Provisional Lease Agreement

The Provisional Lease Agreement is a document you will come across when renting a property with the help of a Hong Kong real estate agent.

In this case there will be three parties involved in the property rental: the tenant, the property owner, and the real estate agent.

The provisional lease agreement is a legally binding contract which should protect everybody's interests. The main intents are:

Tenant Protection. The provisional contract should state that in the event the property owner breaches the contract the tenant will be entitled to a refund equal to twice the initial deposit. This would normally equal 2 months rental. This clause protects the tenant in the event the property owner is subsequently offered a better deal.
Landlord Protection. Should you breech the contract and not rent the property your deposit will be forfeited to the property owner as compensation.
Agent Protection. The real estate agent has spent their time completing the work required, if either the property owner or the tenant breaches the provisional contract then that party shall be liable to pay an amount equal to the agreed agents commission.

You will be expected to sign the provisional lease agreement once you have found and negotiated the price for a rental property or apartment. You will also give the agent payment equivalent to 1 month rental to be held as deposit to ensure the landlord holds the property for you.

Before you sign the provisional lease agreement there are some issues you should consider:

Final rental contract. By signing the provisional contract you are agreeing to sign the final rental contract. To protect yourself you should do one of two things; sight, critique and agree on a rental contract to be used and add this as an appendix to the provisional agreement, or, add a clause that makes the provisional contract subject to sighting and approving the final lease contract. If you fail to do this it is possible you could find yourself committed to signing an unfair rental contract.
Restorations and Improvements. Any renovations, painting or improvements that the landlord has agreed to do to the property prior to your moving in must be clearly stated in the provisional agreement.
Furniture and Inclusions. Furniture that stays, furniture that goes. Inclusions can be anything that has been promised that comes with the rental property such as carparks or club memberships. Only necessary if you are stating subject to in the provisional- if you have agreed on the final contract this information should be included in that contract and is simply referenced in the provisional.

Any other consideration you may have as once you sign the provisional rental contract you are committed to renting the property or forfeiting your deposit.