HONG KONG: Think twice before you invest in overseas property. Buyers who do so are taking a risk and may not be protected by the existing ordinance.
The warning was issued after the Consumer Council received 13 complaints related to the purchase of development projects outside Hong Kong in the first nine months this year, compared to only five such complaints reported last year.
Among the cases filed, 12 involved the same property agent selling a villa development in Thailand at a real estate fair in 2003. According to the complainants, information provided by the intermediary showed that construction would take about a year, with completion scheduled for 2005.
Each buyer paid a down payment ranging from $63,000 to $170,000. The villa development, however, is still not completed. The developer blamed weather conditions and land title problems.
As the mediation is still ongoing, the watchdog declined to disclose the name of the agent and the location of the villa project.
In another recent complaint, a buyer purchased a flat on the mainland through a Hong Kong property agent.
She was assured that the land in the vicinity of her property was planned for a park. The adjacent property proved to be the site for a multi-story building which blocked the scenery.
The complainant could not opt for another unit or request the return of her deposit. The agent insisted the sales brochure indicated that a building would be built on the land concerned.
Ambrose Ho, chairman of publicity and community relations committee of the Consumer Council, said the intermediary has the responsibility to ensure that all information provided to consumers is correct, even in the case of an overseas property.
"Agents have legal liability if it is confirmed that the buyers suffer a loss from their misinterpretation," Ho said.
He added consumers should learn about any development project comprehensively including government remarks and reimbursements over construction delays before making any purchase.
The watchdog also noted that more Hong Kong people have purchased overseas development projects in recent years but that the existing Estate Agents Ordinance may not provide full protection.
Estate agents and salespersons dealing exclusively with properties abroad are exempt from licensing that is under the governance of the ordinance.
The agent in the Thai villa case is exempt. That means the complainants may not be compensated.
Ho urged the ordinance be reviewed to extend coverage.
"It was compiled more than a decade ago ... We cannot see the reason why the licensing system is limited only to local property sale, as the intermediary also has the responsibility to assist buyers in selling overseas projects," he said.
The spokesperson of the Estate Agents Authority, which regulates the intermediary's practice in Hong Kong, said the authority reckons that there are different legislations and governance in different regions and that it will involve very complicated legal problems if they are to monitor the sale of overseas property. But if any licensees are found to misbehave when they sell overseas properties, the authority would carry out an investigation, the spokesperson added.
(HK Edition 10/16/2009 page1)