Conveyancing in Hong Kong: Mortgage and Title Checks

This article is written from the current text of twelve instruments: the Conveyancing and Property Ordinance (Cap. 219), the Land Registration Ordinance (Cap. 128), the Buildings Ordinance (Cap. 123), the Town Planning Ordinance (Cap. 131), the New Territories Leases (Extension) Ordinance (Cap. 150), the Solicitors' Practice Rules (Cap. 159 sub. leg. H), the Building Management Ordinance (Cap. 344), the Government Rent (Assessment and Collection) Ordinance (Cap. 515), the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545), the Residential Properties (First-hand Sales) Ordinance (Cap. 621), the Stamp Duty Ordinance (Cap. 117) and the Extension of Government Leases Ordinance (Cap. 648). The version-in-force date of each is given in Sources.

Introduction

The familiar account of title investigation is that the solicitor starts at the original Government grant and works forward through every transfer to the present seller. That is not what the Ordinance says. The right Cap. 219 section 13(1) gives a purchaser has a hard edge, and the edge is 15 years.

That edge shapes the whole transaction: what the vendor must produce, what the purchaser may requisition, what happens if the requisition is late, what the lender is looking at, and what can be pursued after completion.

Fees, rates and timetables are not the subject here — for stamp duty see stamp-duty-property-hong-kong, and for the process as a whole see buying-property-hong-kong-solicitor. What follows is what the Ordinances themselves say.

1. How far back title must be proved: Cap. 219 section 13

15 years, not "all the way back to the Government lease"

Cap. 219 section 13(1) in full:

Note the words "shall be entitled to require". The subsection is not a floor describing the vendor's minimum duty. It is a ceiling on what the purchaser may demand: the Government lease, plus limbs (a), (b) and (c).

Limb (a) splits in two. The first case is a recent grant —

The second covers most Hong Kong homes —

This is the root of title. The period runs not less than 15 years before the contract of sale, and the document at the root must be an assignment, a mortgage by assignment, or a legal charge — each dealing with the whole estate and interest in the land.

So if a 1978 assignment is the nearest document that predates the 15-year line, that assignment is the root. Everything before it the vendor is not obliged to prove and the purchaser is not entitled to require. "Back to the Government lease" is not what section 13 provides: the Government lease itself must be produced, but the transfers between it and the root fall outside section 13(1).

Limbs (b) and (c) attach to the root:

"Unless the contrary intention is expressed" — six words that move the whole thing

Section 13(1) opens with them. Section 13 can therefore be altered by the contract. An agreement may require a longer period, or a shorter one. When a purchaser reads the agreement, section 13 is the default, not the floor.

Section 13(5) adds a separate boundary in time:

Copies, recitals and presumptions: sections 13(2) to (4A)

Originals are not always required. Section 13(2):

What lies behind the root is handled by presumption, not by investigation. Section 13(3):

Section 13(4) takes it further:

Section 13(4A) deals with powers of attorney:

Deeds executed by corporations have a parallel provision, section 23A(2):

Section 23A(1) deals with a different layer — the attestation of a deed executed by a corporation aggregate — and that presumption is rebuttable:

And the whole of section 23A carries a limit of application, in section 23A(3):

So the conclusive presumption in section 23A(2) reaches only contracts entered into on or after the commencement of section 9 of 14 of 2003 — the same kind of line section 13(5) draws for section 13.

These subsections together are why the 15-year scheme works at all: facts outside the 15 years are not investigated, they are presumed — and the presumptions in sections 13(4A) and 23A(2) are conclusive, admitting no contrary proof.

Which originals get handed over: section 13A

Section 13A(1):

So the originals the vendor must deliver are only two classes: a Government lease relating exclusively to the land, and a document relating exclusively to the land that section 13(1)(a) and (c) require to be produced. A deed that also relates to the rest of the building — a Deed of Mutual Covenant, or a pre-partition parent deed — is not in that class. Section 13A(3) states the consequence:

But section 13A(4) confines that to the parties:

That the purchaser has no ownership in the document does not touch anyone else's right or interest in the land.

Section 13A(2) preserves the common law:

2. Where "Good Title" sits in the Ordinance

The Ordinance's own words

Cap. 219 section 36 allows the Second Schedule terms to be incorporated by reference:

The Second Schedule is not one set of terms but three Parts. Part A is headed "(In an Agreement for Sale of a Residential, Commercial, Industrial or Other Unit in a Completed Building)", Part B "(In an Equitable Mortgage of a Residential, Commercial, Industrial or Other Unit in an Uncompleted Building)", and Part C "(In a Legal Charge)" — Part A for the sale agreement for a unit in a completed building, Part B for an equitable mortgage of a unit in an uncompleted building, and Part C for the legal charge, which is the instrument section 6 below is about. This section is about Part A.

