Hong Kong is one of the few common law jurisdictions to still operate a deeds registration system for recording interests in land and property, rather than a system of registration of title. In a property transaction, a solicitor has to review the deeds for at least the past 15 years to establish title, unlike a system of registered title, where the register itself gives the evidence of ownership and interests in the property.
The old registry system, which was established in 1844, will be replaced by the new land title system in about two years. The Land Titles Ordinance (Cap 585, Laws of Hong Kong) was gazetted on July 23 2004 and its operation is now pending the completion of preparatory work, which includes putting adequate IT systems in place.
The new land title system will transform the present system of deeds registration into a system of title registration. Under the new system, once a person is registered in the Land Registry as the owner, their title to the relevant property is guaranteed. Other jurisdictions (Australia, New Zealand, the UK, Canada and Singapore) use this title registration system, which is generally recognized as the most efficient and secure system for registering ownership to land in the world.
When the Ordinance becomes effective, all new land (including land granted under a new government lease) will immediately be converted to come under the title registration system. Existing land and property will remain under the deed registration system for an interim period of 12 years; at the end of the interim period, all land (with certain exceptions) will be automatically converted to the new system.
During the interim period, new measures will be introduced to give claimants to title or to an interest in a property an opportunity to protect their claims against the risk of loss when the property is sold after it has been converted to the title registration system. These new measures are a caveat and a caution against conversion.
At present, an unwritten interest cannot be registered but can still affect the title of a property. Under title registration, no unwritten interest can affect property unless it falls into a defined category of overriding interests. For a property under the title registration system, a purchaser for value is deemed to have notice only of registered matters, designated overriding interests and terms of the government lease. The registration of a caveat will allow a claimant to give notice of their claim to an unwritten interest before a property is converted to the title register. Once registered, the caveat constitutes notice to all persons subsequently dealing with the property. The risk of loss of the interest claimed will be reduced.
If there is a dispute over title or beneficial interest in a property, a claimant may register a caution against conversion, which will prevent the property from being converted to the title register until the caution has been settled.
To safeguard against the abuse of caveats and cautions against conversion, an owner may apply for the removal of caveats and cautions. A person who registers or maintains a caveat or caution without reasonable cause could be liable in damages to a party who suffers a loss in consequence.