1. I want to purchase a flat. What should I do before I sign the provisional sale and purchase agreement and pay the initial deposit?
Ask your agent or the vendor whether there is anything that may affect or lower the value of the flat, or better still, try to obtain a copy of the land search record about the flat.
What is a land search?
A land search is a search of a property maintained by the Land Registry of the HKSAR Government, which records the transactions relating to the history of the flat and other relevant information. For example, it will show you things like:
- the present owner of the flat and all the previous owners of the flat;
- details of the flat (e.g. the address and government lease term of the relevant land lot);
- whether there is any government order in respect of the flat that has not yet been complied with (e.g. a repairing order, or an order to demolish an unauthorized structure);
- whether there is any mortgage not yet discharged;
- whether there is any lawsuit concerning the flat (e.g. a bank suing the owner for some outstanding mortgage repayments).
The land search record only shows you general information plus an outline of any encumbrances (see below) about a property. It would be helpful if you can obtain the record before you sign the provisional agreement. However, you cannot rely on such record to complete the whole transaction without the assistance of a solicitor.
Encumbrance is a charge or liability which the flat is subject to or anything that can (i) reduce the value of a flat or (ii) obstruct the owner from selling a flat. Examples of encumbrances are: mortgages, a covenant (a formal agreement or promise) restricting the use of the flat, or charging orders imposed by the government or by an individual. Your solicitor must inform you (in any event not later than completion date for the sale and purchase) about any encumbrances found in the land search record or the title deeds.
For more information about land searches, please visit the Land Registry's webpage.