The Second Schedule Part A (in an agreement for sale of a residential, commercial, industrial or other unit in a completed building), clause 9, is headed "Good Title". This clause points the giving of title at section 13A and the proof of title at section 13, and allocates the costs of each, and it reads:

What that clause does is specific: it points giving title at section 13A, points proving title at section 13, and allocates cost — proof at the vendor's expense, inspection and examination (including search fees) at the purchaser's.

It does not set up a standard called "reasonable doubt", and does not use the term "good title"; the Ordinance's own vocabulary is used below.

Section 38(1) protects the solicitor who works to the Ordinance:

That protection is not confined to solicitors. The next subsection, 38(2), extends it:

So a person handling the property in a fiduciary position — a personal representative or a trustee, for instance — has the same section 38(1) protection, with or without a solicitor.

Clause 7: requisitions have a 14-day deadline

Same Schedule, Part A, clause 7(1):

A requisition delivered later than 14 days before the completion date is outside that clause. And clause 7(2) gives the vendor an exit, not a duty:

Read that carefully: if the purchaser insists on a requisition the vendor is unwilling to deal with, the vendor may annul the sale, and the purchaser gets the deposit back — without costs, without compensation, and without interest if it is returned within 7 days. A requisition pressed too hard may not produce a repaired title; it may produce a cancelled transaction.

Clauses 8, 10, 11 and 12: documents, failure and assurance

Clause 8 governs where the title deeds end up:

Clause 10 is failure by the purchaser — deposit absolutely forfeited, resale, and recovery of the shortfall:

Clause 11 is failure by the vendor:

The two are not symmetrical. Clause 10 makes the deposit liquidated damages and permits a resale with recovery of any deficiency; clause 11 does no more than remove a procedural step before the purchaser sues.

Clause 12 is the assurance on completion:

Clause 6 deals with errors and omissions, and subclause (1) has to be read first — it is the "Subclause (1)" that subclause (4) refers to:

That is the general rule: an error does not, of itself, undo the sale. Subclause (2) provides compensation for a material error:

Subclause (3) shuts out compensation for immaterial errors:

And subclause (4) is the exception to subclause (1):

Finally, subclause (5) brings in another Ordinance: "The Misrepresentation Ordinance (Cap. 284) applies to this agreement."

All of these apply only where the agreement has incorporated the Second Schedule by reference (section 36). In an agreement that has not, none of them appears by itself.

Encumbrances the purchaser cannot clear: sections 12 and 12A

Section 12(1) gives either side a route to the court:

Section 12A(1) deals with an encumbrancer who cannot be found:

3. The Land Registry: what deeds registration does and does not do

What is registered is the instrument, not the title

Cap. 128 section 2(1):

Section 2(2) fixes the reach of "judgments":

Section 3: priority, and the consequence of not registering

Section 3(1):

Section 3(2), with its proviso:

The boundary of that subsection matters. An unregistered instrument is not "void against third parties". It is void as against "any subsequent bona fide purchaser or mortgagee for valuable consideration" of the same parcels. That is a priority rule, aimed at a named class. The proviso then carves out two things: bona fide leases at rack rent for a term not exceeding 3 years, and a regulated tenancy as defined by Cap. 7 section 120AA(1).

Section 4 removes knowledge from the question:

So a later purchaser who actually knows about an unregistered mortgage can still take priority by registering. Under deeds registration, whether you knew is not the answer; whether it was registered is.

Section 5 is the one-month window:

Section 5A makes a separate rule for charging orders and lites pendentes:

Lites pendentes: sections 16, 17 and 19

Section 1A defines a lis pendens as "any action or proceeding pending in a court or tribunal that relates to land or any interest in or charge on land" and as "a bankruptcy petition".

Section 16:

Section 17 puts a clock on it:

A judgment or lis pendens showing on a search that is more than 5 years old and has not been re-registered has ceased to have effect as a registration. And section 19 lets the court vacate one:

Registration is not a guarantee of title

Section 23(1) sets out the Registrar's duty:

*The opening words "Subject to subsection (2)" point at a duty not to register.* Section 23(2):

So an instrument effecting a division of land may not be registered unless it is accompanied by a land boundary plan signed and certified by an authorized land surveyor under the Land Survey Ordinance (Cap. 473). Section 23(3) makes separate provision where the division is effected by a will or judgment:

And section 23(4) removes the signing and certification requirement for a plan prepared by the Government:

(The qualification of an authorized land surveyor and the specification of a land boundary plan are governed by Cap. 473.)

