Proposed Amendments to the Land Titles Ordinance (Cap. 585)
Land Law
Introduction
The deeds registration system is all we have known in Hong Kong since 1844 when the Land Registration Ordinance (Cap. 128) (“LRO”) was passed. There are currently around 2.9 million land registers in the Land Registry, which make up the property portfolio of Hong Kong. As property owners and conveyancing lawyers well know, under the deeds registration system, original historical title deeds have to be kept safely and checked for every transaction.
The Land Titles Ordinance (Cap. 585) (“LTO”) was first enacted back in July 2004 to replace the current deeds registration system with a title registration system, but the LTO has not taken effect since then due to the existence of various unresolved issues. The Government promised to carry out a comprehensive review of the LTO and work on an amendment bill before the title registration system therein does take effect.[1]
With new proposals to address the outstanding issues, the Development Bureau has on 27 February 2025 introduced to the Legislative Council the Registration of Titles and Land (Miscellaneous Amendments) Bill (“the Amendment Bill”) to amend the LTO, and aims to have the Amendment Bill passed by the end of 2025.[2] The Amendment Bill’s focus is to implement title registration on “new land” first.
Emily Ting and Eunice Lui give an overview of the LTO and the proposed amendments in this article.
The LTO and its Benefits
Under the current deeds registration system which has been operating under the LRO since 1844, the registration of documents only governs the priority of registered instruments. The land register is not conclusive as to property ownership. Given the possibility of title defects and unregistered interests, historical title documents have to be safe-kept, delivered, and checked thoroughly during conveyancing. Hong Kong is also one of the very few remaining jurisdictions which still runs a deeds registration system.[3]
The LTO was first introduced back in 2004 to resolve the downsides of the existing deeds registration system. Under the LTO, the person who is registered in the Title Register is the owner, and the Title Register constitutes conclusive evidence on title.[4] Title would no longer pass by an executed assignment but instead will be obtained by registration in the Land Registry. Instead of having to check the chain of title deeds to establish title, only the land register needs to be searched.[5]
Once a person is registered as the owner of the land or of an interest in the land, that title is indefeasible, unless the registration was obtained or directly as a result of (i) fraud, (ii) mistake or omission. or (iii) a void or voidable instrument (s.82 LTO).
The registered owner shall also hold his legal estate or equitable interest and rights subject to (s.25(3) and s.26(2) LTO):-
(i) any covenants, exceptions, reservations, stipulations, provisos or declarations contained in the Government lease or the agreement for a Government lease of the land;
(ii) any registered matter affecting the land; and
(iii) any “overriding interest” affecting the land. “Overriding interest” includes a long list of possible interests as defined in s.28 LTO, including but not limited to: Chinese customary rights; public rights; easements registered under the LRO, rights of way or rights of water; covenants which run with the land; easements implied by law or of necessity; statutory rights of resumption, demolition, redevelopment, etc; rights acquired or being acquired by adverse possession; leases for terms not exceeding 3 years.
The benefits which the LTO brings about include: [6]
(i) certainty of property ownership as the Title Registry provides conclusive evidence of title (subject to overriding interests);
(ii) obviating the need to keep or check historical title documents when verifying title;
(iii) simplifying conveyancing procedures and reducing costs in completion; and
(iv) bringing Hong Kong’s land registration system on par with other jurisdictions, such as Singapore and the United Kingdom.
Specific Issues under the LTO
As aforementioned, the LTO did not come into effect due to the various unresolved issues over which no consensus could be reached among major stakeholders.[7] Two of the major issues are:-
(i) Conversion mechanism: the method for shifting from land currently registered under the LRO to the title registration system under the LTO, and how rights and interests that may exist under the LRO system are to be handled during the conversion.[8]
(ii) Rectification of title and indemnity arrangements: this refers to how the legally authoritative Title Register can be put right, if it is found to be in error (for example due to fraudulent transfer of property). Under the LTO, there is a mandatory rectification rule (“the MR Rule”) which requires the Court to make a rectification order in favour of an innocent former registered owner if he lost his title as a result of fraud, irrespective of whoever is currently the registered owner.[9] Concerns have been raised regarding the lack of protection accorded to bona fide purchasers. The LTO also provides for indemnity to be paid to an innocent party if it suffers loss of ownership by reason of inaccuracy of the Title Register and/or due to fraud.[10]
Further amendments are anticipated in future to ensure the smooth transition to and implementation of the titles registration system. In light of the many potential problems that may arise, it may be prudent to study the conversion of “existing land” under the old deeds registration system to the new title registration system in other jurisdictions, such as the process under the English Land Registration Act 2002. For now, it suffices to focus on the New Land First Proposal which is the main focus of the Amendment Bill.
