HK Agreement for Sale and Purchase: Cap. 219 Template

The agreement for sale and purchase is a contract for the sale of land, not the transfer itself. Hong Kong keeps the two apart. The agreement creates binding obligations and gives the purchaser an equitable interest in the property; the legal estate passes later, on completion, through an assignment executed as a deed under section 4 of the Conveyancing and Property Ordinance (Cap. 219) and registered at the Land Registry.

Practitioners distinguish three documents in the same chain. The provisional agreement, known in the market as the PASP, is the short contract signed through the estate agent and carrying the initial deposit, customarily 5 per cent of the price. The formal agreement, or ASP, is the full contract prepared by the solicitors, usually within 14 days, which takes the deposit to 10 per cent and sets out title, requisitions, apportionments and the completion machinery. The assignment completes the sale. A provisional agreement is a binding contract, not a reservation form, and a party who walks away after signing it faces forfeiture of the deposit or an action for specific performance. Our template covers the first two stages and sits alongside the rest of the Hong Kong property and rental document templates.

Contracts for the sale of Hong Kong land are governed by section 3(1) of the Conveyancing and Property Ordinance (Cap. 219), under which no action may be brought on a contract for the sale of land unless the agreement, or a memorandum of it, is in writing and signed by the party against whom it is enforced. Oral bargains struck at a viewing are unenforceable in practice, which is why the provisional agreement is signed on the spot. The vendor's title obligations come from section 13(1): title must be proved from a good root at least 15 years old, while section 13A governs delivery of the original title deeds on completion. Most agreements incorporate by reference the conditions in Part A of the Second Schedule to Cap. 219, which supply the default rules on requisitions, apportionments and rescission.

Stamping is where transactions go wrong. Under the Stamp Duty Ordinance (Cap. 117), an agreement for sale must be stamped within 30 days after the earliest agreement for the same transaction, normally the provisional one; where the formal agreement is signed within 14 days of it, the period runs from the formal agreement instead. An unstamped agreement cannot be received in evidence in civil proceedings until the duty and any penalty have been paid. Since the cancellation of the demand-side measures, residential transactions attract ad valorem duty at the Scale 2 rates only, with Buyer's Stamp Duty and Special Stamp Duty no longer in force. A purchaser claiming the lower rates may be asked to swear a statutory declaration in Hong Kong jurat form. The GovHK guidance on the time limit for stamping agreements for sale and purchase sets out the Inland Revenue Department position.

Registration follows a separate clock. Hong Kong registers instruments rather than title, and under section 5 of the Land Registration Ordinance (Cap. 128) an instrument presented within one month of execution takes priority from its date of execution. Where an agent is involved, the Estate Agents Ordinance (Cap. 511) and the prescribed agency agreements govern commission and dual agency.

The ordinary case is the sale of a second-hand flat, shop, industrial unit or car parking space between private parties. Once price and completion date are agreed, someone has to write them down the same day, because a handshake gives neither side anything to enforce. Sales concluded without an estate agent are the second scenario: two neighbours, a landlord selling to a sitting tenant, a seller who found a buyer through a notice board in the lobby. Family transfers are the third, and they need care, since a transfer at less than market value can be treated as a voluntary disposition and creates title problems for the next purchaser.

Investors use the document in confirmor sub-sales, where a purchaser who has signed an agreement resells before completion and joins the eventual assignment as confirmor. The structure is legitimate but attracts a second charge to ad valorem duty, so each link in the chain has to be recorded accurately. Two edge cases deserve a flag. Where the vendor is a company, the agreement must be executed in accordance with the Companies Ordinance (Cap. 622) and the articles, with a board resolution approving the sale. Where the vendor has died, the sale is made by executors under a grant of probate, and the grant must be produced and registered before the purchaser's solicitors will accept title.

