Selling a Domestic Property
Selling a domestic property takes work, which can make a stressful experience. Find here the information and pointers to help smoothen the sale process.
Looking for a Buyer
You can sell your property on your own, through an appointed agent or at an auction. If you decide to use an agent, remember to appoint only licensed agents. When signing the estate agency agreement with the appointed agents, pay attention to the following points:
- Validity period of the agreement;
- Amount of commission and time of payment;
- Whether the agency relationship is a “non-exclusive agency” or “exclusive agency”. In the latter case, the agent may charge you a commission even if the property is not sold through him/her but other estate agents;
- Whether the agent acts only for you or acts for both you and the purchaser. In the latter case, the agent needs to inform both parties of the dual agency and disclose the amount of commission he/she charges the other party.
Signing Provisional and Formal Agreement
Provisional Sale and Purchase Agreement
When you and the potential buyer agree on a negotiated price, both parties will enter into a provisional sale and purchase agreement. It is a legally binding contract that must be fully obeyed by the parties involved. If the formal sale and purchase agreement cannot be signed, the parties can rely on the provisional agreement to proceed with the deal or to sue for compensation.
The provisional agreement must include certain information such as the address and price of the flat, amount of initial and further deposit, when to sign the formal agreement, the completion day, etc. Access the link below for the usual items that must be included in a provisional agreement.More about provisional sale and purchase agreement
Formal Sale and Purchase Agreement
A formal sale and purchase agreement should be drafted by a solicitor based on the provisional agreement. It contains terms that are more detailed and is intended to replace the provisional agreement. You can include any special conditions you want as long as they do not violate any relevant ordinances or contradict the terms of the provisional sale and purchase agreement.More about formal sale and purchase agreementConsequences of breaching the sale and purchase agreement
Encumbrances against the Property
As a vendor, you should reveal to the purchaser the encumbrances against the property, if there is any, such as:
- government order for removal of unauthorized building work (UBW);
- unpaid property management fees;
- repair works of the building concerned;
- any mortgage over the flat that has not yet been discharged; or
- lawsuit concerning the flat.
Although the estate agent or the purchaser can check the above information by conducting a land search (if the encumbrances have been registered in the Land Registry), it is in your interest to reveal all the encumbrances and negotiate with the purchaser to avoid subsequent disputes, which could hamper the sale process. In addition, you have a duty to disclose the latent defects, which a purchaser cannot discover by a reasonable inspection of the property.Search Land RegisterMore about UBW
Stamp Duty is imposed on the agreement for sale of residential property. The rates vary with the amount or the value of the consideration. Access the links below for more information or online services.Stamp Duty ComputationStamp Duty RatesTime limit for stampingPersons liable for stampingSpecial Stamp Duty
Note: This article serves as a general guide only. In case of doubt, please refer to the relevant regulations or seek advice from the legal profession.