EAQE Study Notes

The public's expectations of the estate agency profession encompass four dimensions: possessing professional knowledge, providing accurate information, diligently carrying out the client's mandate, and refraining from exerting undue influence on clients. All four are reasonable public expectations.

• According to syllabus section 1.3.2, "technical factors" affecting property prices include: interest rate levels, economic data indicators, seasonal fluctuations and mortgage-related policies.
• Interest rates directly affect mortgage interest costs and overall borrowing costs in the market, falling within the scope of technical factors (s. 1.3.2).
• Mortgage-related regulations (including loan-to-value ratio caps and stress test requirements) are also classified as technical factors (s. 1.3.2).
• Macroeconomic data indicators (such as GDP growth rate and unemployment rate) are categorised as "economic indices" and fall within the scope of technical factors (s. 1.3.2).
• Government land supply arrangements and land sale policies fall under the category of "housing policy and land policy" (s. 1.3.1) and are not technical factors. Therefore, (ii) is not included.

• Section 4 of the Estate Agents Ordinance (Cap. 511) establishes the Estate Agents Authority as a statutory body under that Ordinance.
• The functions of the EAA include issuing licences to qualified estate agents and salespersons, formulating codes of practice and standards, and investigating and handling complaints against licensees (Cap. 511, s. 7).

• The Estate Agents Authority was established under Section 18 of the Estate Agents Ordinance (Cap. 511) as a statutory body, not a government department. Its operating funds come primarily from licensing fees and other charges paid by the industry, not entirely from Government general revenue.
• Under Section 23 of the Estate Agents Ordinance (Cap. 511), the functions of the EAA include regulating the estate agency trade, issuing and managing licences, conducting disciplinary proceedings, and promoting standards of conduct in the industry.

• Under the general principles of agency law and the Estate Agents Ordinance (Cap. 511), estate agents owe their clients duties of loyalty, disclosure, and diligence, and must act in the client's best interests.
• The Estate Agents (Licensing) Regulation (subsidiary legislation under Cap. 511) and the Code of Ethics expressly prohibit estate agents from accepting any secret profit from the other party to a transaction without the client's consent. Such conduct constitutes a serious breach of conduct.

• The Estate Agents Authority (EAA) is a statutory body established under Section 3 of the Estate Agents Ordinance (Cap. 511) and is NOT a government department; its members are not civil servants.
• As an independent statutory body, the EAA is responsible for issuing licences to estate agents and salespersons, setting codes of practice and handling complaints to regulate the estate agency industry in Hong Kong.

• Under the Estate Agents Ordinance (Cap. 511) and the EAA's Practice Circulars, a licensee's duty of good faith and professional conduct obligations to clients extend throughout the entire transaction process, including the formal agreement stage, and do not automatically terminate upon the signing of a provisional agreement.
• The EAA has the authority to impose disciplinary sanctions on licensees for misconduct, including warnings, fines, and licence revocation, and may seek relevant legal remedies from the court in cases of continued breach.

• Any monies received on behalf of a client must be deposited into a trust account opened at an authorised institution (Practice Regulations, reg. 12(3)).
• Such monies may only be applied to: (a) make payment to the relevant client, or (b) make payment in accordance with prior written instructions given by the client (Estate Agents Ordinance, s. 43(3)(c)).
• An agent must issue a written receipt to the client 'immediately' upon receipt — there is no fourteen-day grace period (Practice Regulations, reg. 12(2)(a)).
• A copy of the receipt must be retained for at least three years (Practice Regulations, reg. 12(2)(b)).

• Under s. 30(1) of the Estate Agents Ordinance, the disciplinary sanctions available to the Authority include: admonition/reprimand, attachment of conditions to the licence, suspension of the licence (not exceeding 2 years), revocation of the licence, and a fine (up to a maximum of HK$300,000).
• The statutory maximum period of suspension is 2 years, not 3 years; accordingly, the three-year suspension in option (iii) does not conform with the Ordinance and is incorrect.
• A fine of HK$100,000 does not exceed the statutory maximum of HK$300,000; option (ii) is therefore correct.

• A licensee is obliged to produce to the investigator records that the investigator considers relevant to the matter under investigation (s. 28(5)(a)).
• A licensee must provide the investigator with an explanation of any documents produced (s. 28(5)(b)).
• Searching a licensee's private residence is not a requirement prescribed under the investigation procedures in the Estate Agents Ordinance.
• Only a court or magistrate (and not the Authority itself) may order a convicted licensee to bear the costs of the investigation (s. 28(8)(a)).

• Under s. 19(2)/s. 21(3) of the Estate Agents Ordinance, the statutory factors to be considered in determining whether a person is 'fit and proper' include: whether the person is an undischarged bankrupt, whether the person is mentally disordered, whether the person has been convicted of an offence involving fraud/dishonesty/moral turpitude, whether the person was a director of a disqualified company, and whether the person has been convicted of an offence under the Ordinance and sentenced to imprisonment.
• Possession of relevant work experience is not a statutory factor specified in the Ordinance.

