How can I know whether an estate agent has a valid licence?

You can verify whether an agent has a valid licence through the following means:

• Check the Licence List on the Estate Agents Authority (EAA) website. Searches can be made using the agent's name or licence number.
• Check the Licence Register at the EAA office, which allows the public to search for information of licensees.

Instead of appointing an estate agency, can I ask the caretaker of my building to sell my property on my behalf?

Under the Estate Agents Ordinance (EAO), anyone carrying out estate agency work in Hong Kong must have a valid estate agent’s or salesperson’s licence. It is an offence to carry out estate agency work without a licence or to employ an unlicensed person to do so.

Estate agency work has a wide definition in the law. Therefore, the EAA is of the view that you should not ask a caretaker who does not have an estate agent’s or salesperson’s licence to sell your property. Otherwise, the caretaker may be in breach of the law.

3.

Do I, as a landlord, property owner, prospective buyer or prospective tenant of a residential property, have to sign an estate agency agreement? 

Under the EAO, estate agents are required to sign an estate agency agreement with their clients when being appointed to buy, sell or lease a residential property. 

The EAA encourages consumers to sign the estate agency agreement with the estate agent as the agreement will state clearly key terms of the appointment such as the validity period of the agreement, the agency relationship and the amount of the commission. Doing so will enhance the transparency of the transaction and help protect the interests of both parties.

4.

If my estate agent represents both the purchaser and vendor or the tenant and landlord, how can I, the purchaser or tenant, ensure that my interests are not compromised?

If the estate agent appointed by you represents the other party as well, the agent must make that clear in the estate agency agreement. If you do not want your agent to be a dual agent, you can make such a request when appointing the agent. 

According to the Code of Ethics issued by the EAA, estate agents must serve their clients with honesty, fidelity and integrity, protect and promote the interests of their clients, and act in a fair and impartial manner to all parties involved in the transaction. 

The EAA also suggests you read the Guide to Purchasing Second-hand Residential Properties or A Guide to Tenancy to learn more about the things you need to pay attention to when buying or renting a property.

5.

Does the law say that the amount of commission should be 1% of the purchase price or half of a month’s rental?

The law has no stipulations on the amount or the rate of commission an estate agent is entitled to. It is subject to negotiation between you and your appointed estate agent.

6.

Does the law have any provisions as regards the validity period of the appointment of an agent? Can it be shorter than three months? As a purchaser, if I am not satisfied with the service of Estate Agent A, can I unilaterally shorten the validity period and purchase the property which was introduced to me by Estate Agent A through another estate agency?

It is recommended in the Estate Agency Agreement for Purchase of Residential Properties in Hong Kong (Form 4) that the validity period should not be more than three months. However, there is no provision in the Estate Agents Ordanice as regards the validity period and the duration of which is subject to negotiation between you and your agent.

The EAA would like to remind consumers that the validity period is an important term in an agreement. Therefore, they should not put down “until further notice” as the expiry date of the validity period. Instead, the commencement and expiry dates of the agreement should be clearly stated.

Regarding whether the validity period can be shortened, an estate agency agreement is a legally binding document, so if you wish to amend any clauses in the agreement (e.g. the validity period), you must obtain the consent of the other party: that is, the estate agency.

If the estate agency disagrees with cutting short the validity period, you are advised to seek legal advice for a solution. You should not, without seeking legal advice, purchase the property through another estate agency when the agreement is still valid, as you may have to pay commission to both estate agencies as a result.

7.

I am planning to sell a property and earlier appointed an estate agency as the exclusive agency to help me sell it. However, I would now like to appoint another agency. Can I cancel my earlier appointment? 

Estate agency agreements are legally binding documents. If you would like to amend any clauses in the agreement or cancel the agreement, you must obtain the consent of the other party, that is, the estate agency. 

If the estate agency does not agree to cancel the exclusive agreement, you should seek legal advice on the way forward. You should not sell your property through another estate agency prior to the expiry of the agreement and without seeking legal advice, as you may have to pay commission to both estate agencies as a result.

8.

If I am not satisfied with the service of the estate agent or the estate agent has not provided the services he promised, can I refuse to pay his commission?

An estate agency agreement is a legally binding document. Both sides should abide by it once they have signed it.If you are dissatisfied with the service of the agent, you  may pass on your views to the agent’s company. 

