There are plenty of things that I prefer to leave up to chance. Taking my chances on navigating a foreign city? No problem. Mulling over the purchase of a dress that’s on sale? All the time. But when it comes to retaining a real estate lawyer referrals are the way to go. And being a person who lets qualified consultants get on with their job rather than micromanaging them, I am all for lawyering up and letting an expert do the heavy lifting.
Lawyers get a bad rap pretty much the world over. In movies, they are usually portrayed as silver-tongued leeches preying on the misery of their victims — that is, their clients. In a city like Hong Kong, where people tend to avoid the hassle of taking someone to court (feng shui masters and real estate tycoons excepted), lawyers are not held with the same degree of contempt. Nevertheless, it is worth your while to ask friends for recommendations. When you are about to make the largest purchase of your life, things go more smoothly when dealing with someone that you’re in sync with.
Get What You Pay For
After you and the flat seller have reached a provisional agreement, this is when the real estate lawyer takes over. A solicitor’s fee will typically run between 0.075 to 0.125 percent of the flat’s purchase price: if your flat is $5 million, expect to fork out between $3,750 to $5,625. Just like your real estate agent, consider your lawyer an advocate. Their job is to navigate you through the legal mumbo jumbo that the transaction requires. Your lawyer’s responsibilities include conducting land searches, advising you how to act upon existing building orders you may be inheriting, working out a schedule for interim payments, liaising with your mortgage lender and, in direct sale cases where there is no estate agent involved, provide all the necessary documentation to do the deal properly between you and the vendor.
When I was ready to make an offer on a Western District flat, I began asking my homeowning friends if they could recommend their lawyers. One simply used someone her agent recommended, and admitted that she didn’t get the best service — her lawyer was sometimes hard to reach or slow to reply. Another recommended her general practitioner, who she used for anything related to her family’s business as well as the purchase of her flat a few years before. A third friend, who was closing the deal on a flat the same month I was contemplating mine, was the most enthusiastic about her solicitor. Unlike the others, this particular lawyer was a partner within a firm and the office was in Central. As it was a solicitor specialising in real estate and the fee was competitive, I decided to go with the third recommendation.
I knew that Jessie was the right choice as soon as we contacted each other. I sent her a detailed email with my concerns about the flat I had my eye on, and she called me within half a day to speak about each of my queries individually as well as to review the land registry search her firm had conducted. Although it seemed quite straightforward (the flat only had one owner during its entire lifetime) she brought up an anomaly: the owner’s name was spelled two different ways. Jessie advised that I confirm the name with the owner’s Hong Kong identity card when I get the chance, to ensure that she was the rightful owner.
We then discussed whether the flat or the building was haunted, to prevent any issues with the mortgage approval process. She said that although there are websites that list flats where suicides or murders have occurred, they’re not comprehensive. Naturally, if an incident was in the news recently and covered by local media that’s another story. But if she couldn’t find any drama, it was likely that a bank wouldn’t either.
The flat also had an outstanding building order: the common areas in the underground car park needed sprucing up, and all owners had to chip in regardless of whether they had a car. As it was a recurring issue, the work required was straightforward and the dollar amount minimal, Jessie wasn’t too concerned that it would affect my mortgage application.
Sign and Pay
We met in person shortly afterwards after my agent faxed over the provisional agreement and I swung by her office to work out a payment schedule. Her office was clearly a hardworking one, with stacks of legal files piled in corridors and overflowing desks. Jessie was exactly what I expected: amiable, yet also very business-like, direct and thorough. I didn’t hesitate to ask questions, no matter how obvious the answer may be. She explained that in Hong Kong, properties change hands almost as frequently as stock shares. For solicitors handling these transactions, it’s a simple process. “All you have to keep in mind are the S&P dates,” she said. What’s S&P? “Sign and pay!” Jessie stated with a grin.
She outlined the three-stage process that all buyers go through. The first stage is when a provisional agreement is drawn up and the vendor accepts the initial two to four percent of the purchase price, usually in the form of a personal cheque. The second S&P date is approximately 10 days to two weeks after the provisional agreement. The amount is 10 percent of the total purchase price, minus the initial deposit. “This sum is banked into our law firm’s account,” she noted. “Keep the receipt and send it to us for confirmation, and we will then take care of the rest.”
It is at this point that you can apply for a mortgage. The application normally takes six to 10 weeks to process, with the third and final S&P date set roughly after when the bank is able to confirm the loan. If it isn’t for the full amount, you will need to make up the difference for the remaining 90 percent of the purchase price. In the meantime, if there are any hiccups, your lawyer can help you iron things out.
As I left Jessie’s office, I breathed a sigh of relief. It was reassuring to have a professional on my side, bringing me closer to finally living in my own home.