A guide to preventing fraud by law firms when buying a property in Hong Kong

Although fraud cases involving law firms in property purchases in Hong Kong are uncommon, once they occur they can cause significant losses to buyers. The following is a collection of relevant information and prevention suggestions for your reference:

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Common fraud methods

1. Misappropriation of client funds

• The law firm may hold the deposit or construction payment for safekeeping during the transaction. If the lawyer breaches the fiduciary duty and transfers or misappropriates the funds, the transaction will be interrupted and the funds will be difficult to recover.

1. Falsifying documents or concealing title issues

• Unscrupulous lawyers may falsify title documents and conceal the property's encumbrances (such as mortgages, lawsuits, etc.), causing buyers to purchase problematic properties without knowing it.

1. False charges or extra fees

• Adding unreasonable fees under various names (such as handling fees, document processing fees), especially when the buyer is unfamiliar with the process, to make a profit.

1. Collaborating with bad intermediaries to commit fraud

• Law firms collude with real estate agents and developers to create fake transactions or raise property prices to trick buyers into paying money.

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Preventive measures

1. Choose a reputable law firm

• Through official channels (such asThe Law Society of Hong Kong) Confirm the lawyer’s qualifications and practice record, and give priority to firms with experience in real estate transactions.

1. Verify the funds custody process

• Confirm whether the law firm uses an independent "client account" to handle transaction funds to avoid mixing funds with the company's operating accounts.

1. Carefully review the documents

• Ask the lawyer to explain each document in detail (such as sales agreement, property search report), and go through it yourself.Land RegistryCheck property information.

1. Avoid paying large amounts of cash upfront

• The deposit or house payment should be paid according to the terms of the formal contract, and all receipts and bank transfer records should be kept.

1. Follow up the transaction progress

• Communicate with your lawyer regularly, request updates on the transaction progress, and check with the lawyer immediately if you notice any delays or anomalies.

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Steps to take after being scammed

1. Call the police immediately

• Report the case to the Commercial Crime Bureau (CCB) of the Hong Kong Police Force and provide all evidence (contracts, transfer records, communication records, etc.).

1. Complaint to the Law Society of Hong Kong

• The Law Society has a complaints mechanism that can request an investigation into professional misconduct by lawyers involved, or even lead to the revocation of their licenses.

1. Apply for legal aid

• If you have financial difficulties, you canLegal Aid DepartmentApply for assistance and file a civil lawsuit to recover losses.

1. Claim through insurance

• Some law firms have purchased "professional liability insurance" and you can try to claim compensation through insurance (you need to confirm whether the law firm involved is insured).

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Legal liability and recovery

• criminal responsibility: Acts such as fraud, theft, and forgery of documents may violate the Theft Ordinance or the Crimes Ordinance, and may be subject to a maximum sentence of 14 years in prison.
• Civil claims: Victims can seek recovery through the courts, but the process can be time-consuming and involve litigation risks.

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Important Notice

• The Law Society of Hong Kong requires all lawyers to comply with the Solicitors' Practice Rules when handling property transactions, and violators may be subject to disciplinary action.
• During the transaction, the buyer has the right to ask a lawyer to explain all the terms and should not ignore the details due to "trust".
• Keep copies of all documents (including emails and text messages), as they may become key evidence.

If you suspect you have been defrauded, it is recommended that you seek independent legal advice (such as the Community Legal Network, Consumer Council) as soon as possible and avoid private settlement with the parties involved.