Section 23A sets out what the Registrar is not answerable for:

Limb (a) is the point: registering in good faith an instrument "notwithstanding any error, omission or defect therein" carries no liability in damages. That is why a register extract cannot replace reading the documents — registration confirms that an instrument has been entered as required, not that the rights it recites exist.

Section 26A(1) makes a certified copy admissible without further proof:

What a search turns up: other Ordinances that feed the Land Registry

The register holds more than assignments and mortgages. Among the chapters covered here, each of the following sends something in:

That table lists the entries the quoted provisions specify; it is not a complete inventory of the register — the Land Registration Regulations (Cap. 128 sub. leg. A) and other Ordinances make further provision.

4. The Government Lease

The title covenants implied into an assignment and a legal charge

Section 35(1)(b) implies the First Schedule Part II covenants into an assignment:

First Schedule Part II, covenants 1 and 2:

Covenant 3:

Covenant 4:

Covenant 5 is the further-assurance covenant:

These covenants are what "the title is sound" actually amounts to in the Ordinance: the Government lease subsists, the Government rent is paid, the covenants in the Government lease and in any Deed of Mutual Covenant have been observed, the vendor has the right to assign, the purchaser may hold and enjoy the land, and further lawful assurances are to be executed at the purchaser's request. Part II also opens with an important limit — the vendor's liability extends only to breaches arising from acts of the vendor, of persons through whom the vendor derives title otherwise than by purchase for value, and of the other listed persons.

The legal charge side is section 35(1)(e) with First Schedule Part V:

Part V, like Part II, carries five covenants and not one. Covenants 1 and 2:

Covenant 3:

Covenant 4:

Covenant 5:

And section 35(2) makes clear that none of this is immovable:

Government rent

Government rent is dealt with by Cap. 515. Section 6(1):

3% is the Ordinance's own figure, applied to the rateable value of the land leased. Section 6(3) says from when each class becomes payable:

Section 6(5) says who can be asked to pay:

(Exemption is dealt with in Cap. 515 section 4, and rateable value under the Rating Ordinance, Cap. 116.)

2047 and lease extension: Cap. 150 and Cap. 648

The date 2047 is in a statute, not in a policy statement. Cap. 150 section 6:

The scope is set by section 2, and section 2 carries three exclusions:

The expressions "short term tenancy" and "lease for special purposes" are defined in section 3(1). A short term tenancy is "a lease expressed to be granted for a term of not more than 7 years", and in calculating that term "there shall be excluded any extension or renewal of the lease that has occurred, or may occur, by virtue of the exercise of any right".

The definition of a lease for special purposes is the more intricate of the two and runs on two limbs: (a) a lease satisfying the description in section 3(2) but not being a short term tenancy, a lease of a lot specified in Part II of the Schedule, or a lease granted to the Hong Kong Housing Authority, the MTR Corporation Limited, the Kowloon-Canton Railway Corporation or the Hong Kong Housing Society; or (b) a lease of any lot specified in Part I of the Schedule. The section 3(2) description is:

In short, limb (a) turns on a lease that bars assignment for its whole term with no mechanism for lifting the bar. The lots concerned are listed in Parts I and II of the Schedule.

In practice, though, whether a lease is a lease for special purposes is not settled by reading that definition. Section 4(1) requires the Land Officer to note it in the Land Office register:

And section 4(2) makes that note conclusive:

So: a note made before the appointed day, and the lease is conclusively deemed to be a lease for special purposes; no note by the appointed day, and it is conclusively deemed not to be one. The section 3(1) and 3(2) definitions are the criteria the Land Officer applies; what a reader has to check is whether the note is on the register. Limb (c) is the lessee's own opt-out, section 5(1):

"Appointed day" is defined in section 3(1):

Burdens during the extension are dealt with by section 7(1) — encumbrances, mortgages, public rights, mutual covenants, easements, tenancies and the right of re-entry all continue, and only the rent covenant is replaced:

Section 7(2) carries those rights and obligations through the whole period of extension:

And section 7(3) rewrites the resumption compensation formula. Where a lease empowers the lessor to resume on payment of compensation and the method of calculation uses a fraction whose numerator is one together with the unexpired portion of the term:

The denominator is increased by 50, and the lease is treated as originally granted for the longer term. That changes the amount of compensation.

