Following is a speech by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in moving the second reading of the Land Titles Bill in the Legislative Council today (December 18):
I move the second reading of the Land Titles Bill.
The present land registration system in Hong Kong is a deeds registration system. Registration of a deed, however, does not confer validity on the property transaction document. Nor does the land register tell who the legal owner of the property is. In order to establish title to the property, the solicitor concerned must check all the title documents affecting the property transaction. This not only takes time, but adds to the costs of property transactions.
A Land Titles Bill was first introduced into the Legislative Council in 1994. Subsequently we have made substantial amendments to the Bill in the light of the comments received from various sectors. I would like to outline some of the main points of the new draft Bill here.
First, the title register will be proof of property title. Once a person is registered as the owner of a piece of land, the title of the land shall be vested in him. With such conclusive information, title checking will be significantly more efficient than at present.
Second, when a person is registered as the property owner in the title register, his title will not be defeasible. In other words, the protection of title will be greatly strengthened.
Third, for conversion arrangements, we now propose a gradual conversion from the current deeds registration system to the title registration system. Properties will be brought under the title registration system on their first sale after the implementation of the Bill, new issue of Government lease or voluntary application by a property owner. Properties not brought under the title registration system will be dealt with in accordance with the existing deeds registration system. Having considered carefully the views of interested parties, we believe that a gradual conversion will allow an orderly and systematic transition and provide time for the public and stakeholders to familiarize themselves with the new system. We will revisit the issue of automatic conversion when people have become accustomed to the title registration system. This more flexible approach has been adopted in a number of countries such as the United Kingdom, Australia and Canada.
Fourth, the Bill provides for an indemnity mechanism. Any person suffering loss of ownership because of fraud or loss due to mistakes or omissions of Land Registry staff will be eligible for compensation. Of course, this will not apply to those who have contributed to the fraud. A self-financing indemnity fund based on a levy on each registration will be established for this purpose. An upper limit will be set on any indemnity payment due to fraud affecting ownership. Our current thinking is that this limit will be $30 million per claim. This will cover over 99 per cent of all property transactions. Providing for a limit will not only reduce the risk to the indemnity fund, but will also avoid the inequity that might arise from imposing the insurance cost for a minority of very high-value properties upon the majority of property owners. We may further assess the level of this upper limit in due course.
Madam President, the Land Titles Bill aims to give greater security to interests in property and simplify conveyancing. A title registration system will reduce considerably title checking work and simplify registration procedures, thus reducing conveyancing costs. More importantly, the system will provide better assurance of title. The certainty of title as well as the clear and streamlined procedures under the new system will be beneficial to property owners, prospective buyers, and professionals and agencies providing conveyancing services, thus contributing to the economy of Hong Kong as a whole. The title registration system has been implemented in many countries. I recommend the Bill to Members and hope that it will be enacted as soon as possible to enable the introduction of the system in Hong Kong.
Thank you, Madam President.
End/Wednesday, December 18, 2002