• Under s.14(1)(b) of the Licensing Regulation, letters and related documents must state: the licence number or business details statement number, the business name, and the place of business.
• The address as stated in the Business Registration Certificate is not a required item to be stated on letters.

• All benefits must be confirmed in writing to the prospective purchaser, with the relevant terms and conditions and manner of provision clearly stated (Practice Circular 13-04 (CR), para. 33).
• Licensees must disclose benefit details to prospective purchasers and indicate whether the benefit is from the vendor or the estate agency company (para. 32).
• The Practice Circular does not require licensees to advise prospective purchasers to refrain from disclosing benefits to the vendor.

• Concealing one's interest in a property from the client breaches the obligation to disclose monetary or other material benefits under para. 3.6.2 of the Code of Ethics.
• Allowing personal interest to conflict with duties owed to the client breaches the requirement to treat all parties to the transaction fairly and impartially under para. 3.4.1 of the Code of Ethics.
• The circumstances described are not directly related to the provisions on performing duties with due care and diligence or carrying out instructions under the estate agency agreement.

• Making a false representation regarding a cash rebate breaches the requirement to maintain honesty, fidelity and integrity under para. 3.3.1 of the Code of Ethics.
• Disclosing a client's personal data without consent may contravene the Personal Data (Privacy) Ordinance (Cap. 486), thereby breaching para. 3.1.1 of the Code of Ethics, which requires licensees to avoid unlawful conduct.
• Spreading false statements that damage the reputation of another agency breaches para. 3.7.1 of the Code of Ethics.
• Referring a firm of solicitors to a client at the client's own request does not constitute a breach of the Code of Ethics.

• Section 36(1)(a)(vi) of the Estate Agents Ordinance (Cap. 511) requires an estate agent to disclose any pecuniary or other material interest held in the property.
• Paragraph 3.6.2 of the Code of Ethics requires the agent to make full disclosure to all parties of any pecuniary or other material interest obtained in connection with the property.
• The Conveyancing and Property Ordinance and the Unconscionable Contracts Ordinance are not relevant to this disclosure obligation.

• The prescribed forms (Forms 3–6) apply only to the sale and letting of residential properties.
• The sale or letting of a residential property together with a car parking space still requires the use of the prescribed forms.
• Transactions that do not require prescribed forms (Regulation 3(4)) include: the sale or letting of a car parking space alone; the letting of a non-self-contained residential unit lacking independent facilities; and transactions involving non-residential properties (e.g. shops, offices).

• The duties of an agent as set out in Form 3 include: (a) marketing and promoting the property for the vendor; (b) collecting relevant information about the property; (c) arranging for prospective purchasers to view the property; (d) conducting negotiations with all parties and submitting all offers to purchase; and (e) assisting in the conclusion of the agreement for sale and purchase.
• The following matters are not within the scope of duties under Form 3: proactively investigating a purchaser's background, the agent personally inspecting the property, conducting bankruptcy searches on behalf of the purchaser, and providing a valuation of the property.

• Money received by a salesperson on behalf of a client must be paid into the trust account opened by the licensed estate agent (i.e. the employing agency) at an authorised institution (Regulation 12(3) of the Estate Agents (Estate Agency Practice) Regulations).
• Such money must not be paid into the agency's general account, any individual's personal account, or a solicitor's trust account.

• An estate agent must obtain prior written consent from the vendor before publishing any advertisement for a residential property (Regulation 9(2) of the Estate Agents (Estate Agency Practice) Regulations).
• Option C is incorrect because it implies that an estate agent may publish an advertisement without prior consent from the vendor, provided the vendor has not expressly prohibited it — this is contrary to the Regulations.
• Advertisement content must not contain any false or misleading statement in a material particular (Regulation 9(1)).
• An advertisement for a residential property intended for subletting must indicate that the property is for sub-letting purposes (Regulation 9(4)).
• An advertisement must include the estate agent's licence number or the number of the Particulars of Business (Regulation 14(1)(c) of the Estate Agents (Licensing) Regulation).

• Under regulation 5(2) of the Estate Agents (Conduct) Regulations, a salesperson must disclose two items to a client before commencing estate agency work: (a) that he or she holds a licence as a salesperson; and (b) his or her licence number.
• The year of first licensure, the expiry date of the licence, and the number of transactions completed are not items required by law to be proactively disclosed.

• A licensed estate agent seeking to recover commission in respect of a residential property must first have entered into a prescribed form of estate agency agreement with the client; without such an agreement, no claim for commission may be brought (section 45(1) of the Estate Agents Ordinance, Cap. 511).
• Even if a commission clause is included in the provisional agreement for sale and purchase, an estate agent cannot recover commission if no prescribed estate agency agreement has been duly signed.
• There is no requirement to lodge the provisional agreement for sale and purchase at the Land Registry, nor to submit the estate agency agreement to the Estate Agents Authority for approval, as preconditions to bringing a claim.