Section 10 preserves pre-extension breaches:

For what happens after 2047, and for leases outside Cap. 150, the statute is Cap. 648. Section 3 sets the scope:

Section 3 is not the only gate. Extension under Cap. 648 reaches only an "applicable lease", and the section 2 definition of that term excludes a special purpose lease: an applicable lease is one that, as at the date of publication of the Extension Notice, is not — or is regarded as not being — a special purpose lease. How that is determined is section 6's job, and the mechanism is a record entry: an SPL identification note and an SPL cancellation note. Section 6(1):

The two opening conditions of section 6(1) cannot be dropped: it operates only where "the expiry date of a lease falls within the specific expiry period specified in an Extension Notice", and the whole subsection is "subject to subsection (2)". Section 6(2):

Section 6(2) is directed at an identification note made on or after the publication date by virtue of a modification of the lease and still uncancelled immediately before the expiry date.

And the Non-extension List is not compiled on the whole of section 6. Section 8(1):

Limb (b) reads "by virtue of section 6(1)(a)" — limb (a) only, not (b). A lease that is regarded as not being a special purpose lease by virtue of section 6(1)(b) — its identification note cancelled on or after the publication date — is outside section 8(1)(b); section 9(1)(a)(ii) below uses exactly the same wording.

So a special purpose lease is outside section 12 from the start, regardless of the Non-extension List and regardless of any Opt-out Memorandum. Whether a particular lease carries an identification note is a question for the Land Registry record of that lease.

The mechanism is: the Director publishes an Extension Notice in the Gazette specifying a specific expiry period (section 7(1)); a Non-extension List is published at the same time (section 8(1)). The publication deadline is set by section 7(2), which is itself subject to section 7(6):

The 6 years is paragraph (a)'s general rule only. Where the start date of the specific expiry period falls between 5 July 2024 and 31 December 2030 — the earliest cohort this Ordinance reaches — paragraph (b) fixes the deadline at 5 July 2024, not six years. The Opt-out Memorandum limit in section 9(2)(b), set out below, uses the same window.

And the deadline itself can be moved:

A postponement is published as an approval notice under section 7(7), and section 7(8) requires that notice to state the postponed specified day and the reason for the postponement. Section 7(2) therefore gives a date the Secretary may move, not a fixed fact about the calendar. For an applicable lease covered by the Notice and not on the List —

The words are "50 years without payment of any additional premium". Both the term and the absence of a premium are in the provision itself.

The opening words of section 12(1) — "Subject to subsection (2)" — point at section 12(2), which deals with a late-arriving case:

So even where a lease comes within the Notice only after it has expired, the extension is the same 50 years, still without premium, and still runs from the day after the expiry date. Section 12(3) characterises it:

A lessee may also decline. Section 9(1) first sets out which leases the route is open to:

The Opt-out Memorandum under section 9(2) is on a strict clock:

The deadline is not a formality. Section 9(3) states the consequence:

And "all the persons specified in subsection (4)", referred to in the quoted text, are listed in section 9(4):

Section 9(5) gives the effect:

Burdens during the extension are in section 13(1), and section 13(2) adds four covenants and conditions that the original lease may not have contained — the Director's right of entry, compliance with Cap. 131 in development and use, compliance with Cap. 123 in building, and re-entry on breach:

Two things to be clear about. First, an Extension Notice, a Non-extension List and the related notices are not subsidiary legislation (section 21); whether any particular lease is covered, or has been listed, is a Gazette question. Second, Part 4 of Cap. 648 imposes separate approval requirements where foreign-related entities are involved.

Cap. 219 section 42(3) deals with covenants surviving a renewal:

And section 14A(1) deals with Government modifications:

5. The Deed of Mutual Covenant

Cap. 344 Part VIA prevails over the DMC itself

A DMC is a contract, but not one that may be written freely. Cap. 344 section 34C(1) sets the reach of Part VIA:

That subsection turns twice on the "material date". The term is not defined in section 2; it is defined in section 34D(1):

That is the date meant in sections 34C(1), 34E(1) and 34F(1) alike.

Section 34C(2):

Section 34E(1)'s general rule implies Schedule 7 into every DMC — but the subsection opens "Subject to subsection (4)", and that exception is set out below:

And the operative provision is section 34E(2):

So when reading a DMC, the DMC's own words are not the last word.

