the price with the prospective
purchaser again. Seeing that she was earnest, Mr Mak signed
an estate agency agreement with her in which the agent did not
make any disclosure of interest.
Through the efforts of the estate agent, Mr Mak finally agreed
to clinch the deal at $4 million. Subsequently, Mr Mak discovered
that the day after the provisional agreement for sale and purchase
was signed, the purchaser resold the unit in the capacity of
confirmor, at a higher price of $4.38 million. Mr Mak grew suspicious
and instructed his solicitor to investigate the background of
the purchaser, only to find that both the estate agent and her
husband were shareholders of the purchaser company. Mr Mak then
knew that the estate agent had not disclosed her interest and
made a secret profit by re-selling the flat. He decided to demand
compensation from the agent.
In the above case, the estate agent has contravened the provision
of the Estate Agents Ordinance in failing to disclose her interest
to her client. Even if there was no interest at the time the
estate agency agreement was signed, once any interest arises
during the validity period of the agreement, the agent should
disclose it to the client as soon as possible so as to avoid
a conflict of interests affecting public confidence in estate
agents.
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