Second-Hand Housing Estate Purchase Turns Sour: Buyer Loses Deposit Due to Hidden Debts

Ms. Lin, a prospective homeowner, had been saving for years to purchase her dream home. She finally found a second-hand housing estate in Tseung Kwan O that fit her budget of $7 million. After signing a provisional sale and purchase agreement, she paid a deposit of $700,000, thinking she had secured her new home.

However, during the transaction process, it was discovered that the original owner owed approximately $5 million to banks and finance companies. Ms. Lin thought this amount could be deducted from the property price, but things took a turn for the worse. The property was found to have been deeded, and the original owner had owed money to another external finance company, resulting in insolvency.

The unit was “nailed” after the discovery, and Ms. Lin’s deposit of $700,000 was at risk of being forfeited. She questioned the professional ethics of the seller and his attorney, suspecting that they had deliberately concealed the incident. This led her to file a complaint with the Lawyers Association.

Suspicious Aspects of the Incident

Many netizens have raised concerns about the seller’s lawyer, questioning whether they had engaged in professional misconduct or had “trapped the seller.” Two major issues have been identified in the incident.

Firstly, when Ms. Lin signed the provisional sale and purchase agreement, the unit had a third mortgage that was not disclosed in the documents from the Land and Land Department. This led Ms. Lin to believe that the unit only had two mortgages, with a total amount less than $7 million.

Secondly, the seller’s lawyer had represented both the seller and the person who carried out the three mortgages. This has raised concerns about the lawyer’s actions and identity, with many netizens questioning whether there was something wrong with the situation.

Lessons Learned

This incident highlights the importance of thorough research and due diligence when purchasing second-hand properties. Buyers should be cautious of units that have been mortgaged or “nailed” to avoid potential pitfalls. It is also essential to work with reputable lawyers and ensure that all parties involved are transparent about their actions and interests.