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SCMP Reporter

THE passage of the Government's new Land Titles Bill will probably end the inconvenience - time consuming searches through old, musty deeds and further confusion over ownership - associated with ascertaining the rightful owner of a piece of property in Hong Kong.

  For the past 150 years, Hong Kong's system of property ownership has been based on deeds, meaning that the transfer of ownership of a property was based on the signatures on a piece of paper, not the registering of the deed.

  'Under the current system, once parties signed a binding document they transferred title, whether or not they registered it,' said Peter Aherne, partner with law firm Deacons.

  The new legislation, expected to be passed this year, will ensure that the change in title to the land does not take place until an application is filed with the Land Registry and the Government changes the Register.

  'The whole concept behind the system is that the Register is paramount,' said Mr Aherne.

  He said the person registered would own the land.

  After the proposed legislation becomes law and a person wants to find out who owns a piece of property, the newly computerised Registry will provide a quick and simple answer.

  Mr Aherne said it would be possible to ignore the deeds, for the most part.

  'So if the person goes to the Land Registry, all he will probably have to do is check the terms of the Crown Lease and the Deed of Mutual Covenant (DMC),' he said.

  In the past, though deeds were registered, the system only 'preserved the priority' of the documents.

  Registering the deed did not affect the validity of the document.

  'So, it is possible to register an invalid document,' said Mr Aherne.

  This does not mean that the person who registers an invalid document owns the property, merely that the registration of that document could give priority over other deeds and could lead to an attempted fraud or confusion as to the real owner.

  There could be thousands of people in Hong Kong who may, to their surprise, not own their homes.

  Since the registering of deeds is not proof of ownership, there have been cases under the present system in which the sale and purchase of lands have been overturned by the court.

  Some years ago, a woman whose name was on a property deed sold the estate to a third party.

  Her husband disputed the deed, saying he was the one who actually paid for the flat.

  The court subsequently ruled in the husband's favour and ordered the new owner to return the flat to the husband.

  Under the new legislation, the method of dealing with this sort of problem will be different.

  For example, the sale of a property by unscrupulous person A to unsuspecting party B who then registers the property, will make B the rightful owner.

  Unfortunately, the original owner, person C, who was swindled out of the property, will have to seek redress through the courts.

  But the property will not be returned to person C.

  According to Mr Aherne, the government will compensate people defrauded of their land or who fail to register it, to a limit.

  Many people, including some lawyers, wonder why, after 150 years, the system needs to be overhauled.

  Mr Aherne points out that the present system is inadequate.

  It is still deeds-based when the rest of the world has moved on to a registry-type system.

  'All the other major jurisdictions have moved to a title-based registration system and there are clear advantages to that because it is a more efficient way of dealing with a commodity like land,' said Mr Aherne.

  'It makes the system easier to operate and makes ownership more certain.'   While the new system might make ownership easier for purchasers of property, the legal profession appears to be divided on its necessity.

  'Lawyers tend to be conservative by nature,' said Mr Aherne.

  'Therefore they are very nervous about changes to the ways they always do things.'   But he said the Bill would try to address the issues by retaining as much of existing practices as possible.

  He said there were still imperfections in the legislation which could be overcome.



Bill to clarify land ownership debates