[BUYING AND SELLING REAL ESTATE IN HONG KONG]
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between the vendor and the purchaser. It is common that management fee, rates and Government rent, and rental payment (if any) will be apportioned as at the date of completion. The vendor usually pays up to and inclusive of the actual date of completion. Nonetheless, utility payments such as electricity, gas and water will be dealt with by the vendor and the purchaser with the respective utility companies directly. Preparation before Completion: Inspection of the Landed Property The purchaser will make a final inspection of the landed property through the arrangement with the estate agent before the completion date if the property will be sold to the purchaser with vacant possession. There may be fixtures and fittings which have been agreed to be sold or delivered to the purchaser together with the landed property upon completion. One must note that even if the purchaser discovers that any or part of the fixtures and fittings which have been agreed to be sold to the purchaser is/are not available upon final inspection, he/she is not entitled to terminate the PASP/Formal ASP on this reason alone and the only claim which is available to the purchaser is a claim for damages. Execution of Assignment On completion, the vendor shall execute a deed of assignment (the “Assignment”) upon receipt of the purchase money of the landed property. Assignment shall be in the form of a deed. It is required for transferring the legal estate of and in the landed property from the vendor to the purchaser upon completion. In usual practice, the purchaser will execute the assignment in escrow (i.e., to execute the completion documents before completion and the completion documents will only become effective upon all the conditions having been satisfied).
Completion of the Sale and Purchase Completion for sale and purchase of the landed property usually takes place by way of solicitors’ undertaking. This form of completion places an important reliance on the solicitors by requiring the solicitors to give their professional undertakings (i.e., promises). On the completion date, the purchaser’s solicitors shall deliver the balance of the purchase money in exchange for an undertaking given by the vendor’s solicitors to return (1) the assignment duly executed in the purchaser’s favour by the vendor; (2) all original title deeds (which relate exclusively to the landed property and are required for giving good title to the landed property) including the release or discharge of the existing mortgage/legal charge (if any); and (3) the keys of the landed property (if vacant possession is agreed to be delivered to the purchaser on completion). After the vendor has delivered a duly executed assignment to the purchaser, the purchaser’s solicitors will then arrange to pay stamp duty on the assignment (which is a nominal sum of HK$100) and register the assignment at the Land Registry. Stamp Duty Implications Under the Stamp Duty Ordinance (Cap.117) (“SDO”), the vendor and/or the purchaser may be liable for the payment of Ad valorem duty (“AVD”), Buyer stamp duty (“BSD”) and Special stamp duty (“SSD”) for the sale and purchase of a landed property. However, payments of AVD, BSD and SSD are not mutually exclusive. The following stamp duty implications will have to be carefully considered prior to entering into a sale and purchase transaction in relation to landed property:-
ILN Real Estate Group – Buying and Selling Real Estate Series
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