• Where the saleable area is obtainable from the Rating and Valuation Department or the first assignment agreement, the saleable area must be stated in the advertisement (Practice Circular 12-02 (CR)).
• The advertisement must clearly identify the stated area as the 'saleable area'.
• There is no requirement to state the gross floor area concurrently, nor is it necessary to indicate the source of the floor area information.

Under the Estate Agents Ordinance (Cap. 511), a manager of an estate agency office must hold an estate agent's (individual) licence, not merely a salesperson's licence. Chi-yuen holds only a salesperson's licence and therefore does not meet the licensing requirement to act as a manager.

Under the Estate Agents Ordinance (Cap. 511), 'advertisement' is broadly defined to cover any form of promotion or publicity relating to estate agency work, including posters, printed price lists in publications, and leaflets distributed to letterboxes. All three scenarios fall within the definition of 'advertisement' under the Ordinance.

Under the Estate Agents (Conduct) Regulations, once an estate agency agreement has been concluded with the vendor, the agent is required to possess all three categories of property information: the unexpired term of the government lease, the year of completion of the property, and the approved use of the property. All three items are mandatory.

• Using a name in the course of estate agency work that differs from the name on one's licence constitutes a criminal offence under the Estate Agents Ordinance (Cap. 511).
• Providing misleading information to an appointed investigator during an Estate Agents Authority investigation constitutes a criminal offence under the Estate Agents Ordinance (Cap. 511).
• Publishing a property advertisement without the vendor's prior written authorisation is a regulatory breach but does not constitute a criminal offence under the Estate Agents Ordinance (Cap. 511).

• Under the Estate Agents Ordinance (Cap. 511), an estate agent has a statutory duty to disclose to the client full details of any pecuniary or other beneficial interest that the agent holds in respect of the property concerned.
• Referral of solicitors, introduction of mortgage lenders, arranging insurance, and advising on independent valuations are not statutory obligations imposed on estate agents under the Ordinance.

• An undischarged bankrupt may fail to satisfy the 'fit and proper person' requirement under the Estate Agents Ordinance (Cap. 511).
• A person convicted of a fraudulent or deceptive offence — such as obtaining property by deception under the Theft Ordinance (Cap. 210) — may fail to satisfy the 'fit and proper person' requirement.
• A minor traffic conviction (e.g. careless driving resulting in a fine) would generally not affect a person's 'fit and proper person' status under the Estate Agents Ordinance (Cap. 511).

• Under the Estate Agents Ordinance (Cap. 511), the manager appointed to be responsible for the effective and independent management of an estate agency office must hold an estate agent's (individual) licence — statement (ii) is correct.
• The obligation to disclose any beneficial interest in the property applies to all licensees, including both estate agents (individual) and salespersons — statement (i) is incorrect.
• A licensed salesperson may also sign a prescribed estate agency agreement on behalf of an estate agency firm — statement (iii) is incorrect.

• An applicant for a salesperson's licence must be aged 18 or above, be a fit and proper person, and hold Form 5 or equivalent educational qualifications.
• The validity period of a pass in the specified qualifying examination is 12 months, not 6 months. Therefore, condition (i) is incorrectly stated and does not reflect the actual requirement.

• Making a false representation to a client to induce them to enter into a transaction is a breach of the duty to protect the client's best interests and the duty to serve clients honestly and faithfully.
• The fair competition principle under the Code of Ethics primarily governs competitive conduct between licensees, and is not directly applicable to false representations made to a client.

• The Code of Ethics issued by the Estate Agents Authority covers all three provisions: serving clients honestly, faithfully and with integrity; avoiding conduct that damages the reputation of the industry; and exercising reasonable care and diligence in performing duties.
• All three provisions are expressly stated in the Code of Ethics and apply to both estate agents and salespersons.

• Under section 43 of the Estate Agents Ordinance (Cap. 511), a licensee who receives any money on behalf of or for a client must deposit it into a trust account maintained for clients; there is no minimum threshold amount for this requirement.
• Under rule 12 of the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (Cap. 511C), a licensee must issue a receipt to the payer immediately upon receiving any money and must retain a copy of the receipt for at least 3 years.

• Under section 38 of the Estate Agents Ordinance (Cap. 511), a licensed estate agent (corporate) must arrange for a person holding an individual estate agent's licence to be responsible for the management and supervision of business at each office.
• A person holding only a salesperson's licence does not meet the statutory qualification to act as branch manager.
• A licensed estate agent (corporate) must ensure that a qualified individual licence holder is stationed at and exercises effective control over each office; occasional visits do not satisfy the requirements of the Ordinance.

• Under the Estate Agents Practice (General Duties and Hong Kong Residential Properties) Regulation (Cap. 511C), Form 1 (Property Information Form — Sale) is used for residential property sale transactions, while Form 2 (Property Information Form — Lease) is used for residential property leasing transactions.
• A licensed estate agency company must keep records relating to each residential property transaction for a minimum of 3 years.

