The Fair Trade Commission (hereinafter, the "FTC") promulgated on December 1, 2014 the Principles of Fair Trade Commission for Handling Pre-sale Real Estate as amended (which is previously known as the Descriptions of the Fair Trade Commission Concerning the Regulation of Sales Activities of Pre-sale Real Estate, hereinafter referred to as the "Handling Principles"). Consisting of eight points, the Handling Principles came into effect on the day of their promulgation. The amendments are focused on incorporating real estate agents into the scope of regulation and specifically stipulate the items which shall be disclosed in writing to home buyers before a contract is executed, as discussed below:
- Incorporation of real estate agents into the scope of regulation
The forerunner of the Handling Principles is the Descriptions of the Fair Trade Commission Concerning the Regulation of Sales Activities of Pre-sale Real Estate, which limit the subjects of regulation to property developers. In fact, however, pre-sale property is mostly sold by real estate intermediaries or sales agencies commissioned to conduct the sales, calling into question if the Descriptions apply to any act engaged by an intermediary or sales agency which violates the Descriptions. The Handling Principles specifically regulate subjects including "real estate brokers," i.e., enterprises that operate real estate intermediary or sales business.
- Items specifically required to be disclosed in writing to home buyers before a contract is executed
The Handling Principles specifically provide that a real estate developer or real estate intermediary shall disclose the following information in writing before entering into a contract: (1) a copy of the construction license, (2) the site location map, site plan (the cadastral map of the foundation), the floor plan of each floor and the carpark, (3) the most recent general table detailing the ownership share of each household as approved by construction authorities at the time of sale (which should be sufficient to indicate the areas of the main structure, ancillary structure and common portions of the entire site and the share ratio of the common portions of each household in the site), (4) the pre-sale property purchase agreement (which should cover the calculation method regarding the items, areas or share of the common portions), (5) the name of the financial institution providing loans in accommodation of the development project, and (6) restriction information regarding a land located in re-delineated areas and the re-delineation cost that should be shared.
If a real estate developer or real estate broker violates such requirements to an extent sufficient to undermine trading order, this will constitute a violation of Article 24 of the Fair Trade Law. Under Article 41, Paragraph 1 of the same law, the FTC may order the offenders to desist or correct their acts or take necessary corrective measures and may impose a fine of NT$50,000 to NT$25,000,000. In case of no correction within the required period, a fine of NT$100,000 to NT$50,000,000 may be imposed continuously.