"Every" does have an exception, and it is written into the opening words of section 34E(1) — "Subject to subsection (4)". Section 34E(4) gives the Authority a power to exclude:

Note the size of that power: it excludes paragraph 7 of Schedule 7 only, not the whole Schedule, for no more than 3 years, and by notice in the Gazette. Section 34E(5) adds a further bar — the Authority must not make an exclusion under subsection (4)(a) if owners of not less than 50% of the shares in aggregate give notices of objection. So "every" in section 34E(1) is the general rule, and reading a particular building's DMC also means checking whether a section 34E(4) notice is in force for it.

Schedule 8, by contrast, comes in under section 34F(1) only so far as it is consistent:

Shares, management expenses and repair

Section 39 fixes how shares are determined:

Section 34G(1) deals with a developer's unsold shares:

Section 34H(1) supplies a repairing obligation the DMC may have omitted:

Section 34H(2) turns it into a duty owed to all owners:

Sections 34I(1) and (2) deal with the common parts:

What non-payment leads to: sections 19 and 25

Section 19(1):

This matters directly to a buyer: where the DMC gives someone a power to sell an owner's interest or register a charge for unpaid sums, the corporation may exercise it instead. A charge registered by an owners' corporation on a search comes from here.

And section 19(2) widens what counts as the failure to pay that triggers that power:

So the arrears are not confined to sums the DMC itself names: they extend to costs the management committee incurs in exercising its section 40(1)(a)(ii) or (b) powers. What those powers are has to be read in section 40(1). That subsection lets a member of the management committee, and any person it authorizes, enter a flat at a reasonable time on reasonable notice; limbs (a)(ii) and (b) give these purposes:

So what section 19(2) widens is the cost of dealing with property inside a flat that affects the common parts or other owners, and of abating a hazard or nuisance.

Section 25 lets a registered mortgagee pay and recover:

Where a DMC dispute goes

Section 45(1):

Standing is dealt with in a separate subsection. Section 45(2):

The persons to whom the section applies are listed in section 45(4):

So not everyone may commence those proceedings — an owner, the Authority, a person referred to in section 3(1)(a) or (b), a management committee, a corporation, a manager, an owners' committee, a registered mortgagee, an administrator, and, with the Tribunal's leave, the tenants' representative and any other person specified in a registered instrument.

But section 45(3) draws a boundary around that jurisdiction:

(The classes of proceedings within the Tribunal's jurisdiction are listed in Schedule 10.)

Why a DMC term binds a later buyer at all is answered by Cap. 219 section 41(9):

The words are "whether or not they had notice of the covenant". That is what registration does, and it is independent of whether the buyer ever read the DMC.

But section 41(9) does not operate on its own. Sections 41(1) and 41(2) set the gateway for the whole section: 41(1) applies it to express covenants and to covenants implied by or under the Ordinance or any other law, and 41(2) states three conditions —

Registration therefore does not make any and every clause run with the land: the covenant must first satisfy 41(2)(a), (b) and (c), and only then does 41(9) dispose of the notice question. Section 41(5) adds that a positive covenant is not, by virtue only of section 41, enforceable against a lessee, against a person deriving title under a lessee, or against a person merely because he is an occupier; section 41(6) defines what a positive covenant is. And section 41(8) puts an end point on liability:

So once the property is sold, fresh breaches are no longer the former owner's concern, but breaches he committed before the sale still are. Whether a particular DMC clause satisfies the three section 41(2) conditions depends on its wording.

6. The Mortgage Deed

It can only be made as a legal charge

Cap. 219 section 44(1):

Section 44(2) is the subsection that does the most work here:

Note what the parenthesis takes out: the power of the mortgagee to enter into possession before any default by the mortgagor. Read that alongside Fourth Schedule paragraph 2 below (the power to enter and take possession of the mortgaged land) — under a legal charge, possession is not available before the mortgagor is in default.

The Schedule terms on the mortgage side are Second Schedule Part C ("(In a Legal Charge)"), not Part A. They are incorporated by reference under section 36 in the same way, and the first of them is the borrower's payment and indemnity covenant:

(The remaining items in Part C are not set out here.)

Section 44(5) permits a second charge:

Section 44(6) deals with custody of the deeds:

That subsection is where "the bank holds the deeds" comes from — and it too opens with "Unless the contrary intention is expressed". Section 47(1) preserves a right of inspection:

Tacking is dealt with by section 45, and section 45(1) is the exception rather than the rule — the general rule is in section 45(3). Section 45(1) first, where limb (c) speaks directly to a mortgage expressed to secure "all money which may, from time to time, be owing to the prior mortgagee":

Section 45(2) extends that priority to interest and costs:

And section 45(3) is the general rule:

A proviso is attached to it:

So the right to tack in relation to land is abrogated, and what survives is only what section 45(1)(a), (b) and (c) permit; a priority acquired before the commencement of the section is unaffected. Reading section 45(1) on its own leaves a general common law right to tack apparently intact.

