Monograph : Encumbrances Contents
  8. Others

Unperformed sale and purchase agreement

Doubt occurs when a sale and purchase agreement is shown registered in the land register in respect of a property, the completion date has long passed, but no assignment has been registered. In the absence of a cancellation agreement, one does not know the cause of non-completion (for example, is it due to the vendor's default or the purchaser's default or the parties' agreement?), or whether there will be any claim for specific performance or any other claim against the property. In other words, one does not know the existence or extent of any interest or claim of the purchaser in the property under the unperformed agreement.

It is therefore advisable for an owner to seek a written cancellation agreement of any previous unperformed sale and purchase agreement before resale. In the absence of such a cancellation agreement, the vendor should provide proper and sufficient evidence that the previous purchaser has no further interest in or claim to the property whatsoever. In case of doubt, an estate agent should advise his clients to obtain legal advice before entering into any provisional agreement for sale and purchase.


Lis pendens

This is a notice to anyone that the holder of the lis pendens is alleging a claim over the property and that he intends to litigate that claim if necessary.


Court orders

In matrimonial proceedings, the court, in awarding ancillary relief, is empowered to order the sale, transfer or settlement of property which order may also govern the manner of sale or class of purchasers. Where property is subject to such an order, the registered owner is not free to deal with the property.

In other situations, the court may also grant an injunctive or prohibitory order limiting the rights of the owner to dispose of the property. This would happen in the event of a party in litigation proceedings successfully convincing the court that the owner will dissipate the property to avoid satisfaction of any judgment liability.

Intending vendors and purchasers should consult their lawyers before they agree to sell and purchase property subject to any such order.


Breach of terms of deed of mutual covenant

The co-owners of a building are entitled to restrain certain transactions by obtaining an injunction if the transaction would constitute a breach of the terms of the deed of mutual covenant.

    In Lo Chi Wai Arthur v Liu Wing Cheung Wilfred [1983] HCA 11459/82, the deed of mutual covenant provides that the car parking space cannot be alienated separately from the flat, and the sale of a car parking space on its own was held to be a breach of the terms of the deed of mutual covenant, thereby rendering the title defective. Another common restriction under the deed of mutual covenant is that a car parking space must not be sold to a person who is not the owner of a unit in the building.

In the sale and purchase of a car parking space separately from a flat in the building, steps should be taken to ensure that there is no restriction against such alienation in the deed of mutual covenant or government grant.

In addition, the terms of a deed of mutual covenant may specify the uses of different parts of a building. A breach of the permitted user may lead to a claim by the building manager, the other owners or owners incorporation.


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