Steps to Buy and Sale Property in Hong Kong – below are the normal procedures to buy and sale property but it may vary according to the type of the property.
- Property Owners put their property in the Market for sale. This can be achieved by appointing a Sale Agency.
- The buyer negotiates (through an agent or by himself/herself) with the owner about the property's price and other terms.
- The buyer and owner sign the Provisional Agreement for Sale & Purchase. The buyer pays initial deposit (which is usually up to 5% of the purchase price) to owner.
Before signing, buyer needs to confirm the legal ownership of the property first. This is done by making a title search at the Land Registry, a Government department deposited with all property instruments on land. Either the estate agent or buyer's lawyer may do that on buyer behalf.
- After the buyer have signed the Provisional Agreement for Sale and Purchase, the estate agent will pass its copy to buyer's lawyer, who will contact the seller's lawyer. Both parties will negotiate and agree on terms of the formal agreement for sale and purchase. Within 14 days of signing the Provisional Agreement for Sale & Purchase, both buyer and owner should sign the Sale & Purchase Agreement to replace the previous signed Provisional Agreement for Sale & Purchase. After that, buyer's lawyer will arrange the buyer to sign and pay the remaining balance of deposit. By this stage, buyer will be paying a lump sum equal to 10% of the property price.
- The Solicitor will perform the tasks of - Pay stamp duty and Registers the Sale & Purchase Agreement in the Land Registry to protect buyer's interest in the property.
- Both parties discuss and agree on a date for completion of transaction. Usually, it depends on how long it need for the buyer to arrange the mortgage. It would be around one month in most cases.
It is easy to get a mortgage in Hong Kong if the borrower have a stream of income. Local financing is widely available for foreign residents. Many banks in Hong Kong are extremely active in the mortgage loan market. They offer terms to home buyers with competitive rates. The loan term can be as long as up to 25 years.
- The purchaser's lawyer drafts the Assignment Deed (transferring ownership from vendor to purchaser) and gives a copy to the vendor's lawyer for approval.
- The buyer inspects the property before signing the Assignment Deed to ensure that the owner abides by the terms in the Sale & Purchase Agreement.
- Buyer and Owner sign the Assignment Deed. An assignment is a deed which helps to transfer the property's title to the buyer. The buyer can arrange payment by financing.
- Lawyer will do this for the buyer in order to protect purchaser's interest in the property. Once the registration process is completed, Lawyer will provide the registered deeds and the property will be under new owner’s name. In case the purchase is financed by a bank's mortgage, the registered deeds will be passed to the bank for their custody as a lending security.
- Purchase price is paid by cheques drawn at buyer's custodian bank account. Lawyer will arrange with the purchaser to ensure that the money is available in the account for the cheque payment. The safest thing is to transfer the money in custodian account several days before the completion date to enable sufficient time for fund clearance. This is extremely important in Hong Kong because non-payment before the agreed completion time will result in breach of agreement. Breach will result in loss of deposit and a seller's claim for other losses. When the buyer's lawyer has paid the purchase price in full to the seller, the seller will send the keys of the property to the lawyer and enable the buyer to take possession of it.
- Transaction Costs: Commission and Legal Cost. Real estate agent commissions are typically 1% of the price and are paid by the seller and the buyer each. The legal fee to the lawyer is by agreement. There is no standard fee. Agree the fee with own lawyer before appointment to deal with the conveyance. The buyer must pay the expenses registering the new deeds. The amount is fixed by the Government.
- Whole process for the Transaction is completed.