Where the bank's powers come from: section 51 and the Fourth Schedule

Section 51(1):

Section 51(2):

Section 51(3) is a limit on equitable mortgages — section 51(1) extends the Fourth Schedule powers to "any legal charge or equitable mortgage by deed", and section 51(3) immediately draws the line for the latter:

So an equitable mortgagee may have a power of sale, but cannot assign the legal estate on the strength of that mortgage alone.

Section 51(4) lets the mortgage deed vary them:

And the section carries a temporal limit of its own, immediately after (4). Section 51(5):

So a mortgage executed before the commencement of section 51 — given in the section's editorial note as 1 November 1984 — carries no implied Fourth Schedule powers at all, and the whole apparatus set out below does not reach it. Section 13(5) draws the same kind of line for section 13.

Fourth Schedule paragraph 8 is the power of sale:

Paragraph 2 is taking possession:

When it may be exercised: Fourth Schedule paragraph 11

Paragraph 8 does not stand alone. Fourth Schedule paragraph 11:

Three conditions; any one will do, but one must hold. Limb (a) is not "default, therefore sale" — notice requiring payment must have been served, and default must have continued for one month after that service. Limb (b) is interest in arrear and unpaid for one month after becoming due. Limb (c) is a breach of some provision other than the covenant to pay the mortgage money and interest.

Section 50(1) separately implies a power to appoint a receiver, and section 50(2) makes the receiver the mortgagor's agent:

What a sale does, how the money is applied, and what protects the buyer

Section 53(1):

Section 53(2) is a different thing altogether — an order of foreclosure absolute is an order of the court:

Section 54 fixes the order in which the money is applied:

The order is worth remembering: rent, taxes, rates and other outgoings first, then any prior incumbrance, then the receiver's remuneration and the costs of sale, and only then the mortgage money, interest and costs; the residue goes back to the owner.

Section 52 protects someone buying from a mortgagee:

That section has two halves, and the second is routinely dropped. First half: the purchaser's title is unaffected. Second half: anyone who suffers loss through an unauthorized, improper or irregular exercise of the power of sale has a remedy in damages against the person exercising the power.

Redemption and discharge

Section 56(1):

Section 56(2):

At the mortgagor's own cost and charge, which is stated in the provision itself. Section 62(1) requires notices under the Ordinance relating to land to be in writing:

But "in writing" is not the whole of section 62. Fourth Schedule paragraph 11(a), on which this section turns, depends on a notice having been served, and what counts as service is in section 62(2) to (6). Section 62(2) deals with how the notice is addressed:

Sections 62(3) and (4) are the modes of service:

Section 62(5) extends these rules to notices required by an instrument and to notices terminating a lease, and section 62(6) takes court and tribunal proceedings out:

Registration of the mortgage instrument takes us back to Cap. 128 sections 3 and 5: an unregistered mortgage remains good between the parties, but is absolutely null and void against a subsequent bona fide purchaser or mortgagee for valuable consideration (section 3(2)), and the one-month window in section 5 decides whether it takes effect by relation to its date.

7. One solicitor for buyer and lender

The common Hong Kong arrangement is that the buyer's solicitor also handles the lender's mortgage documents. The rule that governs it is rule 5C of the Solicitors' Practice Rules (Cap. 159 sub. leg. H), not an unnamed guidance note.

Rule 5C(1):

Note that the subrule is about vendor and purchaser, not lender and borrower.

And note its opening words — "Subject to subrules (2), (3), (4) and (5)". Those four subrules are not exceptions in the abstract: subrules (2), (3) and (4) are the first-hand developer sale, which is exactly the transaction section 9 of this article is about; subrule (5) extends that same permission to a sub-sale. Rule 5C(2) permits one solicitor to act for both vendor and purchaser in the sale of a unit or other interest in an uncompleted development for which the Director of Lands' consent is required under the Government grant. Rule 5C(3) permits it for an uncompleted development where that consent is not required, but only if a statutory declaration in the Council's specified form has been deposited in the Land Registry and the agreement contains the clauses the Council specifies for mandatory inclusion. Rule 5C(4) permits it in a completed development sold by the owner of the whole development, where no assignment has been executed since the date of the occupation permit or certificate of compliance, "whichever is required in respect of such sale and purchase, and if both are required, the earlier", and again only if the agreement carries the Council's mandatory clauses. Rule 5C(5) extends the same permission to a sub-sale on the same mandatory-clause condition.

