Following is a question by the Hon Tony Tse and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (May 25):
Question:
The Land Titles Ordinance (Cap. 585) enacted by this Council on July 7, 2004 was gazetted on the 23rd of the same month. Cap. 585 aims to replace the deeds registration system with a new system for registering the title to land and the interests in the land subject to which the title is held, so as to provide greater certainty to both the ownership of land and title to property, and simplify property conveyancing procedures. During the scrutiny of the relevant bill, the authorities proposed that Cap. 585 be implemented two years after its enactment so as to allow sufficient time for the authorities to enact the relevant regulations and to finalise the guidance notes for legal practitioners and members of the public. The authorities also undertook to conduct a review of Cap. 585 during the two-year period. However, Cap. 585 has not yet been implemented after almost 12 years since its enactment. The implementation of the title registration system has thus been held off indefinitely. In this connection, will the Government inform this Council:
(1) of the reasons why the authorities have not yet implemented Cap. 585 and the title registration system; the latest progress of the aforesaid review, including the specific problems that have yet to be solved and the relevant reasons, as well as the expected time when such problems can be solved;
(2) whether it has set a timetable for the implementation of Cap. 585 and the title registration system; if it has, of the details, including whether public consultation will be conducted before the implementation; if it has not set a timetable, the reasons for that, and whether the authorities have plans to shelve Cap. 585 and the title registration system;
(3) whether it has assessed the impacts of the long delay in implementing Cap. 585 and the title registration system on property conveyancing and protection of the interests of property owners, especially those interests involved in the land and properties in the New Territories; if it has assessed, of the outcome, and whether it will provide the relevant quantified information; and
(4) as the authorities have indicated the need to provide for a system for determination of land boundaries applicable to the land governed by the Land Registration Ordinance (Cap. 128) and the land registered under Cap. 585, of the latest progress of the relevant work; as the Hong Kong Institute of Surveyors has put forward a number of recommendations on the system for determination of land boundaries, including establishing a legal framework for determination of land boundaries and proper registration of land boundary plans under the Land Survey Ordinance (Cap. 473), as well as setting up a land boundary records system under the Land Survey Authority, etc., whether the authorities will accept such recommendations; if they will, of the details and implementation timetable; if not, the reasons for that?
Reply:
President:
In July 2004, the Legislative Council passed the Land Titles Ordinance (Chapter 585) (the LTO). The LTO aims to replace the present deeds registration system that gives no guarantee to titles with a new system to be established under which the Title Register would be conclusive evidence of the titles to and the interests in registered land, with a view to providing greater certainty to property titles and simplifying the procedures of checking title documents upon conveyancing. As significant changes had been made to the Land Titles Bill during scrutiny, the Government undertook at the request of the relevant Bills Committee to conduct a full review and consider making further amendments to the LTO before its commencement.
The Land Registry established an LTO Steering Committee and an LTO Review Committee respectively to steer and carry out the review of the LTO after its enactment. The Steering Committee was chaired by the Land Registrar, with membership drawn from the Development Bureau, the Lands Department, the Department of Justice, and major stakeholders, namely the Law Society of Hong Kong, the Hong Kong Bar Association, the Real Estate Developers Association of Hong Kong, the Hong Kong Association of Banks, the Hong Kong Mortgage Corporation Ltd, the Estate Agents Authority, the Consumer Council and the Heung Yee Kuk. The review found that substantial amendments to the LTO were required before commencement of the title registration system.
The Land Registry has been publishing and updating information on the progress of the post-enactment review and other preparatory work for the LTO on its website. The Government has also been reporting the progress to the Legislative Council from time to time through various channels, including the Joint Sub-committee formed by the Panel on Development and the Panel on Administration of Justice and Legal Services on the LTO during March 2009 to June 2011. The Joint Sub-committee considered it appropriate for the Government to report the work progress to the Panel on Development and the Panel on Administration of Justice and Legal Services after the Government has drawn up with the full package of proposals on the necessary amendments to the LTO and consulted the public on the proposals.
The reply to the four parts of the question is as follows:
(1) and (2) As mentioned above, the post-enactment review found that the LTO would require substantial amendments before its commencement in order to resolve various complex issues, including the conversion mechanism for existing land under the new system. The public was inclined to prefer using the "daylight conversion" mechanism (i.e. automatic conversion at the end of 12 years after commencement of the LTO), which was simpler and clearer. However, automatic conversion might affect the titles to land the registers of which show indeterminate ownership, and cause the Land Registry to be legally liable for any interest lost or invalidated as a result of inaccuracies in the Title Register. In order to manage the conversion liabilities and protect the Registry's trading fund to meet any indemnity claims, it is necessary to introduce a mechanism for the Land Registrar to register caution against conversion, such that the titles of the relevant properties with indeterminate ownership would not be affected by the automatic conversion. Under such mechanism, the Land Registry would have to carry out basic visual inspection of apparent problems in the existing registers, which has significant resource implications, and there has yet to be consensus on whether inspection should be carried out.
Moreover, under the enacted provisions of the LTO, the court shall order the rectification of the Title Register in favour of a former innocent owner who lost his title as a result of fraud; and the innocent purchaser will be protected by a capped indemnity paid out of the Land Titles Indemnity Fund (known as the "mandatory rectification rule"). Some stakeholders objected to the mandatory rectification rule as it would undermine public confidence in the Title Register as conclusive evidence of titles, and defeat the original purpose of the LTO given that prudent purchasers would choose to investigate into the title history prior to conveyancing transactions; whereas others considered it necessary to retain the rule so that the defrauded former owners could recover their properties. Separately, some stakeholders also expressed reservations about setting a cap on the relevant indemnity. In light of the different views among the stakeholders, the Land Registry is exploring feasible compromises for the way forward.
We will continue to maintain close liaison with major stakeholders, and endeavour to achieve a consensus on the necessary amendments to the LTO in the light of the views received, based on which we would consult the public on the legislative amendments at an appropriate juncture. Given the complexity of the issues involved and the divergence of stakeholders' views, we do not have a timetable on the commencement of the LTO at the moment.
(3) As mentioned above, the LTO aims to provide greater certainty to property titles and simplify the procedures of checking title documents upon conveyancing. Before commencement of the LTO, all stakeholders will continue to use the present deeds registration system. As the present system has been in operation for many years and is familiar to the relevant sectors, its continued use should have no impact on conveyancing and the protection of the interests of title owners.
(4) In relation to the determination of land boundaries, the Hong Kong Institute of Surveyors has suggested to the Development Bureau earlier that amendments be made to the Land Survey Ordinance (Cap. 473). As the suggestion involves complicated legal and land policy issues, the Government needs to examine and consider the suggestion thoroughly. There is no timetable on the relevant work at the present moment.
Ends/Wednesday, May 25, 2016
Issued at HKT 14:39
NNNN