It is difficult to say categorically under what circumstances an agent has failed to fulfil his duties as set out in the estate agency agreement or has not delivered what he promised. You should seek legal advice on such matters. Commission disputes between consumers and estate agents are commercial in nature. Both sides can take civil action to resolve them or refer such disputes to the EAA for a binding decision under section 49 of the EAO.

9.

If I view a property through Estate Agent A and enter into an estate agency agreement with him, but then purchase the property from the landlord direct, do I have to pay commission to the agent?

It is stipulated in item 5 of Schedule 3 of the Estate Agency Agreement for Purchase of Residential Properties in Hong Kong (Form 4) that “the Purchaser is also liable to pay commission to the agent for services rendered with regard to the property concerned if the purchaser or the spouse, or any nominee, undisclosed principal or agent of the purchaser enters into a binding agreement for sale and purchase with the vendor of any one or more of the Properties during the Validity period, whether through the agent or otherwise.”

In other words, even if you purchase the property direct from the landlord, as long as the purchase is made during the validity period of the agreement, you are legally obliged to pay commission to your appointed estate agent.

10.

If I appoint an estate agency as the exclusive agency to sell my property, but eventually sell the property to my neighbour direct, do I need to pay commission to the estate agency?

As stipulated in Schedule 4 of the Estate Agency Agreement for Sale of Residential Properties in Hong Kong (Form 3), if the vendor has appointed an estate agency as the exclusive agency, but sells the property through another estate agency during the validity period, his exclusive agency has a right to claim commission from him.

However, if you sell the property to the purchaser direct instead of your exclusive agency or another estate agency, you do not need to pay commission to your exclusive agency. 

11.

Earlier I signed an estate agency agreement with Agent A and Agent A introduced a property to me. The property was subsequently bought by my wife/child/parent/sibling through Agent B. Can Agent A demand a payment of commission from me?

An estate agency agreement is a legally binding document. Both sides should abide by it once they have signed it. According to the estate agency agreement, you are liable to pay a commission to the estate agent if “your spouse, any nominee, or your undisclosed principal or agent” enters into a sale and purchase agreement with the vendor during the validity period of the agreement.That is, if the buyer is your child or parent or sibling, you would have to pay a commission if  he/she is your nominee, undisclosed principal or agent. 

12.

If I appoint an estate agent to sell my property and pass him the key to the property, can the agent duplicate the key?

To prevent future disputes, when you hand over the key to the estate agent, you should require the practitioner to acknowledge receipt of it and state clearly in writing the terms and conditions, such as the use of the key, whether he can duplicate it, and if so, the number of duplicates, and under what circumstances should the key be returned.

13.

I am planning to purchase a residential property through an estate agent. Before I enter into a provisional agreement for sale and purchase with the landlord, what documents or information should the agent provide me with?

Prior to signing a provisional agreement for sale and purchase with the landlord, your appointed estate agency practitioner should have provided you with a Property Information Form (i.e. Form 1 as stipulated in the Estate Agents Ordinance), unless you have specially waived your right to receive it; and a copy of the latest land search record.

Information listed in the Property Information Form includes ownership, subsisting encumbrances (if any), the floor area, year of completion and user restrictions of the property.

The EAA also encourages consumers to obtain from the agent a copy of all the documents they have signed.

14.

How do I know whether the unit I am going to purchase has unauthorised structures or building orders or a water leakage problem?

Estate agents are required to provide a land search document of the property to you. You can understand from the land search whether any building order has been registered against the property. If in doubt, you should seek advice from a surveyor.If you are concerned about water leakage, you should make enquiries with your estate agent.

15.

Will an estate agency tell me whether the unit I plan to buy is a “haunted” flat, that is, whether a tragic accident happened in the flat or nearby before? Does the agent have a duty to do so?

Under the Code of Ethics, estate agents must serve their clients with honesty, fidelity and integrity, protect their clients against fraud, misrepresentation or any unethical practices, protect and promote their clients’ interests, and act in a fair and impartial manner to all parties involved in the transactions.When fulfilling their duties, estate agents should also exercise due care and due diligence.

However, whether or not a flat is “haunted” is not a piece of information which must be provided by estate agents under the Estate Agents Ordinance. Whether an estate agent has a duty to disclose to the buyer that the property he intends to buy was previously involved in a murder or is a “haunted flat” depends on the circumstances of the case. Generally speaking, if you have not made direct enquiries with your agent or if the agent does not know or could not have known that such things ever happened in the property, the agent has not breached the Code of Ethics. Therefore, the EAA would like to remind you that if you are concerned about whether the flat you intend to buy is “haunted”, you should ask the agent or thevendor through the agent. 