So a buyer of a new flat who is told that the developer's solicitor is also acting for him is not being told about a breach of rule 5C(1) — he is in rule 5C(2), (3) or (4). Under rules 5C(3) and (4), the Council's mandatory clauses — and, under 5C(3), the deposited statutory declaration — are the conditions the permission rests on; rule 5C(2)'s only condition is that the development requires the Director of Lands' consent.

Rule 5C(6) then lists what the rule does not apply to at all:

Limb (c): a mortgage of land. The prohibition in rule 5C does not extend to a mortgage of land, and that is the regulatory basis on which one solicitor handles both the buyer's purchase and the lender's charge. Note also the $1,000,000 in limb (b): that amount may be changed from time to time by the Council, "subject to the prior approval of the Chief Justice".

There is also rule 5C(8), which extends the rule to a group practice:

So two firms in the same group practice do not fall outside rule 5C by being two firms. (Rule 5C(7) is currently blank.)

The Rules also carry a general provision, rule 2:

Developer sales carry a further costs provision, Cap. 219 section 34A. Which agreements it applies to comes first, in section 34A(1):

Section 34A(2) extends it to sub-sales and sub-purchases, but only where the same solicitor is authorized to act for both sub-vendor and sub-purchaser:

An agreement within section 34A(1) or (2) is what section 34A(3) means by "an agreement to which this section applies":

And section 34A(4) attaches a condition to that protection:

So the protection operates only where vendor and purchaser have separate legal representation.

8. Stamp duty and title

Rates are not the subject here (see stamp-duty-property-hong-kong), but what happens to a title document that is not duly stamped is. Cap. 117 section 15(1):

The closing words are "or be available for any other purpose whatsoever, unless such instrument is duly stamped". That is wider than inadmissibility. Section 15(1A) provides a route out:

The opening words of section 15(1) also name section 15A, which is a second exception. Section 15A(1) sets out which instruments it reaches:

Section 15A(2) is the effect:

So an instrument that is not duly stamped only because the section 29DH specified amount or the buyer's stamp duty is unpaid may still be received in evidence in civil proceedings, if it is produced by someone who is not the transferee or purchaser under it.

Section 15(2) turns to public officers:

And section 15(3) opens a gap for Land Registry registration while closing off what it proves:

Note the closing words. That an instrument has been registered at the Land Registry does not settle whether it is duly stamped.

And section 15(4) is the working rule where a public officer is acting on a duplicate or a copy:

A registry handed a copy may call for the original duly stamped, or for evidence to its satisfaction that it is duly stamped, and until one or the other is produced the officer must not act upon, file or register the copy.

The cost of stamping late is in section 9(1):

Double, four times, ten times, according to how late. Section 9(2) preserves a power to remit:

Section 4(5) is the recovery limit:

9. First-hand residential property

Buying from a developer adds a layer that no other chapter here supplies. Cap. 621 section 52(1):

Section 52(2) makes it override the contract:

The 5% can change, and without amending the Ordinance — section 52(3):

Section 53(1) sets the scope first:

Section 53(2) is the timetable:

Section 53(3) is what happens if the formal agreement is not executed:

And section 53(4) is the subsection most often left out:

Once the preliminary deposit is forfeited, the owner cannot come back for more. The common-law right to make further claims is expressly abrogated.

Section 53(5) runs the other way — what happens when the owner is the one in default:

The duty in section 53(2) is the owner's duty to execute within 8 working days after the date on which the person enters into the preliminary agreement — the same anchor date as the buyer's 5-day clock, not the date the buyer executes the formal agreement. So the two sides of this section are not symmetrical: the buyer's failure costs the preliminary deposit (section 53(3) and (4)); the owner's failure is a criminal offence carrying a $1,000,000 fine (section 53(5)).

Section 54 requires the preliminary agreement to contain the Schedule 4 provisions:

The expression "saleable area" is defined in section 8(1):

The purpose of the Register of Transactions is in section 61:

And civil liability for misrepresentation is in sections 77(1) and (2):

10. Planning and unauthorised works

Town planning: what a plan does, and where the offences sit

Cap. 131 sections 11(1) and (2) put approved plans into the Land Registry for free public inspection:

Section 13 states the status of an approved plan:

The words are "as standards for guidance in the exercise of any powers vested in them". The addressees are public officers and bodies. Where permission is needed, the application is made under section 16(1): where a draft plan, partly approved plan or approved plan "provides for the grant of permission for any purpose, an application for the grant of such permission must be made to the Board".

