Proposals for Title Registration
1. Hong Kong is one of the few common law jurisdictions that still operates a deeds registration system for recording transactions in land and property, rather than a title registration system. The Land Registration Ordinance (Cap.128) (LRO), under which the registration of deeds is conducted, was enacted in 1844 and is one of the oldest pieces of Hong Kong legislation still in use. Keeping pace with the times, searches on land records have been supported by computerisation of land registers and imaging of instruments for more than two decades. However, the fact that the land registers remain simply an index to registered instruments has significant impact 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 whereas under a title registration system the title 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 title registration 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 Land Titles Bill was prepared. The Bill proposed automatic conversion of all properties, for which registers of deeds existed, into properties with registered titles. 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 protection against the loss of unwritten equitable interests that can be claimed against property under the present law.
3. A revised bill was gazetted in December 2002. The revised bill 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 commencement of Land Titles Ordinance, along with opportunity for voluntary applications for conversion without a sale. During deliberations in the Legislative Council, it was made clear that the Law Society of Hong Kong did not feel able to support the approach on account of the liabilities that it appeared to place on solicitors during the conversion. They had to sign a certificate of good title to support the conversion. There was also strong demand for a more certain timetable for conversion rather than indefinite parallel operation of the deeds registration system and the title registration system.
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 held under a new Government lease granted or an agreement for a Government lease on or after the appointed day after the commencement of the new ordinance. The only exceptions are land held under short term tenancies or a grant by way of modification or variation where only the lease term, the area or conditions of the lease have been varied.
Existing land and property ('LRO land') will remain under the terms of the LRO and Conveyancing and Property Ordinance (Cap. 219) for a further period (the 'interim period'), currently set at 12 years. During this period, new measures will be introduced under the LRO to give those who claim interest in the property an opportunity to protect their claim against the risk of loss before the property is sold. These new measures are 'caveat' and 'caution against conversion' which are more fully described in 'The "Daylight Conversion" Mechanism'. They will become available at the same time when the new 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, for example, when a 'caution against conversion' has been registered or when an instrument submitted for registration under the old system has not yet completed registration. Conversion will follow automatically as soon as the obstacle to conversion has been removed. No investigation of title or issue of a certificate of good title by a practising 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.