LegCo Paper No. CB(1) 2031/95-96
(These minutes have been seen by the Administration)
Ref : CB1/BC/11/95/2

Bills Committee on Estate Agents Bill

Minutes of Meeting
held on Tuesday, 25 June 1996 at 4:30 pm
in Conference Room B of the Legislative Council Building

Members Present :

    Hon Andrew CHENG Kar-foo (Chairman)
    Hon Mrs Selina CHOW, OBE, JP
    Hon Edward S T HO, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon LEE Wing-tat
    Hon James TO Kun-sun
    Hon CHAN Yuen-han
    Dr Hon LAW Cheung-kwok
    Hon NGAN Kam-chuen

Members Absent :

    Hon Ronald ARCULLI, OBE, JP
    Hon LI Wah-ming

    Hon CHAN Kam-lam

Public Officers Attending :

Mr William SHIU
Principal Assistant Secretary for Housing
Miss Eva TO
Assistant Secretary for Housing
Ms Sherman CHAN
Senior Assistant Law Draftsman (Atg)

Attendance by Invitation :

Representatives from the Property Agencies Association Ltd by invitation
Mr TANG Hoi-tung
Chairman
Mr LI Man-pong
Vice-Chairman
Mr LOU Kuong-fai, Eddie
Chief Secretary
(Representative of Tokwawan District)
Mr CHEUNG Tak-woo
External Affairs Secretary and Editorial Officer
Mr Ricky TSE
Promotion Officer

Staff in Attendance :

Mrs Vivian KAM
Chief Assistant Secretary (1)2
Mr Stephen LAM
Assistant Legal Adviser 4
Miss Becky YU
Senior Assistant Secretary (1)3

I. Meeting with the Property Agencies Association Limited (PAA)

(LegCo Paper No. CB(1) 1656/95-96)

The Chairman advised members that the PAA had been invited to the meeting at the request of the PAA which had recently conducted a study tour to Singapore to understand the operations of estate agents in Singapore.

2. At the invitation of the Chairman, Messrs TANG Hoi-tung and LI Man-pong of the PAA briefed members on the study tour which had been arranged in conjunction with the Association of Singapore Realtors (ASR). Mr LI advised that there were no specific legislation governing the operation of estate agents in Singapore. The Property Tax Division of the Inland Revenue Authority (IRA) was the government department responsible for the issuance of corporate licences, the only licence required for undertaking house agency work, and the formulation of relevant policies. To qualify for a corporate licence, an applicant must satisfy all licensing requirements prescribed by the IRA, apart from the requirements for setting up a corporation. Individual salespersons were however not required to be licensed to work for house agents. The conduct of business of house agents, including the rate of commission charged, advertising and accounting report etc., were monitored by the ASR, a self-disciplined professional body, through the Code of Professional Conduct and Ethics. The ASR could exercise its power in accordance with its constitution to take disciplinary actions against its members in the event of breaches of the Code.

3. In response to members on the findings in the report, Mr TANG made the following points:

  1. there were no specific legislation on offences for malpractices of estate agents;
  2. only the proprietor or the director of a corporation was required to undertake the Common Examination for House Agents conducted by the IRA in order to obtain the requisite corporate licence;
  3. the minimum educational qualifications for house agents was three passes in the Ordinary Level Examination; and
  4. commission for property transactions was usually borne by the purchasers and this would be collected through solicitors to avoid defaults in payment.

4. Mr LI further supplemented that a Memorandum of Understanding had been signed between the ASR and the PAA to commemorate the collaboration of the two organizations to promote bilateral trade relationship and future visits, and to facilitate the exchange of training materials. He undertook to provide a copy of the Memorandum for members’ reference.

5. A member remarked that a direct comparison of the regulatory system between Singapore and Hong Kong was inappropriate since the former adopted a self-regulatory approach and this was different from the proposed positive licensing system in Hong Kong. She however considered it useful to pass on to the Estate Agents Authority (EAA) the relevant reference materials.

(Post-meeting note: The Memorandum and the reference materials had been circulated vide LegCo Paper No. CB(1) 1787/95-96.)

II. Meeting with the Administration

6. Members continued with the clause-by-clause examination of the Bill starting with Clause 49.

Part VI - Estate Agency Agreement

Clause 49. Estate agency agreement required as regards certain proposals and undertakings

7. Members urged the Administration to consider re-drafting the clause in plain language and to minimize the use of brackets as these were very cumbersome; complicated legal phrases such as "shall lie at the suit of" in sub-clause 49(1) should be avoided. Ms Sherman CHAN took note of members’ views but advised that the legal phrase referred to was commonly used in other legislation.

8. Members questioned the rationale for requiring a vendor’s agreement for advertising as this was at variance with current practices and might restrict owners’ choice of agencies. Mr William SHIU acknowledged that vendors were not required to sign agreements at the outset under existing practices and that this new practice would involve a change of working culture in the trade. The intentions of the clause were to avoid disputes arising from verbal instructions and confusions as a result of unclear obligations of estate agents. This would also ensure that the properties advertised were genuine. Members’ views were however divided in this respect: while some considered that vendors’ agreements should be voluntary, others considered a need both for stepping up publicity on the importance of estate agency agreements, and enforcement actions against non-compliance during the initial stage of implementation of the Bill. Mr SHIU took note of members’ views but re-iterated that an agreement was essential for the protection of the interests of all parties concerned. In reply to a related question, Miss Eva TO advised that regulations on advertising including the accuracy of information in advertisements and the related penalties on non-compliance had yet to be prescribed by the EAA.

9. Some members felt that the format of the estate agency agreement should be standardised by the EAA. Miss TO advised that the EAA could prescribe certain essential information such as the responsibilities and liabilities of parties concerned, mode of representation, commission payable and validity of agreement, etc. On the inclusion of sale prices of properties in agreements, Miss TO said that this would be decided by the EAA. Members urged the Administration to re-consider the need for including the listed prices since these would fluctuate in response to market changes.

10. Members sought clarification on the type of persons, apart from the clients, who would be liable to pay the estate agent, as stated in sub-clause 49(2). Ms CHAN advised that this might refer to persons who acted as agents for the clients under estate agency agreements or persons from whom outgoings were otherwise payable.

11. In reply to members, Mr SHIU confirmed that a salesperson would be signing on behalf of an estate agent when he signed an estate agency agreement. Ms CHAN supplemented that specific provisions under sub-clause 37(1)(a) would also apply to the salesperson under sub-clause 37(3)(a). On the question of exclusive agreements, Mr SHIU advised that since the Administration subscribed fully to free trade, there were no provisions in the Bill for exclusive agreements.

Dates of Next Meetings

12. The Chairman reminded members that the meeting on Tuesday, 2 July 1996, had been cancelled. The next meeting would be held on Thursday, 4 July 1996, at 10:45 am while an additional meeting was scheduled for Tuesday, 9 July 1996, at 4:30 pm.

13. There being no other business, the meeting closed at 6:35 pm.

LegCo Secretariat
4 September 1996

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