The Estate Agents Authority said it is "inappropriate" that property agencies added terms to the preliminary sales agreements to allow purchasers and vendors to call off a deal should there be no relaxation of stamp duties announced in the policy address next week.
The move may "lead to legal disputes and cause confusion in the property market," the EAA said in a statement yesterday. The regulator is investigating whether the use of such terms may have breached its guidelines and will take follow-up actions accordingly, it noted.
It was reported that Centaline Property Agency and sister company Ricacorp Properties have been providing sales treaties with "Subject to Contract" to their clients, which permit both parties to walk away from the deal without consequences if the property cooling measures stay after the address.
These documents also specify that both sides acknowledged they have been advised by the agents to seek independent legal advice before signing the agreements and the agents shall have no liability in respect of all matters relating thereto.
Centaline Group's founder Shih Wing-ching replied to the report that the provisions were requested by customers who wanted the agreements to take effect only after the policy announcement. He stressed that the relevant clauses were valid only if both sides had agreed to them and extra requirements were found in other contracts before.
Ricacorp said new agreements with the prerequisites were only available to the frontline agents from Monday.
Sammy Po Siu-ming, chief executive of Hong Kong and Macau's residential division at rival Midland Realty, said the agency was also considering introducing the clauses but no decision has been made.
After consulting legal professionals, Midland believes that the move may involve tax evasion or even break the laws, and vendors may also refuse to close the transactions for different reasons if the prices jump after the policy address, which may ultimately lead to legal actions, Po said.
The EAA also reminds parties to "obtain independent legal advice before signing any agreement, and be mindful that the relevant arrangement and terms of agreement in the contracts may involve evasion of taxes and/or other legal liabilities."
This came as the Hong Kong Mortgage Corporation raised the interest rates of fixed-rate mortgages by 0.49 percentage points. The 20-year fixed-rate mortgage rate stood at 5.29 percent after the adjustment.
The EAA said the move could lead to legal disputes. Sing Tao
