Concrete Analysis | The importance of conducting a land search when buying or selling property in Hong Kong
- Buyers should carefully study the land search copy provided by the estate agent before entering into a sales agreement or paying a deposit, warns Ruby Hon of the Estate Agents Authority
- By understanding the key information about the relevant property, potential risk and loss can be better avoided
A land search is an important document in a property transaction. It provides the searcher with essential information regarding the property, such as its address, ownership details and encumbrances, if any, that are registered against it.
According to section 13(4) of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (Practice Regulation), an estate agent who acts for a vendor (or landlord) of a residential property is required to, immediately before an agreement for sale and purchase (or a tenancy agreement) of the property is entered into, carry out a land search of the property and provide a copy of it to the purchaser, or tenant. This statutory duty applies to estate agents acting not only for the vendor but also to those acting for both vendor and buyer.
To enhance the protection of consumers’ interests, the above statutory requirement of conducting an up-to-date land search is extended to estate agents who act for the purchaser alone by virtue of the practice circular No.13-03(CR) issued by the Estate Agents Authority (EAA), unless an up-to-date land search has already been provided by the estate agent acting for the vendor. By up-to-date, we mean that the land search must be conducted immediately before an agreement for sale and purchase (or tenancy agreement) is entered into, irrespective of whether the property is a residential one or not.
Here, I would like to share a case in which an estate agent failed to conduct a land search in a leasing transaction.
An estate agent acted for both the landlord and tenant in the leasing transaction of a residential property. After arranging for the prospective tenant to inspect the property twice, the estate agent arranged for the tenant to sign a provisional tenancy agreement (PTA). Before the signing of the PTA, the estate agent had not conducted a land search in respect of the property, nor had he provided a copy of the land search to the prospective tenant.
