PQSL on 21 December 2002 Residential Investment

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PQSL on 21 December 2002Residential Investment
Management Practice

• by
• Cherrie Lai

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Investment

• Objective Wealth Maximisation
• Risk vs Return
• Risk
• business risk
• financial risk
• currency risk (if applicable)
• diversification for portfolio

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Investment - Risk vs Return

• Return
• liquidity
• stability
• Certainty
• Evaluation Method
• Yield
• IRR
• NPV

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Residential Investment

• Key Characteristics
• Sale Purchase Higher exposure to title risk
  than other types of property
• (Conveyancing Property Ordinance)
• Leasing Security of Tenure
• (Landlord Tenant (Consolidation) Ordinance

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Residential Management Practice

• Financial Management
• Capital Budgetting
• Operational Budgetting
• Property Management
• Day-to-Day
• Strategic
• Building Management (Amendment) Ordinance
• Deed of Mutual Covenant
• (for strata-titled properties)
• Tenancy Management
• New Letting
• Renewal
• Surrender

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Renewal of Tenancy Initiated by Landlard
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Renewal of Tenancy Initiated by Tenant
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Renewal of Tenancy Market Practice

• Determinants on bargaining power
• Market situation
• Legislative administrative measures
• Commercial relationship between landlord tenant
  
• Settlement by private negotiation is always
  preferred
• Landlord seldom issue Form CR105
• Tenant usually issue Form 22 before the expiry
  of the CR101 or lease expiry date, whichever is
  later

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Typical Tenancy Disputes

• Quiet Enjoyment
• Maintenance Liability
• Non payment of Rent

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Group Discussion Case Study

• QUIET ENJOYMENT
• Subject to compliance tenants obligations
• Without any lawful interruption
• How would quiet enjoyment be interfered?
• Nuisance ? What kind?
• Refurbishment done by the Landlord?
• Refubishment done by a third party?

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Group Discussion Case Study

• MAINTENANCE LIABILITY
• Repair maintenance obligations on
• building interior
• structural defects
• utilities
• electrical appliances provided by Landlord
• Alteration reinstatement
• Insurance
• Indemnity

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Group Discussion Case Study

• NON PAYMENT OF RENT
• What do you want?
• with or without recovery of possession?
• What LAWFUL actions can be done?
• Distraint
• Court Proceeding
• Contractual rights under lease

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Tenant Default on payment
For Reference Only
LL serves Writ Claim s 1) arrears and/or 2)
forfeiture of the lease
Tenant does not acknowledge service of Writ
within 21 days
Tenant acknowledges service of the Writ (required
within 21 days)
LL obtains Judgement against Tenant to obtain
arrears and commence repossession proceedings
(takes about 1 month)
Tenant to defence to the Writ and relief from
forfeiture (submission within 21 days)
Tenant pays arrears without defence
Selection of Orders to pursue based on perceived
commercial risk

• Court Proceedings Judgement
• Arrears
• Forfeiture of Lease
• Other Conditions

Repossession
Prohibition order CostHK50K
Maneva Injunction CostHK70K
Garnishee Order CostHK15K
Bankruptcy CostHK100K
If LL wins,Tenant pays arrears
No further action, Tenants lease and rights to
renew remain intact, i.e. forfeiture of the lease
under the Writ is cancelled

• Serve notice of repossession
• Arrange Peaceful Re-entry
• Change Lock Put Notice
• Inventory List

Apply repossession order from court
LL may oppose the tenants renewal based on the
previous Court Judgement the grounds of frequent
rental arrears. Final decision will be given by
Lands Tribunal.
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THANK YOU

• MERRY CHRISTMAS