Through an estate agent, Ms Wong inspected a residential unit in Tuen Mun and liked it. She paid the owner, Ms Chui, a deposit of $50,000 and signed a provisional agreement for sale and purchase. However, when the formal agreement for sale and purchase was being prepared, Ms Wong was informed by her solicitor that there was a problem in the title of the unit, and the deal might not proceed smoothly.
It turned out that the unit had originally belonged to a Mr Cheung, who divorced his wife, Ms Chui, three years before. The court ruled that the flat should go to Ms Chui and their son, holding as tenants in common in equal shares. As the son was only seven years old, the mother acted as the trustee of the unit. Later, Ms Chui wanted to sell the unit as she needed cash to meet an emergency. So she instructed an estate agent to list the flat.
On receiving the listing instructions, the agent did a land search at the Land Registry. It was indicated in the register that the current owners were Ms Chui and her son, with Ms Chui acting as trustee of the property. The agent thus believed that she had full power to dispose of the property and did not give it any more thought, nor did he mention this to Ms Wong so that the latter might seek legal advice. It was not until the formal agreement for sale and purchase was being prepared that Ms Wong's solicitor pointed out the problem in title.
Ms Chui was the trustee of the unit, and usually had the right to make a decision on behalf of her son, a minor. However, she had no right to sell the unit as, when the court ruled that the unit should go to her and her son, the intention was to provide housing for mother and son. Therefore, the court's approval had to be obtained if the unit was to be sold.
Finally, the agreement was cancelled by mutual consent of the parties and the deposit Ms Wong had paid was returned in full. The agent also agreed not to charge her a commission. However, Ms Wong still had to pay a fee to her solicitor, and nothing would compensate for the losses in time and in mental stress.
Owners and purchasers should consult their lawyers if they face any problems in title or alienation restrictions. Before clarifying the problems, they should not enter into binding agreements for sale and purchase in haste.
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