The New Land First Proposal
To enable early implementation of the title registration system and resolve the above issues pragmatically, the New Land First Proposal was formulated and has gathered support from majority of the members of the LTO Standing Committee and key stakeholders.[11] Essentially, the new system would apply to newly granted land first.
Pursuant to the New Land First Proposal, title registration would be implemented on “new land” first, that is, land held under Government Lease on or after the commencement of the LTO, which includes land granted (i) by way of land sale (auction or tender); (ii) by private treaty grant; and (iii) by land exchange (i.e. land re-granted after surrender).[12] Such “new land”, which are free from title defects and prior interests, would offer a good start to the implementation of the mechanism.[13]
Under the New Land First Proposal, the MR Rule was proposed to be abolished. This will be examined in detail below.
As for the plan for converting the remaining 2.9 million land registers (or in other words, “old land”) to the title registration system, no proposal or framework has been introduced yet. It was stated that the conversion proposal would be formulated after the implementation of the New Land First Proposal.[14]
Under the New Land First Proposal, it was proposed that claims for adverse possession would be barred against “new land” registered under the Proposal, i.e. the limitation periods prescribed in the Limitation Ordinance (Cap. 347) would not apply to “new land” registered under the LTO. The rationale of this suggestion was stated to be to further the policy objective of providing title certainty through the LTO.[15]
The MR Rule and its proposed abolishment
The MR Rule under the enacted LTO
The enacted LTO provides for the MR Rule in ss.82(3), 84 and 85(1)(a), which mandates the court to order the rectification of the titles registry in favour of the innocent former owner if the Court is satisfied that (i) the former owner lost his title by fraud; (ii) he was not a party to the fraud and (iii) did not “by his act or by lack of proper care substantially contribute” to the fraud.[16] There is a limitation period of 12 years, from the date on which the entry in the title register in question was made, for such an application for rectification. If a former owner is able to establish a claim within the time bar that he had lost his title due to fraud, an innocent aggrieved subsequent purchaser, who loses his property as a result, can be indemnified under s.84 LTO, but such indemnity would be subject to a proposed cap of HK$30M which is intended to be specified in regulations to be made.
Criticisms on the MR rule include the counter-intuitive effect of creating uncertainties in title registration and the lack of protection accorded to innocent purchasers, since any purchaser (even if innocent) of a registered property faces the risk of having his title rectified against the former owner if any fraudulent conduct is involved in the transaction.[17] A prudent purchaser would still wish to investigate previous transactions to obtain assurance that he will not be at risk, which of course would mean going back to the old system of investigation of title.
Abolishing the MR Rule under the New Land First Proposal
As aforementioned, the New Land First Proposal proposes to abolish the MR Rule such that a (i) bona fide purchaser (ii) for value and (iii) in possession would enjoy an indefeasible title even if the transaction was effected by fraud.[18] The rationale of the abolishment is to ensure title certainty.[19] To protect the innocent former owners who lost their title due to fraud, a Land Titles Indemnity Fund would be set up to indemnify them, with the indemnity cap currently proposed to be increased to $50M.[20] To prevent abuse of the indemnity system by fraudulent applications for indemnity payment, a claimant for indemnity must first obtain a court order for rectification as a prerequisite.[21]
Concerns have been raised regarding the lack of protection given to innocent former owners. Ancillary measures have been proposed to address these concerns, which inter alia include: (i) that the Land Registrar be empowered to prohibit registration of transfers if there are reasonable grounds for suspecting a fraud has occurred; (ii) that the Court be given the discretion to restore the title of the former owner upon his application; and (iii) anti-forgery features be included in the title certificates distributed to registered owners.[22]
The proposed abolition of the MR Rule appears to bring the position largely in line with the position under the Land Registration Act 2002 in England and Wales.[23] Under Schedule 4 of the Act, where the court decides there is a mistake in the register, but that an alteration of the register would prejudicially affect the title of a registered proprietor, there is significant restriction upon the court’s power to order rectification where the proprietor is in possession of the land affected. In such a case, the court may not order rectification of the register unless the proprietor consents; the proprietor has by fraud or lack of proper care caused or substantially contributed to the mistake; or it would, for any reason, be unjust for the alteration not to be made.[24]
Nevertheless, questions remain as to whether sufficient protection is afforded to the former owner under the New Land First Proposal, for example: In cases where a former owner applies to rectify the title register, how could he possibly discharge the burden of proof when he was not privy to the fraud perpetrated or is the burden rested on the new owner? In the event that his case is made out, are the legal costs to be borne by the Indemnity Fund? What would the measure of indemnity be, for example, what is the valuation date of the property and does it include loss of interest? Would the proposed indemnity cap of HK$50M be too low? These may be questions to be canvassed during the legislative debate or, if/when the Amendment Bill is passed, in future cases to be adjudicated by the courts.
