• Tue
  • Jul 29, 2014
  • Updated: 5:40pm
NewsHong Kong

Top court clears up HOS flat ownership row

People who pay mortgage, not just formal owners, entitled to share

PUBLISHED : Wednesday, 14 November, 2012, 12:00am
UPDATED : Wednesday, 14 November, 2012, 4:21am

People who contribute to mortgage payments for Home Ownership Scheme flats are entitled to partial ownership, even though they are not named on formal documents, the Court of Final Appeal ruled yesterday.

The top court ruled in two cases in favour of plaintiffs who paid most of the repayments on flats bought in the name of other family members, saying they had a "beneficial interest".

The court reversed a ruling by the Court of Appeal that people who contributed to the mortgage had no valid interest, according to the Housing Ordinance.

The ordinance prevents owners from profiting from the discount they received when they bought the flat by reselling or transferring it within five years.

The Court of Appeal deemed that other people paying the mortgage amounted to a transfer of ownership and therefore was illegal.

But the Court of Final Appeal disagreed, saying it was a family arrangement to pool resources to pay the mortgage.

It said each family member was entitled to ownership in proportion to their mortgage contributions.

In one of the two cases ruled on yesterday, the plaintiffs claimed to be beneficial owners of a flat in Kowloon bought for HK$225,000 under the HOS by the defendants in 1984.

The flat is jointly owned by the defendants, but the plaintiffs said they made most of the mortgage repayments.

In 1997, the defendants entered into a provisional agreement to sell the flat to a third party for HK$1.2 million. The plaintiffs then started proceedings, requesting an order setting aside the provisional agreement.

In yesterday's judgment, non-permanent judge Lord Justice Hoffmann wrote: "It might be said that payment of the purchase money by a third party … involved some element of 'speculation' because he might hope to realise a profit … on a sale after the restriction period has expired. But this degree of speculation is no more than is permitted to the purchaser himself."


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