• Under section 30 of the Estate Agents Ordinance (Cap. 511), the maximum fine the Disciplinary Committee may impose on a licensee found guilty of disciplinary offence is HK$300,000.
• Under section 30, the Disciplinary Committee may suspend a licensee's licence for a maximum period of 2 years.
• Other disciplinary sanctions available to the Committee include: reprimand, adding or varying licence conditions, revocation of licence, and ordering payment of costs.
• A licensee aggrieved by a Disciplinary Committee decision may appeal to the Secretary within 21 days; the appeal tribunal's decision is final.

• Under s.45 of the Estate Agents Ordinance (Cap. 511), a licensed estate agent handling a residential property transaction must sign a prescribed estate agency agreement (Form 3/4/5/6) with the client before claiming any commission; otherwise, the agent is not entitled to claim commission.
• The commission dispute mechanism under s.49 is designed for disputes over commission amounts where a valid agreement exists, not for cases where no prescribed agreement was signed.
• The filing fee for commission dispute arbitration is HK$500, and either party dissatisfied with the award must appeal to the District Court within 14 days.

• An "as is" clause means that the property is sold and delivered in its actual physical condition as at the date the provisional agreement for sale and purchase was entered into.
• An "as is" clause covers only the physical condition of the property; it does not constitute any warranty by the vendor as to the legality of unauthorised building works under the Buildings Ordinance.
• An "as is" clause neither binds the purchaser to any existing tenancy affecting the property nor constitutes any representation or undertaking by the vendor regarding compliance with the Buildings Ordinance.

• Under the common law framework, a valid contract requires four essential elements: Offer, Acceptance, Consideration, and an intention by all parties to create legal relations.
• An agreement on the method of dispute resolution is not an essential element for the formation of a valid contract.

• Disclosing personal data to a third party for an additional purpose without the data subject's consent contravenes Data Protection Principle 3 (Use of Personal Data) under the Personal Data (Privacy) Ordinance, Cap. 486.
• Losing personal data contravenes Data Protection Principle 4 (Security of Personal Data).
• Data Protection Principle 2 (Accuracy and Retention) and Principle 6 (Access and Correction) are not relevant to this scenario.

• After the initial five-year restriction period, the owner of an HOS unit may sell the unit on the open market upon payment of the premium.
• The Agreement for Sale and Purchase must stipulate that the premium shall be paid within 28 days from the date of signing (or such other period as specified by the Director of Housing) and before completion of assignment.
• This requirement is prescribed under the relevant provisions of the Housing Ordinance (Cap. 283).

• When a purchaser defaults, the vendor is entitled to forfeit the deposit, terminate the agreement, and resell the property to another buyer.
• A "charging memorandum" is generally used to record outstanding management fees, Government rent, or rates, and is not applicable to situations of purchaser default.

• The agent must review the original Agreement for Sale and Purchase to ascertain whether it contains any clause restricting assignment (Practice Circular 01-08 (CR), paragraph (1)(a)).
• The agent must advise the purchaser whether the balance of the purchase price is sufficient to cover the outstanding balance payable by the confirmor (paragraph (2)(b)).
• The purchaser may not necessarily be able to inspect the property before signing the sub-sale agreement, and the agent must alert the purchaser to this potential risk (paragraph (2)(a)).

• In all three circumstances, the agent should advise the purchaser to have the deposit held by a solicitors' firm as stakeholder: all-monies mortgage, charging order, and confirmor sub-sale.
• The common reason is that the actual amount required to be discharged upon completion is difficult to determine in advance, or the transaction itself carries a higher degree of inherent risk.

• A nomination executed between non-immediate family members is subject to ad valorem stamp duty on the value of the property under the Stamp Duty Ordinance.
• Joint tenancy carries the right of survivorship: upon the death of one joint tenant, that person's interest in the property automatically vests in the surviving joint tenant(s).
• Joint tenancy is not restricted to married couples; any persons may hold property as joint tenants.
• Executing a nomination does not require the concurrent execution of a deed of gift.

• Under section 13(1)(a) of the Conveyancing and Property Ordinance (Cap. 219), the vendor must deduce title for a period of not less than 15 years.
• The first document in the chain of title must be an assignment, a mortgage by way of conveyance, or a statutory charge.
• If the government lease was granted less than 15 years before the date of the agreement for sale and purchase, the period of title runs from the date of the grant of the government lease.

• Where customer due diligence cannot be completed, the licensee must neither establish a business relationship nor carry out any occasional transaction with that client (Practice Circular 18-01 (CR), paragraph 4.15).
• Where a business relationship has already been established, it must be terminated as soon as reasonably practicable.
• The licensee should consider whether a suspicious transaction report should be filed with the Joint Financial Intelligence Unit (JFIU), not make a direct report to the Hong Kong Police Force.

• Under the Residential Properties (First-hand Sales) Ordinance, the saleable area includes balconies and utility platforms.
• Bay windows and cocklofts are specifically excluded from the calculation of saleable area.
• The definition of saleable area is strictly prescribed by the Ordinance and cannot be interpreted expansively.

