Buying overseas property can be a highly risky investment.
And particularly if you have to rely solely on your local agents, acting as intermediaries in the transactions, for information on property that is put on sale before construction.
The Consumer Council has recently received a number of complaints concerning the purchase of a villa development in a Southeast Asian country.
The information provided by the local estate and property agency indicated that the construction time would be about 12 months, with the anticipated completion date between July 2004 and 2005.
Furthermore, buyers were guaranteed a fixed net return of 12% per annum for 8 years, and offered one month per year to enjoy free personal use of a villa in the development.
The agency had allegedly assured the buyers verbally that the company possessed specialized expertise in the field, and would take care of all matters on their behalf in respect of the development from start to finish and act as a liaison with the developer overseas.
Todate, the property development remains uncompleted. The developer has put the blame on the weather conditions and land title problems for the delay.
The buyers have sought the assistance of the Council in complaints against the local agency for alleged negligence and misleading representations.
The Council has also received complaints relating to the purchase of property in the mainland.
For example, in one case, the buyer was assured by the Hong Kong estate agent that the "Planned Land Use" in front of the property she bought was earmarked for building a park.
But much to her chagrin, she was later informed that the land would be used for the construction of a multi-storey building effectively blocking the view of the property.
In another case, the complainant bought a mainland property through a Hong Kong investment company in 2000. Recently he received a letter that he was in debt of $8,000 in tax to the government there.
According to the complainant, he had fully settled all payments at the time of the purchase with the company and was at a loss why he still owed the tax payment.
Consumers are advised of the risks involved in relying totally on the local estate agent in the purchase of property overseas, without personally having a site inspection or finding out from the relevant authorities of that country concerning the regulations, procedures and legal protection there.
They should also be aware that the sale of overseas properties by estate agents in Hong Kong is not governed under the Estate Agents Ordinance which provides exemption for estate agents and salespersons dealing exclusively with properties outside Hong Kong.
The Estate Agents (Exemption From Licensing) Order provides exemption to a person from the requirement for obtaining an estate agent's licence or a salesperson's licence if he -
(a) does so exclusively in relation to properties outside Hong Kong; and
(b) states in all his letters, accounts, receipts, pamphlets, brochures and other documents and in any advertisement that he is not licensed to deal with any properly situated in Hong Kong.
In the first 9 month of this year, the Council received 13 complaint cases related to overseas property compared with 5 cases for the whole of last year.
For more guidance, potential buyers of overseas property are advised to refer to the report in this (October) issue of CHOICE.
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