Sales of First-hand Residential Properties Authority

Mr A will get married soon. He took the advice from an estate agent whom he was familiar with and purchased a first-hand residential property. The estate agent told him that the estimated material date stated in the sale brochure was tantamount to the date on which residential properties would be handed over to purchasers and that he would be able to take over the property purchased two months in advance of his big day. The weather was unstable these days. Mr A was worried that the date on which he could take over the property would be deferred and did not know who he could turn to.

Advice from the SRPA:

Purchasers should ask the vendors direct if they have any doubt over the date on which residential properties will be handed over to purchasers.

According to the Residential Properties (First-hand Sales) Ordinance (the Ordinance), for a development with first-hand uncompleted residential properties or completed residential properties pending compliance, the vendor must state in the sales brochure, advertisements and agreements for sale and purchase (ASP) the estimated material date for the development, as provided by the authorized person for the development.

What is “material date”?

Generally speaking, “material date” means the date on which the conditions of the land grant are complied with in respect of the development, or the date on which the development is completed in all respects in compliance with the approved building plans or the conditions subject to which the certificate of exemption is issued.
For development which is subject to the Lands Department Consent Scheme, the vendor shall notify the purchaser in writing that it is in a position validly to assign the property within one month after the issue of the Certificate of Compliance or the Consent to Assign, whichever first happens.
For development which is not subject to the Lands Department Consent Scheme, the vendor shall notify the purchaser in writing that it is in a position validly to assign the property within 6 months after the issue of the Occupation Document including Occupation Permit.

Agreement for Sale and Purchase (ASP) must contain mandatory provisions on “material date”

The Ordinance stipulates that the ASP for a residential property in an uncompleted residential development must contain mandatory provisions about “material date” as set out in Schedule 5 of the Ordinance, such as:

The ASP must set out the estimated material date for the development as provided by the authorized person for the development and states that the vendor shall complete the development in all respects in compliance with the conditions of the Government Grant and the building plans (if any) on or before the estimated material date subject to such extensions of time as may be granted by the authorized person.
The ASP must state that the vendor is entitled to such extensions of time for completion of the development beyond the specified estimated material date in the ASP and appear to the authorized person to be reasonable having regard to delays caused exclusively by any one or more of the following reasons –
(a) strike or lock-out of workmen;
(b) riots or civil commotion;
(c) force majeure or Act of God;
(d) fire or other accident beyond the vendor’s control;
(e) war; or
(f) inclement weather. (“Inclement weather” means rainfall in excess of 20 millimetres in a twenty-four hour period (mid-night to mid-night) as recorded at the Hong Kong Observatory, or the issue of a Black Rainstorm Warning Signal, or the hoisting of Typhoon Signal No. 8 or above, at any time between the hours of 8 a.m. and 5 p.m.)
The ASP also states that the vendor shall within 14 days after the issue of any such extensions of time granted by the authorized person furnish the purchaser with a copy of the relevant certificate of extension.

As such, purchasers must not assume that the “material date” is tantamount to the date on which they can take over the residential properties. To avoid incurring any unexpected expenditure due to possible extensions of time beyond the material date under the ASP, purchasers should check with the vendor on the take-over date of the residential properties.

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