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Purchasing a property in Hong Kong’s red-hot market can be stressful, especially if one is a first-time buyer. If complications set in, then anxiety levels increase even further. While the majority of transactions are completed relatively smoothly, there are still a significant number of cases that do not proceed as planned due to unforeseen situations, including forfeiture of deposit.
There can be any number of reasons for forfeiture: the buyer may have trouble raising funds to complete the purchase, or they may simply have second thoughts about the property, or there could be an unexpected change in circumstances, such as loss of job. One of the most common reasons for forfeiture of deposit is a bounced cheque.
Why might a cheque bounce? There could be an error in the information it contains regarding the payee, date or amount. The signature on the cheque may not match the bank’s record, or there may be insufficient balance in the account.
It is advisable, especially where comparatively large sums of money are involved, for the purchaser to take precautions. A formal bank draft — prepaid and issued by the bank — is a much safer option than a cheque. Or the buyer can pay the transactional amount to a lawyer, who then issues a cheque on the buyer’s behalf. Also, the buyer can seek assurances from the bank in advance that the cheque will be cleared.
To learn more about property rights and transactions in Hong Kong, please contact your Ally Law lawyer.
Click here to read the full article by Alex Liu of Ally Law member firm Boase Cohen & Collins.
