LCQ8: Disclosure to prospective property buyers of the requirement to provide facilities in private developments for public use
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    Following is a question by the Hon Lee Wing-tat and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (23 April):

Question:

    In connection with the disclosure by property developers and estate agents to prospective property buyers that certain facilities in private developments shall be open for public use in accordance with the land leases or deeds of dedication concerned, will the Government inform this Council:

(a) given that some sales brochures or property information provided by estate agents to prospective property buyers had depicted the club house and public open space on the podium as "club house with podium garden for exclusive use of residents", while some sales brochures stated that "owners shall be responsible for the maintenance of various items spelt out in clause 26(a) of the Special Conditions of the Land Grant" but failed to provide the contents of the clause, whether the Government and the Estate Agents Authority are aware of such situations;

(b) whether the Government has studied if consumers have been misled by such sales brochures and property information into believing wrongly that the public open space in the developments were for residents' exclusive use, and whether such sales brochures and property information have listed out the obligations to be discharged by property owners;

(c) whether it can set out in detail the information to be provided in sales brochures as stipulated in the Lands Department Consent Scheme, and whether the scope and conditions of opening up the facilities (such as open space) for public use in accordance with the land leases or deeds of dedication as well as the relevant obligations of owners are included in the information; if they are not included, whether the Government will amend the relevant requirements so that prospective buyers can have access to the relevant information through such sales brochures; and

(d) whether it knows if the information referred to in (c) are included in the guidelines issued by the Real Estate Developers Association of Hong Kong to its members on sales brochures; if such information is not included, whether it will ask the Association to revise the relevant guidelines?


Reply:

Madam President,

    In accordance with the Lands Department's Consent Scheme and the Guidelines for Sales Descriptions of Uncompleted Residential Properties issued by the Real Estate Developers Association of Hong Kong (.REDA・), developers should provide in the sales brochures specified property information, including salient points of the Government lease, and the information so provided must be accurate at the time of printing of the sales brochures.  In addition, in approving pre-sale applications from developers, the Lands Department will clearly state in its pre-sale consent letter that apart from strict compliance with the requirements of the Consent Scheme, developers should provide in the sales brochures information on the public facilities or public open space which developers (subsequently owners) are responsible for managing, operating and maintaining at their own expenses.  The sales brochures should also contain a statement indicating that owners will have to meet a proportion of the relevant expenses in the management charges.

    My reply to the four-part question is as follows:

(a) Developers are responsible for ensuring the accuracy of all the information contained in the sales brochures.  They may be legally liable if the sales brochures contain any inaccurate, misleading or false information.  Separately, the Estate Agents Authority (.EAA・) has issued practice circulars requiring estate agents to provide accurate property information to prospective purchasers.  In case of non-compliance with the practice circulars or provision of inaccurate and misleading information, the EAA can undertake disciplinary actions against the estate agents or suspend their licences under the Estate Agents Ordinance.  We have recently received comments and complaints about developers not having disclosed clearly salient points of the Government leases in the sales brochures of certain developments.  We have followed up on the cases concerned.

(b)&(c) As mentioned above, developers are required under the Consent Scheme to provide in sales brochures salient points of the Government lease (including lot number, lease term, user restrictions on the lot, onerous lease conditions which would restrict purchasers・ usual legal rights) and other specified items of information.  These include general description of the development; the identity of the intended manager if known; names of contractors and Authorized Persons; location plan showing prominent neighbouring facilities or features; layout plan showing communal facilities within the development; salient points of the Deed of Mutual Covenant (.DMC・) (including definition of common areas; terms of appointment of the management company; the basis of fixing management fees; the management fee deposit); anticipated completion date of the building; detailed plan of a typical floor; schedule of flat size; fittings and finishes; the location, number and dimensions of the carparks; date of printing of sales brochures; miscellaneous payments upon delivery of units to owners; slope maintenance responsibilities and contributions by owners; statement on the payment of preliminary deposit; and the amount to be forfeited in case of cancellation of the Sale and Purchase Agreement.

    In addition, in approving pre-sale applications from developers, the Lands Department will clearly state in its pre-sale consent letter that developers should provide in the sales brochures information on public facilities or public open space which developers (subsequently owners) are responsible for the managing, operating and maintaining at their own expenses.  The sales brochures should also contain a statement indicating that owners will have to meet a proportion of the relevant expenses in the management charges.

    In view of the relevant cases we have received and public concern about the provision of public facilities and public open space by private residential developments, we will explore with relevant parties, including the REDA, Consumer Council and EAA, ways to further enhance the disclosure in sales brochures of salient points of the Government lease, in particular information on areas which are to be opened for public use and maintained at owners' expenses.

(d) Under the REDA guidelines, developers are required to provide specified property information, including salient points of the Government lease and owners・ responsibilities to construct and maintain any facilities prescribed in the lease.  The REDA has also asked developers to use larger prints or texts of different colour in the sales brochures to highlight the relevant clauses about owners・ responsibilities regarding the maintenance of public facilities.  Prospective purchasers can also refer to the Government lease or DMC for details of the relevant clauses.  The REDA has already issued guidelines requiring developers to provide a copy of the Government lease and DMC at the sales offices for free inspection by prospective purchasers.

    In addition, the REDA has requested developers to appoint an independent auditor to certify that the sales arrangements and information contained in the sales brochures comply with the requirements of the REDA guidelines and to submit to it the relevant independent audit report.

Ends/Wednesday, April 23, 2008
Issued at HKT 12:05

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