• The Prevention of Bribery Ordinance (Cap. 201) defines 'advantage' very broadly.
• The definition includes any gift, loan, fee, reward, commission, employment, contract, payment, release, discharge, service, favour and any other advantage of any description.
• Referral commissions, gifts, and private loans all fall within the definition of 'advantage' under Cap. 201.
• There is no minimum monetary threshold for an item to qualify as an 'advantage' under the Ordinance.

Under the Stamp Duty Ordinance (Cap. 117), a deed of gift, a conveyance on sale, and an agreement for sale and purchase of a building are all chargeable instruments. A deed of mutual covenant is not a chargeable instrument for stamp duty purposes.

• Under s.9(1) of the Prevention of Bribery Ordinance (Cap. 201), any agent who, without the permission of his principal, solicits or accepts an advantage as an inducement or reward for doing or forbearing to do any act in relation to his principal's affairs commits an offence. 'Advantage' covers money, gifts, loans, etc., but excludes entertainment.
• Under s.9(3), any agent who, with intent to deceive his principal, uses any receipt, account or other document which is false, erroneous or defective in any material particular commits an offence.

• Under s.3 of the Land Registration Ordinance, registered instruments have priority by registration date; if registered within one month of execution, priority dates back to the execution date; if registered after one month, priority runs only from the registration date.
• An unregistered instrument is void against a bona fide purchaser, but this does not mean the deed automatically becomes invalid — non-registration only affects priority, not the validity of the deed itself.
• Under s.3(1) of the Conveyancing and Property Ordinance (Cap. 219), a land contract must be in writing and signed by the defendant, but need not be executed as a deed; deeds are required for transfers of legal estates (s.4) and leases exceeding 3 years.

• Under the Stamp Duty Ordinance (Cap. 117), an agreement for sale and purchase of residential property must be stamped within 30 days of execution; late stamping attracts a penalty. An unstamped instrument is inadmissible as evidence in court but is not rendered void.
• Late stamping penalties: not more than 1 month late = 2x duty; more than 1 month but not more than 2 months = 4x duty; more than 2 months = 10x duty.
• A Hong Kong permanent resident (not a company) purchasing a residential property in their own name as their sole or first residential property pays AVD at Scale 2 rates.
• Nomination to a non-close relative attracts full AVD; only nominations to a parent, spouse, or child are exempt.

• A land search record from the Land Registry contains details of all encumbrances affecting the property, including mortgages, statutory charges, building orders and court orders.
• The Companies Registry maintains records of registered charges over a company's assets, including charges over land or interests in land.
• The articles of association, certificate of incorporation and business registration certificate do not contain any information relating to mortgages or charges over a specific property.

• Mortgage agreements / legal charges typically contain a covenant prohibiting the mortgagor from letting the property to a third party without the prior written consent of the bank / mortgagee.
• If the landlord lets the property without the mortgagee's consent and the mortgagee subsequently takes possession, the tenant will be unable to continue occupying the unit.
• An agent should advise a prospective tenant to require the landlord to obtain written consent from all mortgagees before signing the tenancy agreement.
• Approval from the building's property management company and the Building Authority is not a prerequisite for entering into a tenancy agreement.

Under the Land Registration Ordinance (Cap. 128), a deed of assignment of a residential flat, a mortgage of a car parking space, and a charging order over a commercial/industrial property are all registrable instruments at the Land Registry.

• An unexpired tenancy agreement is an encumbrance that binds a purchaser and should be brought to the purchaser's attention.
• An outstanding building order indicates that the owner is required to carry out specified works; if not yet complied with, it remains an encumbrance affecting the property.
• A mortgage that has been formally discharged no longer constitutes a burden on the property and need not be flagged as a concern.

• A receipt on discharge of a charge is the document that confirms a mortgage has been fully repaid and discharged.
• A letter of compliance is typically issued by the Building Authority to confirm that works required under a building order have been completed; it has no relation to the discharge of a mortgage.
• A second mortgage merely creates an additional charge over the property in favour of another lender; it does not indicate that the first mortgage has been discharged.

• A mortgage document bearing a notation "EXERCISE POWER OF SALE" indicates that the mortgagee has exercised the power of sale over the property and that the mortgage obligation has been extinguished.
• Charging orders registered against a previous owner are discharged upon the formal transfer of title to a new owner and no longer constitute encumbrances binding on the current owner.
• Currently subsisting encumbrances typically include a legal charge granted by the current owner and a memorandum registered in respect of outstanding management fees.

• When completing the "Property Information Form" (Form 1), the saleable area of a residential property must be obtained from the Rating and Valuation Department's information system (IRIS), which is the prescribed source for this purpose.
• Documents such as the Occupation Permit, the Deed of Mutual Covenant with Plans, and various assignments do not qualify as prescribed sources for saleable area information for the purposes of Form 1.

• The unexpired term of a government lease is calculated as: (lease commencement year + total term) − search date year. For example, a 999-year lease commencing 7 January 1862, searched on 7 January 2013: (1862 + 999) − 2013 = 848 years.
• The total lease term (e.g. 999 years) is not the remaining term as at the date of search.

