on 19 January 1999
LEGCO PANEL ON PLANNING, LANDS AND WORKS
Land Titles Bill
This paper briefs Members on the proposed land title registration system and the Land Titles Bill.
2. The present system of land registration governs only the priority of registered deeds and provides that unregistered deeds shall be null and void against any subsequent bona fide purchasers or mortgagees for valuable consideration. Registration per se does not confer on a deed any validity it does not otherwise have. Therefore, even if a person is registered in the Land Registry as owner of a property, he may not be the legal owner because there may be some uncertainty or defects in his title to the property or his title may be subject to the claim of some other person which does not appear on the land register kept by the Land Registry. This uncertainty of title places purchasers at risk and reduces the commercial potential of properties in some cases.
3. The current system is also costly and expensive as to establishing title to property. It is necessary in every case to check carefully through the title documents and government grant recording all the transactions affecting the property that extend to not less than 15 years before the current contract of sale of that property.
4. A Working Party on Title Registration chaired by the then Registrar General and comprising practising solicitors from prominent conveyancing law firms and representatives of the Law Faculty of the University of Hong Kong was set up in May 1988 to consider the desirability of converting the present deed registration system to a land title registration system. The Working Party, having considered the major types of registration systems operating in other jurisdictions, concluded that conversion to a land title registration system was desirable. The Law Society of Hong Kong was consulted on the proposal and supported it in principle.
5. Subsequently, Professor Peter WILLOUGHBY, former Professor of Law and Head of the Department of Professional Legal Education of the University of Hong Kong, was appointed as consultant to examine the conversion process in detail. In his Report produced in March 1991, he made detailed recommendations for converting the present system of deed registration to one of land title registration. The Law Society, the Bar Association, the Society of Accountants, the Association of Banks, the Consumer Council and a number of other interested bodies were consulted again on the proposal.
THE LAND TITLES BILL
6. In 1994, we introduced the Land Titles Bill into the Legislative Council with a view to converting the present deeds registration system to a land title registration system. Under the proposed system, registration of a person as owner will confer full and absolute title to the property concerned subject only to any matters registered on the land register, certain overriding interests and rectification by the Court. It will no longer be necessary for the owner's solicitor to investigate the title by reviewing and approving all the title deeds. The land register will be the conclusive evidence of the title of the property, and any claim against the property, which is not registered (with the exception of overriding interest and rectification by the Court), will be void. The main provisions of the Bill and operational features of the proposed land title registration system are as follows:
- When the new system comes into operation, all the existing land registers kept by the Land Registry will be deemed to be the land registers for the purpose of the new system.
- Persons whose names appear as registered owners on the land registers will be deemed to be the legal owners of the properties concerned. The owners named on the land registers on the operative day will be subject to any unregistered interest affecting the land and existing before the appointed day which are enforceable against them.
- The Government will indemnify any person suffering actual loss as a result of a mistake of the Land Registry. Government will also indemnify up to a limit any person suffering actual loss as a result of fraud but such compensation will be recovered from the person or persons responsible for the fraud.
- Persons claiming an interest in property registered in the name of another person may, if that registered owner disputes the claim, register a non-consent caution against the property. Any person who registers a non-consent caution wrongfully or without reasonable cause may be liable to pay compensation to those who suffer damage as a result.
- Agreements for sale and purchase and equitable charges will no longer be registrable but interests of the purchaser or chargee under these documents can be protected by the registration of a consent caution instead.
- Title to property of registered owners will continue to be affected by certain "overriding interests" as at present. Examples of such "overriding interests" include:
- public or statutory rights such as public rights of way, rights of laying public utility services, rights of the Government to resume, close, demolish, etc. the property;
- rights of the Government or any other person under the Government lease of the property;
- Chinese custom or customary rights under Part II of the New Territories Ordinance which may affect the property; and
- private rights, such as private rights of way, existing on the date of coming into operation of the new system.
- The Land Registrar will have the power --
7. Although there was general support in principle for the land title registration system, the Bills Committee did not agree to certain provisions in the Bill. These differences had not been resolved by July 1995 when that legislative session ended and examination of the Bill was curtailed. The concerns of the Bills Committee narrowed down to two areas, namely -
- to impose a restriction on registered land for the prevention of fraud or improper dealings;
- to rectify errors in the land registers which are immaterial, or with the consent of all interested parties any other errors.
- to specify forms, including conveyancing forms; and
- to apply to the Court of First Instance for direction in case of doubt or difficulty or in any matter not provided for in the legislation.
8. On (a) above, the proposal of the Bills Committee would undermine the whole spirit of the new system by exposing bona fide purchasers to uncertainty of title to the property. On (b) above, whilst appreciating the good intention behind the proposal of the Bills Committee, the operation of two systems of land registration in parallel would give rise to confusion, and the resources and expenses required by this not justified. We believe that the "midnight conversion" approach is a better arrangement, though we agree that sufficient preparations should be made for this.
- the Bills Committee considered that in cases of fraud, the original owner of the property should be given back the title to the property whereas the bona fide purchaser of the property should be given monetary compensation; and
- the Bills Committee supported a gradual process of conversion to the new registration system (e.g. over a number of years or by area).
9. Despite the curtailment of the Bill in July 1995, we have maintained regular dialogue with the Law Society with a view to addressing their concerns. A number of amendments (as summarized at Annex I ) have subsequently been made to the original Bill. These amendments, we believe, have addressed most of the Law Society's concerns. A copy of the latest draft Bill (14th draft) is at Annex II for Members' reference.
10. We aim to introduce the Bill into the Legislative Council on 31 March 1999, and to implement title registration in late 2001. As we did last time before the original draft Bill was introduced into the Legislative Council in 1994, we are consulting the relevant professional bodies on the revised Bill.
11. Members are invited to comment on the issues relating to the proposed land title registration system and the Land Titles Bill.
Planning, Environment and Lands Bureau