How to transfer property titles in Hong Kong
Kelvin Ng, a solicitor and partner at Yip Tse & Tang Solicitors, answers questions about the importance of conveyancing, and explains its procedures, from land-registry searches, to receiving “clean” or questionable titles
Kelvin Ng is a solicitor and partner at Yip Tse & Tang Solicitors. He answers questions about the importance of conveyancing.
What is conveyancing?
Conveyancing is the transfer of the legal title of property, such as a piece of land or a flat, from one entity to another. More broadly, it is the granting of an encumbrance, such as a mortgage or a lien. Unlike some Western countries, Hong Kong has not implemented a title registration system. Therefore, the owner’s title is not proved by a title certificate. [In Hong Kong], the solicitor representing you [as the purchaser, for example] would investigate the title by perusing all instruments or title deeds relating to the property you intend to purchase.
What are the procedures in conveyancing?
Before signing the provisional sale and purchase agreement, the estate agent would usually conduct a land search at the Land Registry to confirm the legal owner of the property [which is for sale]. After signing the provisional sale and purchase agreement, the estate agent will pass his copy to the solicitor representing you. In the meantime, you may also need to look for a bank for a mortgage to ensure that sufficient funds will be available for the purchase of the property. Your solicitor will then contact the seller’s solicitor. They will then negotiate and agree on the terms of the formal sale and purchase agreement. After [agreeing on the] terms of the formal agreement, your solicitor will arrange for you to sign it and arrange for you to pay the balance of deposit. By this stage, you will have paid the initial deposit and the further deposit, which is usually about 10 per cent of the purchase price, depending on each case. Next, your solicitor will register the formal sale and purchase agreement at the Land Registry to protect your interest in the property. At some point, your solicitor will receive the title instruments from the seller’s solicitor. The buyer’s solicitor will check the title, conduct a land search, and raise title questions to the seller’s solicitor, if necessary, for him to answer. This information exchange is to ensure that the title to the property is good. Getting good title to property can be a problem and therefore you need an experienced conveyancing lawyer. The final steps will involve registering the assignment at the Land Registry. Once done, your solicitor will give you the title deed, if there is no mortgage, and the property will be yours. In case your purchase is financed by a bank mortgage, the title deed will be passed to the bank for custody as a lending security.
What happens if the title deed is not “clean”?
If the purchaser’s solicitor does not accept or is not satisfied with the title after receiving replies to requisitions on title, the solicitor may insist on further requisition until a satisfactory reply is received. For example, during the investigation process, the buyer’s solicitor would ask the management company or the incorporated owners of the building about whether there are outstanding management or other fees payable by the owner. If there are unpaid fees, the purchaser’s solicitor will write to the vendor’s solicitor to require them to be settled by the seller. It also applies to pending building orders. For example, if there is an order to remove an illegal structure, the seller will be required by the buyer’s solicitor to remove it and inform the Buildings Department before proceeding to the completion and execution of the assignment.
What happens if a solicitors’ firm is taken over by another firm due to alleged misconduct under the Legal Practitioners Ordinance? For example, if the firm’s bank account, which has the deposits of property buyers, has been frozen. What could these buyers do?
I suggest that the affected buyers negotiate with the sellers on postponing the conveyancing process to a later date. As the Law Society will investigate the case, I believe the affected buyers will be able to get all their deposits back once the case is closed, after proving that the funds have not been misappropriated. It’s just a matter of time. If the sellers believe they will suffer losses from the delayed transaction, they may claim the losses from the solicitors’ firm.