Hong Kong - Property Title Briefing
 
Hong Kong's deeds registration system does not provide evidence of the vendor's title or confer title; it only establishes priority for dealings in an interest in a property. This means that when a property is sold or mortgaged, the solicitor needs to review all the title deeds and documents to establish his opinion on title. Unfortunately, the opinion expressed by one solicitor may be challenged by another; a common situation evidenced by lengthy and costly requisitions on title between solicitors during transactions and the numerous property disputes that come before the Hong Kong courts.
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In addition, Hong Kong has a 30-day registration period, during which time other interests may be registered with priority over the purchaser's or lending bank's interest.
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The Hong Kong Law Society has stated that "instances of properties with absolute good title are rare if not unknown." Typical title issues include:
Missing original title deeds

Discrepancy in signatures or names

Discrepancy in property description

Missing or invalid powers of attorney

Incomplete or illegible Government Lease

No certificate of exemption or compliance

Breach of Government Lease
 

 

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During market downturns, potential purchasers often use minor title defects as a means of rescinding purchase contracts as this is the only legitimate way to secure a refund of the deposit. This also has a very significant impact on banks selling repossessed properties.
 
Title Insurance
 
Title insurance protects owners by providing an indemnity for loss suffered resulting from any defects in the title to the Property. The coverage includes legal fees to defend title and financial loss resulting from any title defects. The coverage can be extended to financiers via a Lender's Policy and has the advantage of protecting solicitors against claims in negligence as we waive rights against solicitors. It is therefore an efficient risk reduction tool for all parties in a real estate transaction.
 
 

 
For more information on how title insurance can protect you and your clients, please visit our website www.firstam.com.hk or contact us.