• The Deed of Mutual Covenant (DMC) contains the covenants, management rules, and the rights and obligations that all owners of the building must observe.
• An Assignment merely records the transfer of title of a particular interest and does not cover the general rights and obligations of all owners.
• The Conditions of Exchange is a government land grant document that sets out the obligations of the owners towards the Government.
• An Agreement for Sale and Purchase is a document for an individual transaction and does not set out the general obligations of owners.

• Under section 8 of the Government Rent (Assessment and Collection) Ordinance (Cap. 515), government rent for leases granted or renewed on or after 1 July 1997 is charged at 3% of the annual rateable value of the property.
• Under the Rating Ordinance (Cap. 116), rates are calculated as a percentage of the rateable value, with the percentage set by the annual Budget.
• Both rates and government rent are based on the rateable value assessed by the Rating and Valuation Department, but their legal bases differ: rates are governed by Cap. 116 and government rent by Cap. 515.

• Under s.3 of the Land Registration Ordinance (Cap. 128), registered instruments have priority over unregistered instruments.
• Under s.5, if an instrument is registered within one month of execution, its priority backdates to the execution date; if registered after one month, priority runs only from the date of registration.
• New Territories leases commencing 1 July 1898 (99 years less 3 days) have been automatically renewed until 30 June 2047, with rent payable at 3% of rateable value.
• Unregistered interests do not constitute notice to subsequent purchasers (s.4).

• TPS resale restrictions have three stages: in the first 2 years, the unit can only be sold back to the Housing Authority at the original price; from year 3 to year 5, it may be offered to the HA at market value minus the discount; after 5 years, it can be sold on the open market upon payment of the premium.
• The premium must be paid within 28 days; selling without paying the premium is a criminal offence punishable by a maximum fine of HK$500,000 and 1 year's imprisonment, and the sale is void.

• Once a DMC is registered at the Land Registry, it is legally binding on all present and future owners of the development, including clauses restricting the use of properties.
• Common parts as defined by the DMC (e.g. external walls, rooftop) are jointly owned by all owners according to their undivided shares, and owners may not unilaterally occupy or alter common parts.
• Restrictive covenants in a DMC do not automatically lapse with the passage of time; amendment typically requires the consent of all owners or a court order.

• An Occupation Permit is issued by the Building Authority pursuant to the Buildings Ordinance (Cap. 123).
• The Occupation Permit typically records the approved use of each unit, the year of completion of the building, and the total number of units on each floor.
• The Occupation Permit does not contain any floor area information (whether gross floor area or saleable area), nor does it relate to the term of any government land lease.

• The permitted use of land may be ascertained from the Outline Zoning Plan prepared by the Town Planning Board and from the government lease or conditions of grant.
• The Land Registry search records of the flat intended to be purchased do not contain information relating to the permitted use of adjoining lots.

• A Deed of Mutual Covenant is entered into between the developer and the first purchaser, and is equally binding on all subsequent assignees.
• The content of a DMC typically covers: the name of the first purchaser, the allocation of undivided shares to each part of the building, the definition of common parts, and the proportionate share of management fees.
• Management fees are generally apportioned among unit owners in proportion to their respective undivided shares.

• Under section 14 of the Buildings Ordinance (Cap. 123), any person intending to carry out building works involving a change of the approved use of a building must first submit building plans signed by an Authorized Person (AP) and obtain the approval of the Building Authority.
• A material change in the use of a building without approval requires notification to the Building Authority (s.25(1)), which may issue an order requiring cessation of the unauthorised use.
• An application to change the permitted use must be made to the Building Authority (the Director of Buildings), not the Rating and Valuation Department, and is not achievable merely upon payment of a land premium.

• Under section 21 of the Buildings Ordinance (Cap. 123), no person shall occupy a building before the Building Authority issues an occupation permit, except for a maximum of 2 caretakers.
• The Building Authority under the Buildings Ordinance is the Director of Buildings.
• Building works of a structural nature require an Authorised Person to be appointed to prepare plans for the Building Authority's approval; minor works not involving structural alterations may be exempted under s.41(3).

• Under the Building Management Ordinance (Cap. 344), the management committee must apply to the Land Registrar within 28 days for registration of the owners' corporation.
• Owners holding not less than 5% of the shares may convene an owners' meeting to discuss the formation of an owners' corporation.
• An owners' corporation is responsible for keeping the common parts in good repair, carrying out works required by government departments, and performing the management responsibilities stipulated in the DMC.

• Under the Buildings Ordinance (Cap. 123), a certificate of compliance issued by the Building Authority is the authoritative document confirming that an order (including an order to demolish an unauthorised structure) has been duly carried out.
• The Building Authority is the Director of Buildings, exercising statutory functions under the Buildings Ordinance.

A standard valuation report generally must state the date of valuation and the assessed value of the property. The prevailing mortgage interest rate and the fee charged for the report are not typically included as essential contents of a valuation report.

• The comparison method is suitable for properties with sufficient comparable market transactions available. Residential flats are the most typical application.
• The profits method is primarily used to value properties whose worth is based on their profit-generating potential, such as hotels, cinemas and petrol stations.
• The residual method is the principal means of valuing development land — land value is derived by deducting total development costs from the estimated market value of the completed development.
• The cost (contractor's) method is used for special-purpose properties lacking sufficient comparable transactions.

