Proposed amendmentsProposed amendmentstoto

Land Titles OrdinanceLand Titles OrdinanceCap 585Cap 585

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Outline of PresentationOutline of Presentation

Fundamental difference between deeds and title registrationWhy make amendments before commencementScope of amendments agreedThe remaining issues:-

Whether to revise rectification rulesWhether to amend conversion mechanism

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Title by RegistrationTitle by Registration

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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 remEvidence of identity and authority still crucial

Need for Amendment BillNeed for Amendment Bill

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

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Agreed AmendmentsAgreed Amendments

Redrafting and reorganization of LTOAddressing issues raised by bills committeeLTO to take priority over prior legislation unless specific exceptions made in LTO itselfRemove ambiguities over scope of indemnity schemeThe Land Registry Securing your possession Supporting an open market

RectificationRectification

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 ownerAvoids 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 effectRectification : illustration of effect

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(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).

Rectification : proposed changesRectification : proposed changes

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Only allow mandatory rectification against first bona fide registered owner after fraud/void instrumentNo mandatory rectification if property has been divided up and sold on to multiple ownersRemove ambiguity that might allow claim for rectification after land has been resumed or surrendered.

Conversion : 2004 MechanismConversion : 2004 Mechanism

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Commencement Conversion

Existing land stays under LRO

Eligible land converted

Caveats become Cautions

Caveats may be entered under LRO to give notice of claim to

unwritten equities

Cautions against conversion (CAC)

CAC land converts when CAC resolved

Issues with 2004 MechanismIssues with 2004 Mechanism

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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

Alternative ProposalAlternative Proposal

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InitialConversion

Commencement

New Land

only 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

SpecifiedDate

Indemnity for post conversion matters

Way ForwardWay Forward

Decide extent of remaining amendments after consultation closes at end of MarchPrepare draft bill and rules for consultation with Law Society Working PartyBrief LegCo in preparation for tabling of Amendment BillLaunch education and training programme.

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