Vendor’s Title & Encumbrances
When you have found a suitable property, don’t rush to sign any contract. Make sure you are well informed of the vendor’s title and encumbrances against the property.
- Ascertain from the vendor whether he/she is selling the property in the capacity of the owner or in any other capacity.
- Ascertain whether any approval/consent from the Government or other authorities are required before the vendor can sign an agreement to sell the property and whether any premium has to be paid (e.g. for flats under the Home Ownership Scheme, owners must pay a premium to the Hong Kong Housing Authority for removal of the alienation restrictions before they can sell the flats in the open market).
- Ascertain from the vendor whether there are any subsisting mortgage, charge, government order, tenancy agreement, etc. relating to the property.
- Obtain a warranty from the vendor that neither the property has any illegal structure nor has it been altered.
- Ensure that the vendor is able to repay all outstanding liabilities, e.g. mortgage, management fees, Government rent and rates, before completion of the transaction.
- Ask the management company whether the Incorporated Owners of the building or all the co-owners are involved in any litigation.
You can ask the estate agent to provide you a land register of the property which lists out all the vendor’s encumbrances against the property. You can also make a search online or seek assistance from a lawyer.