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Frequently Asked Questions
Land Titles Ordinance (Q1 to Q12)
| Q1: |
As the existing deeds registration system has been in operation for many years, why is the title registration system introduced? |
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| A: |
Under the existing deeds system, a person registered in the land register as an owner of a property may not be the legal owner as there may be some uncertainty or defect in his title to the property and he may be subject to unregistered claims. The existing system lacks the certainty offered by a title registration system. Title registration system will provide certainty of title and simplify conveyancing procedures. |
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| Q2: |
How will title to property be established under the title registration system? |
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| A: |
Under the title system, the person registered on the title register is recognized as the legal owner. Title can therefore be established as a matter of fact by checking the title register. The title to the property is subject to interests which are subsisting and registered against the property. |
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| Q3: |
How will conveyancing procedures be simplified under the title registration system? |
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| A: |
The title register will be conclusive evidence as to the title of the property. After registration of a property under the title registration system, it will no longer be necessary to review all the previous title deeds as at present under the deeds registration system. |
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| Q4: |
Why is there an upper limit in an indemnity claim for fraud cases? |
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| A: |
The indemnity will be funded by a levy which will be collected on each registration. A levy structure is being devised with a view to keeping the costs to a reasonable and affordable level. Especially in the early years, before the indemnity fund is securely established and the level of local risks can be assessed on the basis of real experience, the cost that would be imposed on the average purchaser would be excessive if the few very high value transactions also had to be fully covered by the fund. The indemnity limit can be reviewed after a few years to take into account experience.
Even with the limit on the indemnity coverage it should be noted that over 99% of all transactions will be fully covered by the scheme. For those not fully covered, they can still benefit from an indemnity coverage up to $30 million in the cases of forgery or false entry - a protection not available to a deprived registered owner under the current deeds registration system. Furthermore, the owners of high-value properties would not be deprived of the means to recover their losses in case of fraud. They would still be able to pursue their claims through the courts against anyone who defrauds them.
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| Q5: |
Will there be any cap on the indemnity payment as a result of loss due to mistake or omission of the Land Registry staff? |
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| A: |
No. The Land Registry will have stringent controls on its procedures for registration to guard against any mistakes. In the event of claims for indemnity due to mistake or omission of the Land Registry staff, there will be no cap on such indemnity payment. The liability of the Government for its staff will not be diminished by the introduction of the new system. Although the indemnity fund will make first payment out, the Land Registry Trading Fund will repay the amount to the indemnity fund. |
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| Q6: |
Why is the Court given the power to rectify the title register to restore the property to the former owner and under what circumstances will the Court exercise the power? |
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| A: |
A prominent feature of title registration systems is that it draws a curtain over previous transactions. The owner stated on the title register is recognized by law as the legal owner. But the effect on an innocent former owner who might lose ownership due to fraud (e.g. forgery) could be severe if this principle is applied without allowing for rectification by the court under specific circumstances. Rectification of the LTO title register will be given in favour of a former innocent owner if he lost his title by or as a result of fraud and the Court is satisfied that (i) the former owner lost his title as a result of a void instrument or a false entry in the title register; (ii) the former owner was not a party to the fraud; and (iii) the former owner did not, by his act or by lack of proper care, substantially contribute to the fraud. Any innocent purchaser who is deprived of his ownership as a result of a court order restoring a property to a former owner would be eligible for compensation from the indemnity fund. |
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| Q7: |
What is 'Daylight Conversion'? |
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| A: |
It is a shorthand to describe the conversion mechanism under which the land and buildings governed by the deeds registration system will be converted to the new title registration system.
Under the first Land Titles Bill introduced in 1994, it was proposed that all land would be converted from the deeds registration system to the new title registration system overnight on a date to be appointed by the Secretary for Planning, Environment and Lands. This proposed conversion mechanism was described as 'Midnight Conversion' for the sake of convenience. Due to objections the proposal had been dropped.
Under the Land Titles Ordinance (Ordinance No.26 of 2004), a two-stages conversion mechanism is adopted. It is a modification of the Midnight Conversion. Upon implementation of the Ordinance, some new land and buildings will first be brought under the new title registration system. Then upon the expiry of an interim period of 12 years after the implementation ("the Interim Period") all other land and buildings which remain under the deeds registration system will be, compulsorily and automatically, converted to the new title registration system. By then the conversion of all land properties to the new system should have been completed with only a few exceptions. This modified conversion mechanism having a longer interim period before automatic conversion is described as "Daylight Conversion" as contrast to the "Midnight Conversion".
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| Q8: |
What will the registration fees be under the title registration system? |
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| A: |
Exact fee levels will be set closer to the time of implementation of the title registration system, i.e. after passage of the Land Titles Bill and when the necessary information system has been established. But we expect that the fees would not be significantly different to those charged under the existing system. |
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| Q9: |
What is the estimated amount of levy on each registration? |
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| A: |
The rates of the levy will be fixed nearer the time of implementation of the title registration system but we expect it to be around 0.017% of the value of the property. |
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| Q10: |
What are the benefits to an owner under the new system? |
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| A: |
Upon conversion to the new system, disposal of the property whether by way of sale or mortgage will become easier. The law under the Land Titles Ordinance recognises the person stated to be the owner on the title register as the person having full right of disposal of the property. The time and cost of establishing title or ownership will be reduced as it is no longer necessary to look behind the title register and review the title deeds to establish title. |
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| Q11: |
Will the provisions relating to tso, tong and appointment of trustees in the New Territories Ordinance be amended by the new system? |
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| A: |
No, the Land Titles Ordinances does not affect the provisions in relation to tso, tong and appointment of trustees under the New Territories Ordinance. |
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| Q12: |
Will Chinese customs and Chinese customary law be preserved under the title registration system? |
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| A: |
Chinese customs and Chinese customary law are preserved under the new system as overriding interests. This means that the property is subject to these rights whether the interests are registered on the title register or not. |
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