• According to the Hong Kong Institute of Surveyors Valuation Standards, when applying the Comparison Method, systematic adjustments must be made for all differential factors in each comparable transaction (including size, floor level, location, time of transaction, and view).
• The core principle requires the valuer to identify and quantify each adjustment factor: time adjustments, location adjustments, and individual property characteristic adjustments.
• Comparable transactions should ideally be close to the valuation date, but more distant transactions are usable with appropriate time adjustments.

• The Cost Approach is applicable to special-purpose properties with few or no comparable market transactions, such as industrial plants, schools, and temples.
• The standard procedure: (1) estimate the current market value of the land; (2) calculate the replacement cost of the building (Modern Equivalent Asset); (3) deduct three categories of depreciation — physical deterioration, functional obsolescence, and economic obsolescence; (4) add the depreciated building value to the land value.
• Replacement Cost (a modern equivalent building) differs from Reproduction Cost (an exact replica); the Cost Approach generally adopts Replacement Cost.

• Core principle of the Income Approach: Market valuation should be based on Market Rental Value (MRV) rather than contract rent, consistent with the requirements of HKIS Valuation Standards VS 3.
• Calculation of net rental income: All outgoings payable by the landlord (rates, government rent, management fees) must be deducted from gross rental income before the net income figure is capitalised.
• Capitalisation formula: Market Value = Net Annual Income ÷ Capitalisation Rate; the division must not be confused with multiplication.

• The core formula of the residual method is: Land Value = GDV (Gross Development Value) minus all development costs, including construction costs, interest, professional fees, marketing costs, and developer's profit.
• The residual method is primarily used for land valuation of development sites. The Discounted Cash Flow (DCF) method is an extension of the residual method that incorporates the time value of money.

• For a lease exceeding 3 years, the applicable stamp duty rate is 1% of the annual rent or average annual rent.
• The renewal option (including its rent and term) is not taken into account when calculating stamp duty on the original lease.
• A rent-free period reduces the actual rent collected, which affects the average annual rent calculation.
• Total stamp duty payable also includes a small counterpart fee (e.g. HK$5).

• A tenancy agreement must be stamped in accordance with the Stamp Duty Ordinance (Cap. 117), within 30 days of execution; late stamping attracts a maximum penalty of ten times the duty payable.
• A tenancy agreement containing a renewal option or purchase option should be registered at the Land Registry so that the option is binding on third parties.
• A lease not exceeding 3 years at a market rent is an overriding interest and protects the tenant even without registration; however, a renewal option must be registered to be enforceable against third parties.

• Under Part IV of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), statutory implied covenants in a residential tenancy include: the tenant shall not make structural alterations without the landlord's consent, and the tenant shall pay rent within 15 days of the due date.
• A prohibition on keeping animals is NOT a statutory implied covenant under Part IV of Cap. 7; it must be expressly included in the tenancy agreement to be enforceable.
• Breach of a statutory implied covenant may entitle the landlord to forfeit the tenancy.

• When handling a subletting transaction, the agent must verify whether the head tenancy contains a prohibition or restriction on subletting.
• If subletting is prohibited under the head tenancy, the agent must obtain written consent from the head landlord before proceeding.
• The term of the sub-tenancy must not exceed the remaining term of the head tenancy.
• There is no statutory requirement to notify the Buildings Department merely because a property is sublet.

• Under Part IV of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), residential tenancies carry a statutory implied covenant obliging the landlord to repair and maintain the structure and exterior of the premises, irrespective of whether the tenancy agreement contains any express provision.
• The 'fair wear and tear' exception does not exempt a landlord from repairing structural water seepage defects.
• Any term in a tenancy agreement that purports to exclude or restrict the statutory protections conferred on the tenant by Part IV of Cap. 7 is not binding on the tenant.
• The implied covenant of quiet enjoyment entitles the tenant to use the property without interference by the landlord.

• The rent control and rent assessment committee system under the predecessor provisions of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) was fully abolished in the 1990s; the current Cap. 7 no longer provides any rent control mechanism for private residential premises.
• The current Part IV of Cap. 7 primarily deals with implied covenants and forfeiture of tenancy; it does not confer on tenants any statutory right to apply for determination of market rent. Rent levels are freely negotiated.
• Although the Lands Tribunal handles tenancy disputes, its functions do not include proactively determining a 'fair market rent' outside a rent control framework.

• Form CR109 is required to be submitted to the Rating and Valuation Department only in respect of residential properties.
• The two triggering events for Form CR109 are: (1) the grant of a new residential tenancy agreement, and (2) the renewal of an existing residential tenancy.
• The landlord must submit Form CR109 within 1 month of the tenancy; a late penalty applies, and a landlord who fails to submit it cannot sue the tenant for rent under that tenancy.

