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Newsletter - September 2006
 
Asia Title Risk Round-Up
 
Property ownership and loan enforcement risk is inherent in doing business in Asia. These risks vary by location and transaction, but the following summaries highlight the key risks in a range of countries.
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Hong Kong
 
The Hong Kong Law Society has stated, "instances of properties with absolute good title are rare if not unknown." During market downturns, potential purchasers often use minor title defects as a means of rescinding purchase contracts. This impacts significantly on banks selling repossessed properties ........ more
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India
 
Most city survey records only show land, not buildings erected on it, and it is common to see encroachments by neighbouring owners. Customary rights and community property rules present a myriad of complications & the court system is notoriously slow ........ more
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Japan
 
In Japan, prospective purchasers should physically inspect property to determine who is in possession and interview neighbours for information. Land boundaries are often unclear resulting in problems with encroachments. Japanese lenders will often rely on the good faith of the owner when taking a security interest over real estate. Real risks exist if the identity of the owner is not fully confirmed ........ more
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Korea
 
Major risks include the accuracy of the deeds registry, off-title lease claims and the accuracy of boundaries. Fraudulent land transactions are routinely unwound with no compensation to innocent purchasers ........ more
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Macau
 
Title of a registered owner is defeasible if it has been subject to previous fraudulent dealings. In such cases, the property will invariably be returned to the innocent owner. The Government provides no compensation for innocent parties who lose ownership of their property due to fraud ........ more
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Singapore
 
Singapore has probably the most reliable title system in Asia. However, known defects in titles, such as encroachments over adjoining properties, can still prevent transactions occurring as the cost impact can be significant ........ more
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Thailand
 
Special care needs to be taken where dealing with rural, forest & beach reserve land (where most resort type developments are located) and with Phuket in particular. Fraudulent transfers of land (including Government officials' fraud) will usually result in the property being returned to the rightful owner ........ more
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Please visit us at MIPIM Asia this month.

 
For more information on how title insurance can protect property ownership interests and enforceability of loans in Asia, please visit our website www.firstam.com.hk or contact us.
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