Regulations on Issuing Property Advertisements

• There are a number of requirements that estate agency companies need to comply with when issuing property advertisements

• The Estate Agents Authority issued a circular last December that spells out new requirements.

I would like to share a case concerning a property advertisement with misleading or wrong information.

An estate agency company issued an advertisement of a residential property for sale or rent with information of its block number, saleable area and gross floor area. Several photos showing the view of the property and its interior were also included.

However, the photos did not belong to the advertised property but belonged to another property located in the same block on a lower floor, which shared the same direction and view. The staff of the estate agency company found the photos in the company's computer database and used them for the listed property. Later on, when the owner of the other property discovered the advertisement, she lodged a complaint with the Estate Agents Authority (EAA).

An inquiry hearing was conducted after an investigation. The EAA Disciplinary Committee was of the view that the estate agency adopted the photos of another flat without carefully verifying the information when issuing the advertisement and was in breach of section 9(1) of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation, which stipulates that a licensed estate agent shall not cause or permit to be issued an advertisement wholly or partly relating to his estate agency business which includes any statement or particular that is false or misleading in a material particular. The Committee decided to reprimand the estate agency company and impose a fine of $11,500 (US$1,465).

To enhance the accuracy and transparency of property advertisements in the market, the EAA issued a Practice Circular, which took effect on 1 December 2018. The guidelines of this circular are applicable to all types of properties, including first-hand and second-hand properties, non-residential properties and properties situated outside Hong Kong.

There are a number of requirements that estate agency companies need to comply with when issuing property advertisements for their clients. They must assign a unique identification number (Property Number) to each property to be advertised. They are also required to state clearly and legibly on the advertisement the Property Number as well as the date on which the advertisement is issued or updated so that consumers could easily distinguish the properties involved. In addition, written consent of the vendors/landlords must be obtained before they issue any advertisement in respect of the vendors’/ landlords’ properties.

When handling residential properties, estate agents should be familiar with the need to obtain written consent from the vendors/landlords as this is required under the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (“Practice Regulation”). Under the Practice Regulation, the prescribed estate agency agreement for the sale of residential properties in Hong Kong (Form 3) and estate agency agreement for the leasing of residential properties in Hong Kong (Form 5) both contain a standard provision for estate agency companies to obtain consent of the vendor/landlord for issuing advertisements and the vendor/landlord may indicate his agreement/disagreement.

As for other kinds of properties, property agents may consider adopting similar wording used in Form 3 or Form 5 for obtaining clients’ consent for issuing advertisements in respect of their properties.

To protect the interests of both parties and to avoid misunderstandings or disputes, the EAA strongly advises vendors/landlords to co-operate with their property agents in providing them the written consent for issuing advertisements.

Apart from the above, there are other regulations that property agents are required to comply with when issuing property advertisements. They must take all reasonable steps to verify the accuracy of the information contained in the advertisement and not issue any advertisement which includes any statement or information that is false or misleading in a material particular. Moreover, estate agency companies should not engage in, or allow employees to engage in misleading advertising tactics, such as using sham listings or fake listing price to lure consumers.

The EAA hopes that property advertisements in the market will be clearer and up to date after the issuance of the Practice Circular. That said, consumers are advised not to solely rely on the information in the advertisements but they should view the flat in person they are interested in and obtain the latest property information from the property agents, where necessary, before making any purchase or renting decision.

(26 February 2019)