Avoid Repair Cost Traps in Second-Hand Property Sales

After owners contribute money for major repairs and then sell their property, will government subsidies go to the new owner? Who is responsible for the remaining installments of phased repair fees? This article breaks down the 3 most common pitfalls regarding repair costs and subsidies in second-hand properties, teaching you how to protect yourself with contracts.

The Trap of Government Subsidies Going to the Wrong Person: Previous Owner Contributes, New Buyer Receives?

Scenario: The owners' corporation approves major repairs, requiring each household to contribute $50,000, while also applying for Urban Renewal Authority or government subsidy schemes, with each household eligible for $20,000.

Pain Point: Subsidy Disbursement Takes 1–2 Years

Government or Urban Renewal Authority subsidies are typically disbursed to the owners' corporation only after the project:

• is completed
• undergoes auditing
• receives approval

After receiving the funds, the owners' corporation will distribute them to the current owners based on the Land Registry records at that moment.

If you sell your property during the project period: even though you paid the initial $50,000, the $20,000 subsidy two years later will still be directly issued to the new buyer or deposited into that unit's management fee account.

The new buyer essentially "profits without investment."

Practical Self-Protection Methods for Owners

If you plan to sell your property while the building is awaiting subsidy disbursement, you must include an additional clause in the "Provisional Sale and Purchase Agreement." Without written documentation, the previous owner generally has no recourse.

Who Pays the Remaining Installments of Phased Repair Fees When Selling Midway?

Major repair costs are high, so owners' corporations often allow phased payments, for example:

• $2,000 per month
• paid over 24 installments

If you sell at the 6th installment, who is responsible for the remaining 18 installments?

Pain Point: Buyers and Sellers Easily Disagree

Sellers often think: "I sold the property; I won't use it after renovation, so the remaining installments should be paid by the new owner."

But the key legal practice focuses on:

• The timing when the repair fee liability arises

As long as the repair fee is a statutory liability arising from an owners' meeting resolution during your ownership period, that debt is essentially yours.

If, when selling:

• it is not disclosed
• no arrangement is made for full payment
• the buyer's lawyer discovers it during title search or inquiry with the owners' corporation, the buyer can demand cancellation of the transaction or even pursue damages from the seller.

Practical Self-Protection Methods for Owners

Before selling, you should:

• proactively disclose all approved but unpaid repair fees
• clearly specify with the buyer in the provisional agreement:
  • whether "the seller will pay in a lump sum before completion"
  • or "the buyer agrees to take over the remaining installments"
  • and reflect this in the property price

Everything must be written into the contract; oral promises are insufficient.

Receiving a Mandatory Window Inspection Order Right After Signing a New Lease: Repair Costs Eating Up a Year's Return?

Many rental property owners fear: just after signing a two-year fixed-term lease, the owners' corporation or Buildings Department issues a repair order.

Pain Point: High Scaffolding Costs, Disruptive Construction, Risk of Losing Tenants

Some owners think: if the owners' corporation erects scaffolding, they can also arrange private window inspections or air conditioner duct repairs for their unit.

But in practice:

• contractors hired by the owners' corporation often quote higher prices for private units
• arranging your own scaffolding must align with the owners' corporation's project schedule
• during scaffolding, there is loud noise, inability to open windows, and lots of dust

Result:

• tenant complaints
• requests for rent reduction
• even early lease termination

Repair costs coupled with rental risks erupt simultaneously.

Practical Self-Protection Methods for Owners

During the "vacant possession period" (after old tenants move out, before new tenants move in), you should:

• proactively inquire about the owners' corporation's repair plans for the next 1–2 years
• preemptively address:
  • mandatory window inspections
  • aging pipes within the unit
  • external wall air conditioner brackets

Avoid erecting scaffolding and construction after tenants move in, which could lead to ongoing rental disputes.

Conclusion

Old buildings offer high potential returns but also come with:

• risks of owners' corporation contributions
• timing gaps in government subsidies
• impact of repairs on rentals

Whether you choose to:

• sell for cash
• continue renting out

You must have clear planning for:

• repair fees
• subsidy ownership
• payment responsibilities

Otherwise, tens of thousands in profits could vanish due to a single contract error.

FAQ

Q1: Do major repair subsidies always go to the new owner?

When the owners' corporation distributes subsidies, it generally recognizes only the current owner at that moment. Without specific contract clauses, subsidies typically go to the new owner.

Q2: Can phased major repair fees be transferred to the buyer?

Yes, but it must be clearly stated in the sale and purchase agreement and agreed upon by the buyer; otherwise, legal responsibility remains with the original owner.

Q3: Can I ask the buyer to receive the subsidy on my behalf and then transfer it to me?

Yes, but it must be written into the provisional agreement as an additional clause; otherwise, there is no legal basis.

Q4: When is the best time for rental units to undergo mandatory window inspections?

The ideal time is during the vacant possession period or before renting out, to avoid erecting scaffolding and construction after tenants move in, which could cause rental disputes.