There is no legal definition of a “haunted flat” and different persons may have different interpretations of it. Therefore, the EAA suggests you be specific in your enquiries. You should ask, for example, whether a suicide or homicide took place in the flat before, and not use vague terms, such as whether the flat is “haunted” or “cursed”.

16.

I am planning to purchase a commercial property. Do I need to sign an estate agency agreement with the estate agent? Should the estate agent provide me with a land search copy or other property information?

The requirements about entering into a prescribed estate agency agreement, providing a land search copy and other property information are stipulated in the The Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (which prescribes various forms and stipulates the responsibility to provide different types of property information) and only apply to residential properties.

However, you may ask the estate agent to provide you with general property information or information related to the transaction. According to paragraph 3.4.1 of the Code of Ethics issued by the EAA, estate agents should protect and promote the interests of their clients, carry out the instructions of their clients in accordance with the estate agency agreement and act in an impartial and just manner to all parties involved in the transaction.

Transactions of non-residential properties may involve complicated legal issues. The EAA advises you to seek legal advice if you encounter any difficulties or if there is anything unclear.

17.

How can I be sure of the area of the shop I am about to purchase or rent? How can I find out if the cockloft inside a shop is an unauthorised addition? Should the estate agent provide me with the relevant information?

The Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (Practice Regulation) (including forms and responsibilities to provide property information as prescribed under the regulation) only applies to residential properties.

As regards non-residential properties, the Practice Regulation has no provision as to whether estate agency practitioners should provide their clients with information about such properties or tell them if there are any unauthorised building works related to such properties.

However, the Code of Ethics issued by the EAA requires estate agents to serve their clients with honesty, fidelity and integrity. Hence, estate agents should try their best to answer the questions raised by their clients. If the agents do not know the answers, they should frankly admit it to their clients and advise them to seek professional advice from surveyors or lawyers.

18.

Is an estate agent obliged to tell me that the shop I am going to buy involves a sub-deed? 

According to the Code of Ethics, estate agents should, in the course of business, serve their clients with honesty, fidelity and integrity, as well as protect their clients against fraud, misrepresentation or any unethical practices in connection with real estate transactions. Estate agents should also protect and promote their clients’ interests, and act in a just and impartial manner to all parties involved in property transactions. Estate agents should also exercise due care and due diligence when fulfilling their duties.

Whether a practitioner has a duty to inform you that the property is a partitioned property depends on the relevant circumstances of the case. For instance, if the property has already been partitioned and information including the ownership and sub-deed has been registered with the Land Registry, the practitioner is generally not obliged to reveal whether the property involved is a partitioned one. 

However, if the partitioning of the unit has not yet been completed, the estate agent should remind you of the risks of purchasing such a property: for example, whether the partition is lawful, or in breach of the Buildings Ordinance, the Fire Safety (Commercial Premises) Ordinance, conditions of Government lease or the terms of the deed of mutual covenant. If the land search record of the property shows that it has subsisting encumbrances, such as outstanding management fees, the agent should draw your attention to such matters and advise you to consult a lawyer. The agent should also remind you of the rights and obligations of the owners under a sub-deed and suggest you seek legal advice before buying the property.

19.

I am interested in buying a flat and my estate agent recommends I issue a cheque of $30,000 as “earnest money” to the vendor. Should I do as suggested?

Before reaching an agreement with the vendor on the purchase, and before signing a provisional sale and purchase agreement, it is not advisable that you issue a cheque of any amount in any manner to anyone (regardless of whether the payee is the vendor or estate agency company).

20.

My wife and I want to sell our jointly owned property. Can I appoint an estate agent and sell the property on behalf of my wife?

If you want to appoint an estate agent to sell a jointly-owned property on behalf of your wife, you must obtain written authorisation from your wife which states clearly that you have been authorised by your wife to enter into the transaction and sign the necessary documents on her behalf. The power of attorney should be executed and attested properly. To avoid disputes, the EAA suggests the power of attorney be attested by a lawyer. You are also advised to show the power of attorney to your appointed estate agent to prove you are authorised to enter into the transaction on behalf of your wife.

21.

If my residential property has been rented or sold, can the estate agency still issue the advertisement of the related property?

According to section 9(3) of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation, estate agent shall remove all advertisements issued or caused to be issued by him as soon as is practicable after the residential property concerned is no longer available for sale or purchase or leasing; or the termination of the estate agency agreement concerned (whichever is the earlier).