The purchaser and seller are both responsible for paying the stamp duty. However, the purchaser will usually contract to pay the stamp duty in full. The table below shows the stamp duty tax rate for commercial properties, after 20 November 2020. More details on the amount payable can be found here. Amount or value of the consideration(whichever is the higher)Stamp duty tax rate for non-residential properties. ExceedsDoes not exceed $2,000,000$100$2,000,000$2,351,760$100 + 10% of excess over $2,000,000$2,351,760$3,000,0001.5%$3,000,000$3,290,320$45,000 + 10% of excess over $3,000,000$3,290,320$4,000,0002.25%$4,000,000$4,428,570$90,000 + 10% of excess over $4,000,000 $4,428,570$6,000,0003%$6,000,000$6,720,000$180,000+ 10% of excess over $6,000,000 $6,720,000---3.75% You should note that the calculation of stamp duty for residential property is different.

A Formal Sale and Purchase Agreement (SPA) is a legally binding contract that outlines the terms and conditions agreed by the parties to the agreement i.e. the purchaser and seller of the property. The Conveyancing and Property Ordinance requires all contracts for sale of land (including house/property/building) to be made in writing to be enforced by the Court. Therefore, you cannot sell or buy a property through an oral agreement, as it will not be recognised by the court. The agreement is contractually binding and there may be severe consequences for breaching it. Terms of a formal SPA Based on the provisional agreement, and subsequent negotiations, usually the seller’s lawyer will draft a formal Sale and Purchase Agreement. It contains terms that are more detailed and is intended to replace the provisional agreement. A Formal SPA will have terms that are based on the agreed provisional SPA, including: Particulars of the seller and the purchaserAgreement to sell and purchaseThe seller agrees to transfer the title of the property to the buyerParticulars of the propertyThe description of the property should be identical to the one on the Land RegistryPurchase price and manner of payment Formal SPA terms will also contain additional terms from the provisional SPA, including: Condition of propertyUsually, the purchaser would take the property on an as-is basis, but there may be other conditions too, like delivery of machineryThe purchaser will usually have inspected the propertyFurniture and fixturesIf the price includes furniture and fittings, such items should be listed in the formal agreement. However the seller will likely not warrant the condition of the furniture or fixtures.Good titleThe seller agrees to prove and give good title to the property, and they are willing to provide title deeds of the property to the purchaserConsequence of breaching the formal agreementIf a party fails to complete the agreement, the other party can claim

A Sale and Purchase Agreement (SPA) is an agreement signed and agreed upon by both the seller and purchaser regarding the terms of the purchase. The provisional agreement is prepared by the estate agent and is signed by both the purchaser and seller. The agreement contains the preliminary terms of the sale of the property and is used as a basis for the formal agreement, which will be signed on a later date. The agreement is contractually binding and there may be severe consequences for breaching it. Terms in a Provisional SPA A provisional SPA must include the following terms: Particulars of the seller and purchaserIf the seller or purchaser is an individual, the agreement should state their name, address and Hong Kong Identity Card number. If the seller or purchaser is a limited company, the name, Business Registration Number and registered office of the limited company should be stated.Description of propertyThe property's postal address is usually sufficient to identify the property. PriceThe agreed price for the property is expressed in either words or figures or both.Completion date The date on which the seller disposes of the property to the purchaser. It may also include the following terms: Amount of initial and further deposit, and when it has to be paid The initial deposit is usually 1% to 3% of the total purchase price, and paid by the purchaser when they sign the provisional agreement;The further deposit is usually 10% of the total purchase price, inclusive of the initial deposit, and paid by the purchaser on the day the formal agreement is signed [9% or 10%]Balance of price to be paid upon completion of purchaseLegal cost and stamp dutyEach party will pay his own legal costs to their lawyersThe purchaser will usually pay the stamp dutyThe consequence for seller/ purchaser in case of withdrawal from the agreementAn "escape clause" allows a party to withdraw from the transaction within a short period of time after signing the

Property due diligence is a fact-finding process done by the purchaser, to ensure there are no legal and/or financial concerns relating to the property. The purchaser would usually instruct a lawyer to conduct property due diligence, and the lawyer should inform them of any encumbrances related to the property. An encumbrance is anything that can (i) reduce the value of a property or (ii) prevent the property owner from selling the property in the future. Sometimes, the purchase price is held back because issues have been identified in the due diligence process. The lawyer may also write to the seller to remedy the issue before the purchase will be completed. Due diligence period During the due diligence period, the purchaser has an opportunity to review and evaluate information and materials related to the property. The duration of the due diligence period is a negotiated, fixed amount of time, which varies between each transaction, but usually it is 14 -30 days from the time the sale and purchase contract is signed. Depending on the agreement, the purchaser may be able to rescind if they discover any major issue with the property. Content of property due diligence The areas covered by the due diligence and documents reviewed by the purchaser, their lawyer, and third party consultants will depend on each purchase. Generally, the following due diligence will be conducted: Title check The purchaser's lawyers will check the title documents of the property, by conducting searches at public registries including the Land Registry. This will reveal: the present owner and all the previous owners of the property;details of the property (e.g. the address of the relevant land lot);whether there is any government order in respect of the property that has not yet been obeyed (e.g. a repairing order, or an order to demolish an unauthorized structure);whether there is any existing mortgage;whether there is any lawsuit concerning the property

The process of selling/ purchasing a property is complicated, and generally speaking, there are 5 main steps associated with the process. However, this is a very broad overview of the sale/ purchase process of a property, and each transaction will be different, so you should consult your estate agent or lawyer if you are unsure of the process. Find an agent Both the seller and purchaser would find an estate agent to help with the sale and purchase of a property. If you would like to sell your property, your estate agent may: Get information about the property from you; Market your property to potential purchasers; Arrange for potential purchasers to inspect your property;Tell you about all offers in relation to your property;Help you negotiate and sign the provisional agreement with the purchaser. If you would like to buy a property, your estate agent may: Provide you with the necessary information about the property;Arrange for you to inspect the property;Pass on all your offers to the sellerHelp you negotiate and sign the provisional agreement with the seller. Do you need to sign the estate agency agreement? Will the agent provide property information? No, as per the Estate Agents Practice (General Duties and Hong Kong Residential Properties), the requirement of signing an estate agency agreement applies only to residential properties. In a commercial property transaction, the agent can provide general property information or information related to the transaction. As per the Code of Ethics issued by the EAA, estate agents must exercise due care and due diligence during a transaction i.e. they must protect the client’s interests and act in a fair and impartial manner. Sign the Provisional agreement The purchaser and the seller sign a Provisional Sale and Purchase Agreement of the selected property, which is usually prepared by the broker/estate agent in a prescribed standard form. The purchaser pays the seller an initial