It is imperative that before the practitioner accepts any appointment of agency and/or deals with any person claiming to be the authorised representative of the absent contracting party in a property transaction, the representative must be able to produce a Power of Attorney duly executed by the absent contracting party authorising the representative to enter into the transaction concerned and to execute the relevant document for and on his behalf. To avoid unnecessary disputes, EAA strongly recommends the Power of Attorney be executed and attested by a solicitor. It is insufficient and highly risky simply to request the representative to sign a declaration to the effect that he has or will have proper authorisation from the absent contracting party and that he will be personally responsible for all consequences.

It is necessary for practitioners, when acting as an agent, to carry out a land search of the property so as to ascertain the ownership of the property and any existing encumbrances affecting it. The Estate Agents Ordinance and the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation stipulate that a licensee must conduct and/or supply a land search to his client. In February 2005, the Land Registry introduced the Integrated Registration Information System, through which the public may conduct land searches on the internet from 8:30am to 11:30pm every day. Stating that no land search could be carried out because the PASP was signed outside the service hours for conducting a land search is unacceptable.

An agreement for the sale and purchase of shares is a complicated legal document. Purchaser(s) may unwittingly take over debts and liabilities of a limited company that are associated with a transfer of the shares and business undertakings of that limited company, and such debts and liabilities may not be easily discovered without conducting a due diligence examination of the accounts and business of that limited company. In the event that the purchaser(s) require(s) financing to complete the purchase, a share transfer may give rise to complications in the financing of the purchase. If the parties' interests are to be adequately protected, comprehensive legal documentation is required. It is highly risky and inappropriate for practitioners to arrange for a share transfer without legal advice.

The practitioner should advise the purchaser of any possible risks in payment of deposits directly to the vendor and of the desirability of arranging for the stakeholding of all deposits (both the initial and further deposits) by a firm of solicitors. The licensee should also explain to the vendor and the purchaser the implications of the stakeholding arrangement and the conditions to be fulfilled before the release of the deposits by stakeholders. These obligations apply to all sales and purchases whenever there is an undischarged mortgage. A licensee must explain to a client who is not legally represented, before entering into a PASP of a property where there is an undischarged mortgage, the meaning of any deposit stakeholding provision and/or the implications and risks of deleting the deposit stakeholding provision contained in a pre-printed PASP.