EAA reminds practitioners on matters regarding first-hand properties

EAA has issued three circulars to practitioners in recent months with regard to first-sale residential properties, specifically on obtaining of vendor's written consent prior to the issue of advertisement, provision of information on first-hand residential properties and identification of personnel at first-sale sites.

According to Section 9(2) of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation ("Practice Regulation"), a licensed estate agent shall obtain a vendor's written consent prior to the launch of advertising in respect of the vendor's residential property.

A licensed estate agent must have prior written consent from the vendor of a property before the licensed estate agent may issue any advertisement in respect of such property.

In the case of first-sale residential properties, Section 9(2) applies if an advertisement refers to a recognisable development and suggests in any way or gives the impression that the development is up for sale. It applies even if the developer's name is not expressly quoted in the advertisement or if there is no suggestion in the advertisement that the licensed estate agent is acting for the developer. This means that all licensed estate agents must obtain prior written consent from developers before issuing any form of advertising for first-sale residential properties.

In relation to the provision of information for first-sale residential properties, the Real Estate Developers Association of Hong Kong has issued a new set of supplementary guidelines ("REDA Guidelines") to its members to enhance the transparency of the private sale mechanism of first-sale residential properties.

According to REDA Guidelines, price lists and lists of units on offer will be made available to prospective purchasers before a private sale at the sales office and through agents engaged by developers. Sales brochures and a copy of both the draft Deed of Mutual Covenant (DMC) and the Government lease will also be provided at the sales offices for free inspection by prospective purchasers. If practitioners take the initiative or accede to the prospective purchasers' request to explain or introduce property information, they must exercise due care and due diligence in ensuring that the information provided is accurate.

In view of the REDA Guidelines, practitioners are reminded that Section 9(3) of the Practice Regulation provides that a licensed estate agent shall not cause or permit to be advertised a residential property in respect of which he is acting as such agent at a price or rental or on terms different from that instructed by the client concerned. Where practitioners have been given the price list and the list of units on offer by the developer, they should provide the same to prospective purchasers or remind them to obtain the same at the sales office before entering into any agreement for sale and purchase (including Memorandum, Provisional Agreement, Offer to Sell, etc.).

Meanwhile, with a view to ensuring the good behaviour of practitioners and preventing unlicensed estate agency work at first-sale sites, EAA has urged all practitioners to co-operate in wearing their estate agent cards and employee cards whenever they are on duty at first-sale sites. This will save substantial time for both EAA staff and practitioners in carrying out inspection work and facilitate the detection of unlicensed persons performing estate agency work. It will also help prospective clients to distinguish between licensees and non-licensees, and between employees of different estate agency companies, enhancing consumer protection.

EAA further reminds estate agencies to keep records of staff deployed at first-sale sites.

Section 15 of the Practice Regulation provides that a licensed estate agent shall establish proper procedures or systems to supervise and manage his business of doing estate agency work to ensure that his employees or persons under his control comply with the provisions of the Estate Agents Ordinance. Pursuant to Section 15 of the Practice Regulation, estate agency companies are expected to establish and maintain an effective and reliable system whereby a record is kept of all employees deployed at a particular first-sale site on any particular day.

In the event of EAA investigating any incident of suspected unlawful behaviour at a first-sale site, such a record should be made readily available to EAA upon request.

Practitioners who fail to comply with the relevant provisions and the above guidelines may be subject to disciplinary action by EAA.