Today, the Land Registry provides a record of interests in land and property in Hong Kong through a system of registering deeds. This was established by the Land Registration Ordinance, which was enacted in 1844 and is the oldest piece of legislation still in daily use in Hong Kong. The register of deeds provides a record of legal documents relating to each property and establishes the priority of each document. This record can be used by a solicitor to investigate the title to a property in order to advise clients who may be interested in dealing with it. The register itself does not make any binding statement about the state of ownership or the validity of documents that have been registered. Every time there is a transaction in a property, the title documents have to be reviewed again. There are also rights over property, called unwritten equities, that are allowed by the common law even though they have not been registered.
Although Hong Kong's system of deeds registration has been modernized through large investments in computer and imaging systems, it has inherent weaknesses and limitations. Over time, uncertainties can arise as to the interpretation of the various documents, which can give rise to the delays and costs of litigation and to difficulty in dealing with particular properties. The fact that unwritten equities may exist gives rise to further uncertainties, costs and complications in conveyancing. Safekeeping of the huge volumes of historical documents on each property is a burden for banks and individual owners. There is risk of damage, loss or theft. Since the 1970s, the stock of private property and the number of property owners in Hong Kong has increased dramatically. Dealing safely and securely with the repetitive examination of all the paperwork involved in assuring title under the deeds registration system puts a very heavy burden on solicitors and the Land Registry.
Since the late nineteenth century there has been a trend in common law jurisdictions to replace systems of deeds registration by what is known as Title Registration. Under a title registration system, each time there is a transaction in a property the Land Registry makes a determination of the new ownership. The act of registration itself conveys the title to the new owner and the title register gives a clear statement as to who the owner is. The historical documents are no-longer needed to prove title. As a general rule, unless a matter is recorded on the title register it will not affect the title of an owner.
Title registration has proved an effective system for ensuring security and ease in dealing with property rights in jurisdictions with a high volume of property transactions. The Administration and the Law Society agreed in the early 1990s to develop a title registration system for Hong Kong. The title registration system would take account of Hong Kong's unique land and property arrangements, such as the deeds of mutual covenant governing rights in multi-unit developments and the preservation of Chinese customary rights in parts of the New Territories, but would seek to replace the deeds registration system as efficiently as possible, seeking to bring in the benefits of a title register as widely and as quickly as possible while ensuring protection for existing rights and interests.
However, in enacting the LTO, the Legislature requested the Administration to carry out a comprehensive review before seeking to bring the new legislation into effect. Members were concerned that a large number of substantial amendments were made to the legislation during the committee stage and a number of stakeholders were still concerned about how the legislation would work in practice.
In May 2007 the Administration reported to the Panel on Planning, Lands and Works of the Legislative Council on progress with the review and advised that a substantial amendment bill would be needed before the new system could be started. For details of the report, please refer to the Preparation for Title Registration: Position Report (23 May 2007).
In December 2008, the Administration reported again to the Development Panel of the Legislative Council on the remaining matters to be settled before the amendment bill is introduced. The main matters covered in that report are the two issues of the conversion mechanism and rectification provisions that we are now consulting the public and other key stakeholders on. The panel paper also contains an annex setting out initial discussions on the two matters with the Law Society, Bar Association and Real Estate Developers Association of Hong Kong. For a more general introduction to the report to the panel and the two consultation papers you may like to refer to a speech given by the Land Registrar in September 2008.
THE CONSULTATION PAPERS
As well as seeking views from specific stakeholder groups, such as the Law Society, Consumer Council, Heung Yee Kuk and others, the Administration would also welcome views from the public on the matters raised in these two consultation papers: