Agent cannot claim forfeited deposit

Overseas Education | 11 Jan 2018

Estate agents should maintain high ethical standards and avoid any practice which may bring discredit or disrepute to their trade.

Otherwise, they may be subject to disciplinary actions by the Estate Agents Authority.

An estate agent acted for both the landlord and the tenant in a lease transaction involving a residential property. She arranged for the two parties to enter into a provisional tenancy agreement relating to the property. However, the tenant opted not to rent the property after paying a deposit of several thousand Hong Kong dollars.

The deposit was then forfeited by the landlord.

The estate agent claimed that according to trade practice, the landlord should pay her 50 percent of the forfeited deposit.

But after checking the provisional tenancy agreement and making inquiries with other estate agents, the landlord realized that he was not required to share with the estate agent the forfeited deposit for the cancellation of the lease.

Thus, he lodged a complaint with the EAA.

The EAA disciplinary committee found that the estate agent's unreasonable request for 50 percent of the forfeited deposit may bring discredit or disrepute to the trade.

Hence, she failed to comply with paragraph 3.7.2 of the code of ethics.

Moreover, she did not explain the meaning of each clause of the provisional tenancy agreement to the landlord when the latter was not legally represented before the signing of the provisional tenancy agreement.

In particular, she failed to explain the terms regarding the breach of contract and commission paid by the defaulting party.

Therefore, she also breached section 13(1)(a) of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation.

The committee decided to reprimand the estate agent, suspend her license for 14 days and attach conditions to her license, requiring her to obtain 12 points under the Continuing Professional Development scheme within 12 months.

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