RECO3037 Chap.10 Land Contracts, Conveyancing and Completion
Land Contracts, Conveyancing and Completion
The writing requirement
A sale of land starts with a contract, and section 3(1) of the Conveyancing and Property Ordinance makes a land contract unenforceable by action unless it, or a memorandum of it, is in writing and signed by the person it is to be enforced against, or by that person's authorised agent. The memorandum must contain the parties, the price, the property and any particular terms agreed.
The chapter sets out the exceptions, a short lease that starts at once at the best rent without a premium, a sale by order of the court and part performance, and the different case of an agreement made subject to contract, which is no contract at all.
From negotiation to completion
An ordinary sale runs through negotiation, contract and completion.
A provisional agreement, often signed at an estate agent's office, records the parties, the property, the price, the deposits, the dates for the formal agreement and completion, and the commission. A further deposit is paid when the formal agreement is signed, bringing the total typically to ten per cent of the price, and the agreement is stamped and registered.
The vendor must then show good title, producing the deeds and answering requisitions, which the standard condition requires to be raised in writing no later than fourteen days before completion. On completion the balance is exchanged for the deed of assignment, in person or through a chain of solicitors' undertakings.
The chapter also covers the separate administrative schemes for buying a flat before it is built.
Deposits and time in the reported cases
The tutorial on conveyancing asks for a group of Hong Kong decisions to be reconciled, and the chapter does it fact by fact.
A conventional ten per cent deposit may be forfeited as earnest money without proof of loss, while a larger one must be reasonable in relation to the vendor's likely loss. Where time is of the essence and remains so, a purchaser who is late cannot obtain relief, as Dawson Enterprises v Talisteam held.
But a vendor whose own conduct caused the failure cannot forfeit the deposit, which is the lesson of China Pride Investment v Silverpole, and a notice making time essential must allow a reasonable time.
What this chapter covers
- 01
Section 3(1) and the four Ps of a memorandum
- 02
Part performance and agreements subject to contract
- 03
Consent and non-consent schemes for uncompleted flats
- 04
Estate agents, provisional agreements and deposits
- 05
Good title, requisitions and condition 7
- 06
Stamp duty and registration of the agreement
- 07
Exchange on completion and solicitors' undertakings
- 08
Forfeiture of deposits and time of the essence
Worked example · free
Can the vendor keep the deposit after a late completion
- 3Explain the effect of time being of the essence on the purchaser's duty.
- 3Explain why the court will not relieve the purchaser in Hong Kong.
- 3Decide whether the 10% deposit may be forfeited.
Key terms
- Party to Be Charged
- The person against whom a land contract is to be enforced, whose signature section 3(1) requires.
- Provisional Agreement
- The first written sale agreement, usually signed at an estate agent's office, fixing the price, deposits and timetable.
- Requisition on Title
- A written question or objection about the vendor's title that the purchaser raises and the vendor must answer.
- Earnest Money
- A deposit paid as a guarantee of performance, which may be forfeited without proof of loss if it is of conventional size.
- Deed of Assignment
- The deed that transfers the property to the purchaser on completion in exchange for the balance of the price.
- Part Performance
- Acts done under an oral land contract that let equity enforce it despite the lack of signed writing.
Land Contracts, Conveyancing and Completion FAQ
Is a land sale binding if it is not in writing?
Not enforceable by action, in most cases. Section 3(1) of the Conveyancing and Property Ordinance requires the agreement, or a memorandum of it, to be in writing and signed by the person against whom it is enforced. The exceptions are a short lease that starts at once, at the best rent and with no premium, a sale by order of the court, and a contract enforceable through part performance.
When can a vendor keep the purchaser's deposit?
When the purchaser has repudiated the contract, typically by failing to complete on time where time is of the essence. A deposit of the conventional ten per cent may be kept as earnest money; a larger one must be reasonable in relation to the vendor's likely loss. A vendor whose own conduct caused the failure to complete cannot rely on it to forfeit.
What is the deadline for raising requisitions on title?
Under condition 7(1) in Part A of the Second Schedule to the Ordinance, requisitions must be delivered in writing to the vendor's solicitors as soon as practicable after the title deeds are delivered, and in any event at least fourteen days before completion. The formal agreement usually adopts or sets an express time limit, so check its own wording too.
Exam move
Draw the sale as a line of dates, provisional agreement, formal agreement, requisition deadline and completion, and write beside each date what money changes hands and which document is signed. Then place each reported case on the line at the point where its dispute arose.
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