Proposals for Title Registration

1. Hong Kong is one of the few common law jurisdictions that still operates a deeds registration system for recording interests in land and property, rather than a system of registration of title. The Land Registration Ordinance, under which the registration of deeds is conducted was enacted in 1844 and is the oldest piece of Hong Kong legislation still in daily use. In recent years it has been supported by computerization of the registers and imaging of instruments in order to make searches easier. However, the fact that the registers remain simply an index to instruments has significant effects on the efficiency with which conveyancing and other dealings in property can be conducted. Every time a transaction takes place a solicitor has to review the deeds in order to check the title, unlike under a system of registered title where the register itself gives the evidence of current ownership and interests in the property.

2. In 1988 the then Registrar General established a working party to examine the introduction of registered title for Hong Kong drawing on schemes in place in comparable jurisdictions. The objective was to improve the efficiency and security with which property could be dealt with so as to better serve the public and professionals engaged in property related business. By 1993 a bill had been prepared. This proposed the automatic conversion of all property for which registers of deeds existed into property with registered title. The Bill was introduced into the Legislature in 1994 but lapsed at the end of the session. The major objection was to the method of conversion - known as 'midnight conversion' - on the grounds that it gave insufficient notice and insufficient protection against the loss of equitable interests that can be claimed against property under present practice.

3. A revised bill was gazetted in December 2002. This proposed replacing the 'midnight' conversion mechanism with 'gradual conversion' under which there would be compulsory applications for conversion upon first sale of a property after enactment, along with opportunity for voluntary applications for conversion without a sale. During deliberation in the Legislative Council it was made clear that the Law Society did not feel able to support the approach on account of the liabilities that it appeared to place on solicitors during the conversion. There was also strong demand for a more certain timetable for conversion rather than indefinite parallel operation of deeds and title registers.

4. In response to these concerns a new mechanism, termed 'daylight conversion' was developed. Under this mechanism -

New Land will come directly under the title registration system from the day of commencement of the legislation. New land is defined to include most land covered by a new Government lease granted after a surrender, as well as land under Government leases granted after auction or tender. The only exceptions are short term tenancies and leases regranted by Government where only the term, area or conditions of the lease have been varied.

Existing land and property ('LRO land') will remain under the terms of the Land Registration Ordinance and Conveyancing and Property Ordinance for a further period (the 'interim period'), currently set at 12 years. During this period, new measures will be introduced under the Land Registration Ordinance to give claimants to title or to an interest in land opportunity to protect their claim against the risk of loss when the property is sold when it has come under the title registration system. These new measures are a 'caveat' and a 'caution against conversion' and are more fully described below. They will become available at the same time that the Land Titles Ordinance is commenced.

Conversion is automatic at the end of the interim period. No special application has to be made for conversion to take place. There are certain circumstances in which a property will not be brought onto the title register at the end of the interim period. These are when a caution against conversion has been lodged and when an instrument submitted for registration under the old system has not yet completed registration. In all other cases, at the end of the interim period the land or property will be brought directly onto the title register. In the exceptional cases, conversion will again follow automatically as soon as the special condition that prevented earlier conversion has been dealt with. No investigation of title or issue of a certificate of good title by a private solicitor is required.

No voluntary conversion. A consequence of removing the investigation of title and issue of a certificate of good title required under the gradual conversion mechanism is that there is no means for a voluntary application for conversion to be dealt with. All existing properties will have to wait for the end of the interim period before conversion takes place.

5. This revised approach to conversion was found acceptable by most parties. Extensive committee stage amendments were then made to the Bill during May and June 2004 to give effect to this new conversion scheme and to respond to other requests for revision.