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Legal Update

Delivery of Original Title Deeds in Sale of Land

17 July 2008
Mayer Brown JSM Legal Update
Summary
 
Amendments have been made to the Conveyancing and Property Ordinance ("CPO") to limit the period for which the vendor of a property is required to provide original title documents to the purchaser for giving title to that property.
 
It is expected that these amendments will help to alleviate potential problems for many property owners the titles of whose properties are doubtful due to the absence of original pre-intermediate root of title document(s). Lawsuits resulting from action by purchasers who decline to complete on the ground of inability of the vendors to produce pre-intermediate root title documents, especially where there is a downturn of the property market, will be avoided. From the perspective of purchasers, the amendments will assist them in purchasing properties of their choice without future concerns about doubts in the title caused by technical defects appearing in pre-intermediate root title documents beyond the statutory requirement of 15 years.
 
Full Update
 
Background
 
Part 3 of the Yiu Ping Fong and Another v Lam Lai Hing Lana, HCMP No.3617 of 1998, Guang Zhou Real Estate Development (Hong Kong) Co. Ltd. and Another v Summit Elegance Limited, HCA 1531 of 1998 and Loyal Hope Limited v Leung Pui Ming and others, HCA 136/2007, which suggested that a vendor had a duty to produce the "originals" of "all" title deeds and documents relating "exclusively" to the subject property (that is, including original documents made before the intermediate root of title required under section 13(1) of CPO) to fulfil his duty to give a good title.
 
New section 13A of CPO
 
Under the new section 13A(1), unless the contrary intention is expressed, a purchaser of land is entitled to require the vendor to deliver to him, for the purpose of giving title to that land, the original of only
 
(i)  the Government lease that relates exclusively to that land and
 
(ii)  any document relating exclusively to that land and is required to be produced by the vendor as proof of title to that land under section 13(1)(a) and (c) (that is, where the Government lease was granted less than 15 years before the contract of sale and purchase, proof of title commencing with the Government lease, and where the land is held under an older Government lease, evidence of title for at least 15 years before the contract, commencing with an intermediate root of title which is an assignment, a mortgage by assignment or a legal charge which deals with the whole of the vendor's interest in the land to be sold).
 
New section 13A(4) makes it clear that section 13A does not affect the right or interest in the land concerned of any other person who is not a party to the contract for the sale and purchase of that land. Hence, the right or interest of any person other than the vendor and the purchaser (that is, third party rights) will not be affected by the operation of section 13A.
 
Revised Second Schedule to CPO
 
Clauses 8 and 9 of Part A of the Second Schedule to CPO (which contain covenants and conditions which may be incorporated by reference) were amended correspondingly to reflect the spirit behind the introduction of the new section 13A.
 
Application
 
The new provisions apply only to transactions for which either a preliminary agreement or in the absence of a preliminary agreement, a formal sale and purchase agreement has been signed on or after the commencement of the amendments. The new provisions therefore have no effect on past transactions that are either completed before 11 July 2008 or for which a preliminary agreement or in the absence of a preliminary agreement, a formal agreement has been signed before 11 July 2008.
 
For further information, please contact:
Ellen Tsao (
ellen.tsao@mayerbrownjsm.com )
Connie H Y Yu (
connie.yu@mayerbrownjsm.com )
 
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