• Lawful methods of terminating a tenancy include expiry of the term followed by the tenant vacating, mutual agreement to terminate early, and exercise of a break clause.
• Under common law, termination of a monthly tenancy requires notice equivalent to one full rental period (one month), aligned with the rent payment cycle.
• A landlord wishing to recover possession must obtain a recovery order through the Lands Tribunal; self-help eviction (e.g. changing locks) without a court order is unlawful and may constitute a criminal offence.

• A licence confers only a personal right to use the property on the licensee; the landlord may revoke it at any time and the licensee does not enjoy a legal estate in land.
• A tenancy grants the tenant exclusive possession, whereas a licence is characterised by the owner retaining the right to enter and revoke at any time, with the licensee having no right to assign.
• For new tenancies entered into after 9 July 2004, security of tenure under Part IV of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) has been abolished and such tenancies are governed by common law only.

• Each place of business must be under the 'effective and independent' control of an appointed manager (Estate Agents Ordinance, s. 38(1)(a)).
• A branch manager must hold an estate agent's licence; a licensed salesperson does not satisfy this requirement.
• The same person cannot simultaneously act as manager of two places of business, as this would violate the requirement for 'independent control'.
• Length of service is not a determining factor; what matters is the type of licence held.

• A separate business details statement must be applied for in respect of each place of business and business name (Licensing Regulation, s.10).
• The appointment or revocation of appointment of a manager must be notified to the Authority within thirty-one days (Estate Agents Ordinance, s.40).
• There is no requirement to separately notify the Authority merely because a new branch has commenced operation.
• Not every director is required to hold a licence; however, at least one director must be licensed, and any director who carries on estate agency work must be individually licensed (s.20).

• Practitioners who suspect a transaction involves money laundering must file a Suspicious Transaction Report with the Joint Financial Intelligence Unit (JFIU).
• AML measures include monitoring FATF statements, strictly verifying client identity, setting out transaction details in agreements, and retaining records for at least five years.
• Identifying and verifying the beneficial owner is a key step, particularly in transactions involving corporate structures or trusts.
• There is no legal requirement to submit copies of all agreements to the Hong Kong Police Force.

• A branch manager has a duty to prohibit the use of pirated or unauthorised software within the branch.
• A branch manager must establish and implement IT security procedures to mitigate potential IT security risks.
• When engaging IT outsourcing service providers, contracts should include provisions protecting the confidentiality of computer system data.

• Matters requiring notification to the Estate Agents Authority include the employment of a salesperson, the appointment of a branch manager, and the appointment of a director of the company.
• The internal transfer or redeployment of a salesperson between branches does not constitute a matter requiring notification to the EAA.

• Employing an unlicensed person to carry out estate agency work may simultaneously give rise to three categories of consequences: disciplinary action by the Estate Agents Authority, civil liability to any person who suffers loss, and criminal prosecution under the Estate Agents Ordinance.
• All three consequences may apply concurrently and are not mutually exclusive.

• An employer may incur vicarious liability for acts committed by an employee "in the course of employment", even without express authorisation or knowledge.
• An estate agency firm is vicariously liable for the acts of its agents or salespersons done in the course of employment, even if the employee is engaged on a commission-only basis.
• Under section 15 of the Estate Agents (Licensing) Regulation (Cap. 511B), an estate agency firm must establish procedures to supervise employees' compliance with relevant legislation.
• The EAA has the power to take disciplinary action against an estate agency firm for failure to properly manage and supervise its salespersons.

• A licensed estate agent intending to open a new place of business is required to notify the EAA, but is NOT required to obtain prior approval before commencing business.
• Each place of business must have a licensed estate agent (individual) appointed as its manager (s.38).
• Professional indemnity insurance must cover the business activities of all offices; provided the existing policy extends to the new branch, no separate policy for each branch is required.
• A licence must be displayed in a conspicuous place at the office premises for public inspection (s.39).

• During the first month of probation, either employer or employee may terminate the contract without notice or payment in lieu; after the first month, not less than 7 days' notice or payment in lieu is required.
• Wages must be paid within 7 days after the end of the wage period.
• Under Employment Ordinance s.11AA, a year-end payment is presumed non-discretionary unless expressly stated otherwise in writing in the employment contract.
• Summary dismissal without notice is only justified in serious cases such as wilful disobedience, misconduct, fraud, or habitual neglect.

• Under the Partnership Ordinance s.7, each partner is an agent of the firm and contracts within a partner's authority bind the firm.
• Under the Partnership Ordinance s.11, each partner is jointly liable for ALL partnership debts with unlimited liability.
• A partnership is NOT a body corporate and has no separate legal identity, unlike a limited company.

• Under section 37 of the Estate Agents Ordinance (Cap. 511), licensees must properly maintain business records; the statutory retention period is three years.
• The EAA's advertising guidelines require that all property advertisements state the licence number of the licensee responsible for the advertisement.
• Once a licensee suspects a client of money laundering, the licensee must NOT tip off the client, as doing so is an offence.
• Under CPD requirements, a licensed estate agent must complete a minimum of 15 CPD credits per CPD cycle, of which at least 3 must come from core subjects.