Proposed amendments to Land Titles Ordinance Cap 585

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Proposed amendmentstoLand Titles OrdinanceCap
585
The Land Registry Securing your possession
Supporting an open market
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Outline of Presentation

• Fundamental difference between deeds and title
  registration
• Why make amendments before commencement
• Scope of amendments agreed
• The remaining issues-
• Whether to revise rectification rules
• Whether to amend conversion mechanism
• Way forward

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Title by Registration

• Act of registration marks legal change of title
• Title by Registration not Registration of
  Title
• Title Register, not title deeds, are proof of
  title
• Certificate is of State of Title.
• Unregistered matters (except overriding
  interests) have no effect in rem
• Evidence of identity and authority still crucial

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Need for Amendment Bill

• Enactment in 2004 a statement of intent. Demand
  to check and, if needed, improve legislation
  before commencement.
• Difficult language and structure
• Ambiguity
• Review raised new questions about rectification
  scheme and practicality of conversion mechanism
  that must be settled.

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Agreed Amendments

• Redrafting and reorganization of LTO
• Addressing issues raised by bills committee
• LTO to take priority over prior legislation
  unless specific exceptions made in LTO itself
• Remove ambiguities over scope of indemnity scheme

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Rectification

• How to put the Register right when it is found to
  be in error.
• Enacted LTO contains Mandatory Rectification
  provision for fraud cases
• Court must order rectification in favour of
  former owner
• Avoids risk that a former owner might get less
  than value of the property due to the cap on
  indemnity in fraud cases.

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Rectification illustration of effect

• (X)
• (A) --- --- (B) --- (C) --- (D) --- (E) ---
• (A) former owner
• (X) fraud /void instrument
• (B) bona fide purchaser dealing with fraudster.
  In position to check and raise question about (X)
• (C) (D) (E) bona fide purchasers remote from
  fraud. Not able to check (X).

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Rectification proposed changes

• Only allow mandatory rectification against first
  bona fide registered owner after fraud/void
  instrument
• No mandatory rectification if property has been
  divided up and sold on to multiple owners
• Remove ambiguity that might allow claim for
  rectification after land has been resumed or
  surrendered.

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Conversion 2004 Mechanism
Eligible land converted Caveats become Cautions
Existing land stays under LRO
Caveats may be entered under LRO to give notice
of claim to unwritten equities
Cautions against conversion (CAC)
CAC land converts when CAC resolved
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Issues with 2004 Mechanism

• Problematic Registers LR should not determine
  title
• Priority of Caveats
• Low cash flow for 12 years makes indemnity fund
  vulnerable during interim period and in first few
  years after conversion.
• Uncertainty over risk to be assumed

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Alternative Proposal
All eligible land under LTO
Subsisting interests still apply on transactions
Claims to unwritten equities can be protected by
caution
Applications for upgrading allowed Indemnity for
all registered matters after upgrading
Indemnity for post conversion matters
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Way Forward

• Decide extent of remaining amendments after
  consultation closes at end of March
• Prepare draft bill and rules for consultation
  with Law Society Working Party
• Brief LegCo in preparation for tabling of
  Amendment Bill
• Launch education and training programme.