The Land Titles Bill, which was introduced into the Legislative Council in December 2002, was passed today (July 7) after 15 months of thorough and in-depth discussions between the Government and the Bills Committee.
A spokesman for the Housing, Planning and Lands Bureau said, "The main purpose of the Ordinance is to allow title to property to be established by reference to a title register, thus giving greater security to property interests and simplifying conveyancing procedures."
Currently there are 2.5 million registered properties in Hong Kong under a deeds registration system governed by the Land Registration Ordinance.
The spokesman said, "The enactment of the Ordinance puts in place the introduction of a title registration system. Under the system, it will no longer be necessary to review the historical title deeds to establish title as at present. The Title Register will provide an up to date and authoritative point of reference. This will give greater certainty over title and simplify conveyancing."
The revised Bill, supported by legislators, replaces the gradual conversion mechanism originally proposed with the "daylight conversion" mechanism. This is to ensure that existing properties are treated consistently and to avoid the costs and risks that would have been involved in certification of title upon sale or voluntary application.
The daylight conversion mechanism provides that:-
(a) there will be a 12-year interim period after the commencement of the Ordinance during which all existing land will continue to be governed by the deeds registration system under the Land Registration Ordinance. During this interim period, notice of claims arising from unregisterable matters may be given through registration of instruments called "caveats". Action may also be taken to prevent conversion while a claim is being resolved by registering an instrument called a "caution against conversion". As regards new land granted by the Government on or after the commencement date, it will be brought directly onto the title registration system;
(b) at the end of 12 years from the commencement date, each property under the deeds registration system will be transferred to the title register unless a "caution against conversion" still stands against it or there are other outstanding instruments pending registration under the Land Registration Ordinance. "Caveats" lodged under the Land Registration Ordinance will be carried over as "cautions" under the title register; and
(c) after the 12-year interim period, a bona fide purchaser for value of registered land under the new title registration system will not be affected by any claim arising from unregistered matters unless notice of it has been given by way of a "caution".
An indemnity scheme will be set up to protect any innocent party who suffers loss caused by an entry in or omission from the Title Register. The indemnity is subject to a cap of $30 million per case involving loss of ownership due to fraud. To address concerns expressed over the proposed cap on indemnity in fraud cases, changes have been made to the rectification provisions by restoring the ownership to the former owner in case of a void instrument (a document that has been forged or otherwise procured without the owner's knowledge) or false entry. This preserves the general practice under existing law. In all other cases, a currently registered owner who is in possession of the property will be left in possession unless there was fraud or error in the transaction whereby he became the registered owner.
The spokesman added, "The operation of the indemnity fund will be governed by regulations to be made under the Ordinance. The indemnity fund is a self-financing fund set up through a levy on registration. The levy rates to be charged will be announced nearer the time of implementation of the title registration system."
All land registered under the title registration system are still subject to overriding interests which are unregistered rights that can affect land. Examples are rights of way, Chinese custom or customary rights and power of re-entry for breach of lease conditions. The Ordinance limits and clearly defines what overriding interests may be asserted over property.
The Administration will put in place the relevant regulations governing the implementation of the title registration system, prepare guidance notes for legal practitioners and members of the public and carry out extensive public education programmes before the Ordinance is brought into effect. This is likely to take place two years after enactment. Over this period the Administration will also review issues raised by various parties to ensure that the new system can be implemented smoothly.
Title registration systems have been adopted in most common law jurisdictions. The title registration system will increase the efficiency of conveyancing procedures and give greater security to property interests. The introduction of a title registration system here represents a significant reform and will allow Hong Kong's land registration system to develop in line best registration practices in other countries.
Ends/Wednesday, July 7, 2004
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