 Mr Ding had been working hard to make money since graduation from university, in the hope that he would soon be able to buy a comfortable place in which he could live with his aged parents. Since property prices had declined in recent years and the banks had lowered their mortgage rates, Mr Ding reckoned that he had saved enough money, amounting to 30% of the price of an average flat, to make a purchase. So he asked a number of estate agencies to look for a suitable unit.
Soon afterwards, Mr Ding, on the recommendation of an agent, settled on a unit in a building situated in Sai Ying Pun. The building did not look too old. Mr Ding's parents found the unit satisfactory, and the price was within his budget. As Mr Ding was anxious to clinch the deal, he agreed to sign a provisional agreement for sale and purchase first so that he could started applying for a mortgage loan at the bank, and the agent agreed to check the information on the property. Mr Ding paid an initial deposit at the same time as he signed the agreement.
After the agreement was signed, Mr Ding went at once to a bank to apply for a mortgage loan. The bank, following its usual practice, made an appraisal of the unit and came up with the result that the building had actually been occupied for 25 years. Because of the age of the building, the bank agreed only to provide a loan equivalent to 60% of the price.
Mr Ding then inquired at several other banks, and the result was the same. The amount required to complete the deal exceeded Mr Ding's budget. The 10% difference amounted to more than $100,000. If he failed to honour the agreement he would risk the vendor forfeiting the deposit and might have to pay both parties' commissions to the agent. As no bank could offer more than 60% of the price, Mr Ding was forced to borrow from friends and finally managed to put together enough cash to conclude the transaction.
A prospective buyer should be in possession of the basic information about a property, including its age, which directly affects its value but is not readily discernible to the naked eye. He should consider such information carefully before deciding to buy the property.
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