In a recent case, an estate agent introduced to a purchaser an uncompleted unit of a village house in the New Territories, which had been put on sale by the developer before paying the premium to the Government for lifting the restriction on alienation.

The purchaser was interested in the uncompleted village house but she was not aware of the complexities involved in the transaction. Without explaining he risks involved, the estate agent arranged for the purchaser to enter into an "agree-to-buy" agreement at the price of $1.28 million and pay a deposit in the sum of $30,000 directly to the other party to the agreement.

In the evening after signing the agreement, the purchaser had the opportunity to speak to her friend about the purchase, who advised her that purchasing a village house might involve complicated issues. Having been warned of the risks, the purchaser stopped payment of the deposit cheque and instructed a solicitor to check the identity of the registered owner of the village house. The solicitor found that the other party to the agreement was not the registered owner. When the purchaser enquired about this with the estate agent, the estate agent explained that the other party was the attorney of the registered owner and would provide the purchaser with a copy of the power of attorney for her inspection.

However, after a week, the estate agent still could not produce the power of attorney, and the purchaser did not proceed with the purchase.

Having considered all the evidence and the representations of the parties at the inquiry hearing, the Disciplinary Committee found that the estate agent had failed to protect the interests of the purchaser in arranging for her to pay the initial deposit to a person who was not the registered owner and without ascertaining whether the other party to the agreement was duly authorised to enter into the agreement.

The Disciplinary Committee was also of the view that the estate agent should have known that, before entering into any agreement for sale and purchase of a village house, a premium should be paid to the Government for lifting the restriction on alienation. The estate agent should also have ascertained that consent from the Government had been granted to the vendor for selling the village house before arranging for the purchaser to purchase the property. As the sale and purchase of a village house usually involves problems concerning the vendor's identity and restriction on alienation, the estate agent should have advised the purchaser to seek legal advice.

For the above reasons, the Disciplinary Committee suspended the estate agent's licence and ordered the estate agent to obtain 10 points under the Continuing Professional Development Scheme of the Authority within one year by attending training courses.