[1] LC Paper No. CB(1)84/2025(04) “Proposed amendments to the Land Titles Ordinance (Cap. 585) to implement title registration on newly granted land, Background brief” (“LC Paper (04) Background brief”), 21 January 2025, at §4.
[2] LC Paper No. CB(1)84/2025(03) “Amendments to the Land Titles Ordinance to Implement Title Registration on Newly Granted Land” (“LC Paper (03) Amendments”), January 2025, at §18; Legislative Council Brief on Registration of Titles and Land (Miscellaneous Amendments) Bill 2025 (File Ref: DEVB(PL-CR) 1-10/43) (“LegCo Brief”) at §21.
[3] LC Paper (03) Amendments at §2.
[4] S.29(4) LTO; LC Paper (04) Background brief at §3.
[5] LC Paper (04) Background brief at Annex, p.12; Judith Sihombing, “An Outline of the Features of the Land Titles Ordinance 2004”, 23 July 2004. Retrieved from the Law Society’s website at: https://www.hklawsoc.org.hk/-/media/HKLS/members/circular/documents/04-325a2.pdf?rev=88db342e57c64cbf87e8466538484f74
[6] LC Paper (03) Amendments at §3.
[7] Land Registry’s post-enactment review. Retrieved from the Land Registry’s website at: https://www.landreg.gov.hk/en/title/postenactment.htm
[8] LC Paper (03) Amendments at §3, LC Paper (04) Background brief at §4.
[9] LC Paper (03) Amendments at §7.
[10] LC Paper (03) Amendments at §12.
[11] LegCo Brief at §4. Land Registry’s post-enactment review. Retrieved from the Land Registry’s website at: https://www.landreg.gov.hk/en/title/postenactment.htm.
[12] LC Paper (04) Background brief at §§5-6; LegCo Brief at §5.
[13] LC Paper (03) Amendments at §5.
[14] LC Paper (04) Background brief at §17; LegCo Brief at §20.
[15] LC Paper (04) Background brief at §§10-11; LC Paper (03) Amendments at §11; LegCo Brief at §11.
[16] S.82(3) LTO.
[17] Development Bureau’s “Consultation on Amendments to the Land Titles Ordinance – Rectification and Indemnity Provisions”, December 2008 at §§8, 23; LegCo Brief, §8.
[18] LC Paper (03) Amendments at §7; LegCo Brief at §9.
[19] LC Paper (03) Amendments at §8.
[20] LC Paper (03) Amendments at §§12-13; LegCo Brief at §12.
[21] LegCo Brief at §16.
[22] LC Paper (03) Amendments at §§8-10; LegCo Brief at §§9-10.
[23] In England and Wales, much of the land has been subject to compulsory registration since 1 December 1990, and the land registration system was overhauled by the Land Registration Act 2002: Explanatory Notes to Land Registration Act 2002, §7. Retrieved from the UK Legislation website at: https://www.legislation.gov.uk/ukpga/2002/9/notes.
[24] Schedule 4, §3, Land Registration Act 2002.
Emily Ting
Called to the Bar in 2019, Emily has a broad civil practice with an emphasis on chancery matters. She is active in the area of land law (including land compulsory sale applications, adverse possession, mortgage actions, building planning, and advising on easements and governments leases) and has co-authored the articles Summary possession of land under Order 113: Practical tips (with Mr. Ross Yuen) and Exemption clauses in the Deed of Mutual Covenant: A built-in shield against liability for building managers? (with Ms. Isabel Tam).
Her recent cases include Wise Grace Investment Limited & others v Lui Man Dung & others [2025] HKLdT 5 in which she acted for respondent minority owner in the trial of an application for compulsory sale for redevelopment.
Emily was recently recognised by Legal 500 Asia-Pacific 2025 as a Rising Star – Competition.
More details can be found in Emily’s profile.
Eunice Lui
Eunice was called to the Bar in 2024. Eunice joined Chambers in the same year upon completion of her pupillage with Mr. Hectar Pun SC, Ms. Priscilia Lam, Mr. Ross Yuen and Dr. Benny Lo.
Eunice is developing a broad mixed practice, spanning over land, commercial, arbitration and public law matters, and accepts instructions in all areas of Chambers’ work. She is fluent in English, Cantonese and Putonghua (Mandarin).
During her studies at the University of Hong Kong, Eunice served as part of the Law Association, representing law students of her cohort. Eunice was also an enthusiastic mooter, as she represented the University of Hong Kong at the Twenty Second Annual International Maritime Law Arbitration Moot as oralist, in which her team was a quarter finalist. Prior to commencing pupillage, Eunice served as a Marshal to the Honourable Madam Justice Carlye Chu, Vice-Preseident of the Court of Appeal.
Visit Eunice’s profile for more details.
This article was first published on 28 February 2025.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.