• The identification of the parties records the full name, identity card or passport number and address of every vendor and purchaser, matching the Land Registry record exactly. Where a company sells, the template captures the company number and the execution formalities required by the Companies Ordinance (Cap. 622), in the same way as the other commercial agreements drafted for Hong Kong incorporation rules.
• The description of the property covers the flat, floor, building, lot number and the undivided shares assigned to the unit under the Deed of Mutual Covenant, plus any car park or roof sold with it. A description that omits the undivided shares invites a requisition and delays completion.
• The price and deposit structure separates the initial deposit from the further deposit, states who holds the money and in what capacity, and confirms that the balance falls due on completion against delivery of the assignment.
• The completion clause fixes the date, the place, the firms involved and the mode of payment, usually a cashier order drawn on a licensed bank. It states that time is of the essence, which is standard in Hong Kong and turns a late completion into a repudiation rather than a delay.
• The title and requisitions clause obliges the vendor to give and show good title under section 13 of Cap. 219, incorporates the Part A conditions, and sets the window in which the purchaser may raise requisitions and the vendor must answer them.
• The vacant possession and apportionment clause records whether the property is sold with vacant possession or subject to a tenancy, lists the fittings included, and apportions rates, Government rent and management fees.
• The default clause deals with forfeiture of the deposit, resale of the property and the costs recoverable from the defaulting party, and allocates stamp duty and Land Registry fees between the parties.

Urban private residential flats on Hong Kong Island, in Kowloon and in the new towns are the simplest case. Title runs from the Government lease through the Deed of Mutual Covenant to the assignment of undivided shares. Watch for outstanding Buildings Department orders on unauthorised structures, because they bind the purchaser after completion and the vendor's implied covenants under section 35 of Cap. 219 rarely produce a useful remedy once the money has moved.

New Territories village houses and small houses carry restrictions that catch purchasers regularly. Many are held under a Government grant containing an alienation restriction requiring the written consent of the Director of Lands before assignment, and a premium may be payable. An agreement signed without checking the grant conditions can leave a vendor unable to complete, and an individual small house also falls outside the first-hand sales regime.

Home Ownership Scheme and subsidised flats are governed by the alienation restrictions in the Housing Ordinance (Cap. 283). During the restriction period the flat may only be sold to a buyer nominated by the Hong Kong Housing Authority through the Secondary Market Scheme, at a price that excludes the land premium. A sale in the open market requires payment of that premium first, and the agreement should record which party bears it and when.

Uncompleted flats sold by developers follow a different regime. The Residential Properties (First-hand Sales) Ordinance (Cap. 621) fixes the preliminary deposit at 5 per cent and requires the purchaser to execute the formal agreement within five working days, failing which the preliminary agreement is terminated and the deposit forfeited. These sales use the mandatory provisions and the standard forms of the Consent Scheme or the Law Society's Non-Consent Scheme, so a general template is not appropriate.

Commercial, industrial and car parking units attract duty on the non-residential scale. Permitted use under the Government lease and the occupation permit should be checked before signature, since a unit sold as a workshop and used as an office breaches the lease conditions. Buyers of parking spaces should confirm that the space is separately assigned rather than licensed under the DMC, a distinction that decides whether the buyer owns anything at all. Related paperwork sits with the personal and family documents prepared for Hong Kong law.

You begin by choosing whether you need the provisional agreement, the formal agreement or both, since the form adjusts the deposit structure and the completion machinery accordingly. Next come the parties, entered as they appear on the identity documents and on the Land Registry search, with a separate block for companies and their execution clause. The property section asks for the address, lot number, undivided shares and any parking space or roof included in the sale, then prompts you for the tenancy position so the vacant possession clause matches reality.

You then set the commercial terms: the price, the initial deposit, the further deposit, the completion date and the party responsible for each item of duty and fees. Fittings and apportionments follow, then the special conditions, where you record anything negotiated outside the standard terms, such as a subject to mortgage clause or an early handover for renovation. The finished document downloads in Word and PDF, ready for signature and for your solicitors, and the Hong Kong document library covers the paperwork that surrounds the transaction.

Most disputes start with the deposit. Parties agree a figure well above the customary 10 per cent believing it strengthens their hand, then discover on default that the excess is treated as a penalty rather than a true deposit, as the Court of Final Appeal held in Polyset Ltd v Panhandle Ltd. The second recurring error is treating the provisional agreement as informal. It gets signed in a hurry, omits the completion date or leaves the fittings undefined, and every gap becomes a negotiating point once the solicitors take over. A third is missing the stamping window, which runs from the earliest agreement in the chain, with penalties that multiply the further past the deadline the parties drift.

The rest are matters of homework. Sellers rarely check the Government lease or the Deed of Mutual Covenant before signing, so unauthorised structures, restrictions on use and pending Buildings Department orders surface only when the purchaser raises requisitions, by which time time is of the essence and the vendor has days rather than weeks to respond. Purchasers sign before their mortgage is approved and without a financing condition, then lose the deposit when the bank values the flat below the agreed price. Neither problem is expensive to prevent and both are expensive to litigate.