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Newsletter - February 2006
 
Court Imposes "Very Onerous Duty" on Conveyancing Solicitors in Hong Kong
 
In the recent case of Liu Moon Ping v Wong Kwok Tung and Others[1], a judge accepted the submission made by an aggrieved client suing a solicitor for negligence that "in conveyancing, the solicitor owed a very onerous duty to make sure that he checks everything, that he advises the client of any possible hazard, and that if there is any possible hazard, he should not accept the title."
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The judge went on ... "in a conveyancing exercise, there is no place for assumption but proof beyond reasonable doubt on the basis of the title deeds and documents and property conveyancing evidence."
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Whilst it is obvious that a solicitor is under a duty to ensure that title purchased by a client may not be called into question on a subsequent sale, the land title system in Hong Kong suffers from fundamental flaws to the extent that the Law Society has stated, "instances of properties with absolute good title are rare if not unknown." This high expected standard of duty of care together with the imperfect land titles system places conveyancing solicitors in an extremely difficult position in proving titles.
 
Title Insurance
 
A title insurance policy provides the purchaser and the bank with an indemnity for loss suffered as a result of title defects, as well as indemnifying all legal fees and costs in defending the title. The policy waives all rights against solicitors and the law firm and is on a no-fault, no-negligence basis. It therefore provides a straight-forward risk mitigation tool for both owners and lenders whilst shielding solicitors against claims in negligence.
 

[1] Civil Action No. 1912 of 2003
 

 
For more information on how title insurance can protect you and your clients, please visit our website at www.firstam.com.hk or contact us to arrange an informal discussion or a presentation for your conveyancing team.