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Hong Kong - Selling Property
When you sign the estate agency agreement with the agent, you should pay careful attention to the amount of commission and time of payment; the agreement’s validity period; period of the agreement; if the relationship is a “non-exclusive agency” or “exclusive agency;” and whether or not the agent is acting only for you or also for the buyer. If your contract includes an exclusive agent, then your agent might charge you a commission even if the property is sold through another agent.
Once you and the buyer reach an agreed upon price, both parties enter into a provisional sale and purchase agreement. This is a legally binding contract that must be followed by both parties. If, for some reason, the formal sale and purchase agreement cannot be signed, either party can rely on the provisional agreement to proceed with the deal or even to sue for compensation. The provisional agreement includes certain information like the closing date, the address and price of the property, amount of initial and further deposit, when to sign the formal agreement, etc.
A solicitor should draft the formal sale and purchase agreement. The sale and purchase agreement is based on the terms set forth by the provisional agreement. This agreement contains detailed terms that are intended to replace those in the provisional agreement. Certain special conditions can be included as long as they do not infringe upon any relevant ordinances or oppose the terms of the provisional sale and purchase agreement.
As the seller, it is your responsibility to educate the buyer regarding any encumbrances against the property. These can include any lawsuits; unpaid management fees; mortgage over the property that hasn’t been discharged; government orders for remove of unauthorized building work; or repair works.
Even though the real estate agent or the buyer can find this information by carrying out a land search, it is still in the seller’s best interest to inform of all the encumbrances and negotiate with the purchaser regarding this. This can help avoid any future disputes, which could impede the sale process. It is also the seller’s duty to disclose the latent defects. These are any defects that the buyer cannot discover through a property inspection.
The Stamp Duty is imposed on the agreement for sale of residential property. Rates vary with the property’s amount or value. A new stamp duty, as of 2012, was imposed on foreigners who are buying property in Hong Kong. This amount is 15%.
Despite the fact that predictions were made that there would be a real estate slump following the implementation of the new stamp duty, there is still a fairly healthy real estate market in Hong Kong. It is expected that prices will drop in the near future but as of now there are still several thousand properties being sold every month.
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