| The Freshman |
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| In the conveyance of a small house, one should take note of whether premium has to be paid |
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 Ms Lee, who lived alone, had grown up in the rural area of the New Territories and was accustomed to a quiet environment. In her leisure time, she also liked to entertain her friends at home. Recently, she intended to move to a flat in a small house situated in a quiet village together with the use of the roof top, where she thought she could raise her pair of German shepherds and invite her friends to barbecues.
On the introduction of an agent, Ms Lee picked a 700 sq.ft. flat in a small house, together with the roof top, in Cheng Ka Village, Sheung Sui. The land search record of the flat supplied by the agent only indicated that Mr Cheng was the owner of that lot, so Ms Lee asked Mr Cheng for more information about the flat. Mr Cheng said that the land on which the small house stood was originally farmland. The Government had granted him a building licence the year before and allowed him to use his male descendant right to build on it a three-storey small house, the area of each storey being 700 square feet. The Government had also issued a Certificate of Compliance which was in the custody of his solicitors. He said that if he succeeded in selling the flat, his solicitors would proceed with completing the partitioning of the flats for registration.
When the provisional agreement for sale and purchase was signed, Mr Cheng was not able to produce a Certificate of Compliance and proof that the premium had been paid. The agent thus proposed that the deposit should be stakeheld at the solicitors until the title was checked. The parties accepted the proposal readily.
A week later, Ms Lee was informed by her solicitor that although the Certificate of Compliance had been issued, the premium had still to be paid before the flat could be sold. Ms Lee was worried that the deal could not be completed and asked her solicitor to take it up with Mr Cheng's solicitor. Subsequently, Mr Cheng's solicitor furnished her with proof of the payment of premium. Ms Lee then completed the deal without further scruples.
Rural land rights and the related conveyancing procedures are quite complex and there are restrictions on alienation of most village houses. All parties should pay special attention. When in doubt, they should promptly seek legal advice.
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