Mr and Mrs Cheung had just returned to Hong Kong after living for some time in New Zealand. As they were accustomed to living in a quiet environment they would like to buy a small house in the New Territories. Through the introduction of an estate agent, Mr Cheung settled on a 700 square-foot flat on the ground floor of a small house in Yuen Long. The flat came with a garden and a car parking space.
Negotiation for a price went rather well between Mr and Mrs Cheung and Mr Lee, the vendor. Mr Lee told them many stories about the history of the village. His great grandfather used to till the land in the village, but his father was unwilling to carry on farming, so the fields were left untended. Two years before, he handed back to the Government a plot of low-lying farmland in exchange for a piece of Class A land on which he built the present house. Mr Lee went on to say that the Government had inspected the house and issued a Certificate of Compliance. He had also paid the premium to the Government the week before. Mr Lee pointed out that the garden and the car parking space in front of the house had been approved and could be sold together.
After concluding a provisional agreement for sale and purchase, Mr Cheung was informed by his solicitor that the Government confirmed that the garden and car parking space were in fact granted by the Government to Mr Lee in the form of a short-term lease, and Mr Lee was not allowed to transfer the lease to another person. On learning this, Mr Cheung immediately contacted Mr Lee, but Mr Lee said that the people in the village customarily transferred their gardens and car parking spaces without Government interference, and told him not to worry. Still feeling uneasy, Mr Cheung planned to give up the deal but Mr Lee insisted that he should honour the agreement. Neither party was ready to yield. Later, through the agent's mediation and the solicitors' assistance, Mr Lee finally agreed to sell the ground floor flat at a reduced price, while the solicitor would apply to the Government on behalf of Mr Cheung for a short-term lease on the garden and the car parking space.
Land ownership in the New Territories is a matter of great complexity. The building licence for small houses does not usually include other facilities such as garden and car parking space. A purchaser should therefore check whether the relevant right may be transferred before signing a provisional agreement with the owner so as to avoid losses.
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