Sale and Purchase of Property
(Real Estate)
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1. If there are some "new expenses" (e.g. repair costs for the relevant building) come out after the parties signed the formal sale and purchase agreement but before the completion day, should the vendor or the purchaser bear these expenses?

With reference to the judgment of a Court of Appeal case (Luk Stanley Ho Chang v Fook Man Finance Company Limited), whether contributions to the cost of such repair or renovation works are to be paid by the vendor or by the purchaser depends on the construction of the particular clause in the relevant sale and purchase agreement.

In the subject case, a sale and purchase agreement dated 26 July 2005 was made between the plaintiff as purchaser and the defendant as vendor. The date of completion was to be on or before 25 August 2005. After the Agreement was entered into but prior to the completion day, the plaintiff discovered that the Incorporated Owners of the building had held a meeting on 4 July 2005 and had passed resolutions to carry out major repairs to the building and also to replace the lift.

One of the clauses in the Agreement provides that if any such notice or resolutions (requiring the vendor as one of the co-owners of the building to effect repair or renovation to any common part or facilities of the said building) existed at the date of the Agreement, the vendor’s share of the costs of such repair or renovation shall be borne and paid by the vendor. Since the resolutions were passed by the Incorporated Owners on 4 July 2005, which existed at the date of the Agreement, the Court of Appeal found in favour of the plaintiff (purchaser) and held that the repair costs must be paid by the defendant (vendor).

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