The Provisional Sale and Purchase Agreement — commonly known as the PSPA — is one of the most important documents in any Hong Kong property transaction. It is the first legally binding contract between buyer and seller, and signing it commits you to the deal. This guide explains what the PSPA contains, what you need to check before signing, and what happens if either party pulls out.
What Is the PSPA?
The PSPA is a short-form contract — typically 2–4 pages — that records the key terms of the property transaction:
- The full address and description of the property
- The agreed purchase price
- The initial deposit amount (usually 3–5% of the purchase price)
- The deadline for signing the Formal Sale and Purchase Agreement (FSPA)
- The completion date
- Any special conditions agreed between the parties
The PSPA is usually prepared by the estate agent, not a solicitor. However, it is still legally binding once signed. You should instruct your solicitor to review it before you sign if at all possible.
The Initial Deposit
On signing the PSPA, the Law Society of Hong Kong and all reputable estate agents strongly advise that the initial deposit be made payable to the seller’s solicitors as “stakeholders” (the HK equivalent of escrow). The deposit is typically 3–5% of the purchase price and is paid by cashier’s order or bank transfer. Once the FSPA is signed and the further deposit is paid (bringing it to 10%), the contract usually becomes “Specific Performance” (必買必賣). If either party backs out after the FSPA, they can be sued in court to force the completion of the sale, or be sued for unlimited damages if the property value drops.
What Happens After the PSPA Is Signed?
Once the PSPA is signed, The Formal Agreement (FSPA) must be signed within 14 days after signing the PSPA. During this period:
- You instruct your solicitor and provide them with a copy of the PSPA.
- Your solicitor begins title searches and due diligence on the property.
- You formally apply for your mortgage (if applicable).
- Solicitors for both sides negotiate and finalise the terms of the FSPA.
- You sign the FSPA and pay the balance of the deposit (bringing the total to
approximately 10% of the purchase price).
What Should You Check Before Signing the PSPA?
Because the PSPA is legally binding and your deposit is at risk, you should verify the following before signing:
- Is the seller the legal owner? Check the address against the Land Registry if possible, or ask your agent to confirm.
- Is the purchase price you have verbally agreed correctly reflected in the PSPA?
- Are the deposit amount and payment method clearly stated?
- Are the FSPA signing deadline and completion date realistic given your mortgage timeline?
- Are any inclusions — furniture, appliances, car parking spaces — specifically listed?
- Are there any conditions to the agreement (e.g., subject to satisfactory title search)?
If there are any terms you are unsure about, do not sign until you have spoken to your solicitor.
Subject to Finance Clauses
Unlike in some other jurisdictions, ‘subject to finance’ clauses (which allow the buyer to withdraw if they cannot secure a mortgage) are not standard in Hong Kong PSPAs. If you sign a PSPA without such a clause and your mortgage application is
later rejected, you will still be bound by the contract and risk losing your deposit. In fact, property developers for new launches will never accept this clause, and secondary market sellers almost never agree to it.
This is why mortgage pre-approval before signing is so strongly recommended. Discuss with your solicitor whether a subject-to-finance condition can be negotiated into the PSPA.
Cooling-Off Period
There is no statutory cooling-off period for property transactions in Hong Kong. Once the PSPA is signed and the deposit is paid, the contract is binding. This is different from consumer transactions in many other jurisdictions.
Revised PSPA vs. FSPA Comparison Table
| Feature | Provisional Sale & Purchase Agreement (PSPA / 臨約) | Formal Sale & Purchase Agreement (FSPA / 正約) |
| Prepared By | Estate Agent (using a standardized template) | Vendor’s (Seller’s) Solicitors; reviewed by Buyer’s Solicitors |
| Length | Typically 2–4 pages | Dozens of pages (including detailed legal jargon and title covenants) |
| Deposit | Initial Deposit (“Small Deposit”): Usually 3–5% of the purchase price. (Paid to seller’s solicitor as stakeholder) | Further Deposit (“Big Deposit”): Topped up to a total of 10% of the purchase price upon signing. |
| Legal Binding | Yes. However, before the FSPA is signed, parties can generally exit by forfeiting/doubling the deposit. | Yes. Usually operates under “Specific Performance”—exiting carries the risk of lawsuits and unlimited financial claims. |
| Timing | Signed same day or next day after verbal agreement. | Signed within 14 days after signing the PSPA. |
| Stamp Duty | Normally payable within 30 days from the date of the earliest agreement | If the FSPA is signed within 14 days, the 30-day clock effectively resets from the FSPA |