The unauthorized-development offences in Cap. 131 have a geographic condition. Sections 21(1) and (2):

Sections 20(7) and (8) are the same structure in a different situation:

Enforcement is in section 23(1):

Among the Cap. 131 provisions covered here, the unauthorized-development offences (sections 20(8), 21(2) and 21F(2)) and the section 23 enforcement power all turn on the definition of "unauthorized development". That section 2 definition has two limbs: (a) in relation to land included in a plan of a development permission area, land to which section 20(7) applies, or a regulated area, it means development in contravention of the Ordinance; and (b) in sections 22 and 23, in relation to land referred to in section 23(4), it means development other than development permitted under a plan of an interim development permission area, undertaken on or after the date on which notice of that plan is gazetted. So section 23 does not reach only development permission areas and regulated areas — land to which section 20(7) applies, and interim development permission area land, are within its range too. That does not make planning irrelevant to an urban flat — it reaches the title by a different route, namely the covenants in the Government lease. Cap. 648 section 13(2)(b) writes compliance with the Town Planning Ordinance (Cap. 131) and its subsidiary legislation into an extended lease as a covenant of the lessee, and section 13(2)(d) attaches the Government's right of re-entry to a breach.

Two more provisions have to be read alongside these: sections 20(9), 21(3) and 21F(3) each qualify the offence in 20(8), 21(2) and 21F(2) respectively, providing that each of those subsections has effect subject to section 111 of the Private Columbaria Ordinance (Cap. 630); and section 23(13) likewise provides that subsections 23(1) and (2) have effect subject to that same section 111.

The Buildings Ordinance: orders, notices, and a cost that follows the property

Cap. 123 section 14(1):

Section 14(2) states the limits of an approval:

The first two of the three things an approval is not deemed to do are "to confer any title to land" and "to act as a waiver of any term in any lease or licence". An approved plan is not lease compliance.

Section 24(1) is the demolition or alteration order:

Section 24(1A) excludes minor works commenced under the simplified requirements from subsection (1).

Another subsection has to be read here too: section 24(6) qualifies the whole of subsection (1). It provides that subsection (1) has effect subject to section 112 of the Private Columbaria Ordinance (Cap. 630) and to section 72 of the Basic Housing Units Ordinance (Cap. 658).

Section 24(2C) allows the order to be registered:

Section 24(3) is the Government doing the work:

And then section 24(4A), which is the subsection a buyer most needs to know:

Once the order is registered at the Land Registry, the cost of work done by the Building Authority is recoverable from "the person who, as at the date of completion of the demolition or alteration, is the owner of that land or premises". The date the provision fixes on is the completion of the works, not the completion of the sale. If the Building Authority's work is completed after the sale completes, the buyer pays; if it was completed before, the owner at that time — the seller — pays. So this is not a loose end that can be left with the seller, but which of the two it lands on turns on the date the demolition or alteration was completed.

Section 24C creates a second kind of document — a notice:

Sections 24C(4) and (5):

Section 24C(6) is how it is cleared:

So where a search shows a section 24C notice, the question is not "was it demolished" but "was an instrument of satisfaction lodged".

One more subsection has to be read: section 24C(7) qualifies the whole of subsection (1). It provides that subsection (1) has effect subject to section 112 of the Private Columbaria Ordinance (Cap. 630) and to section 72 of the Basic Housing Units Ordinance (Cap. 658).

11. Compulsory sale for redevelopment

An old building bought out whole for redevelopment goes through Cap. 545. Section 3(1):

90% is the Ordinance's own figure, but section 3(5) is a power to move it:

The Chief Executive in Council may, by notice in the Gazette, specify a lower percentage for a specified class of lots. But the opening words of section 3(5) — "Subject to subsection (6)" — carry content: the Ordinance itself puts a floor under that power.

So a lower percentage can go down to 65%, and no further. 90% is the general threshold in section 3(1), 65% is the statutory floor section 3(6) imposes on any notice, and section 3(7)(b) provides that a notice under subsection (5) is subsidiary legislation. Which percentage applies to a particular lot turns on the relevant Gazette notice.

The Tribunal does not rubber-stamp. Section 4(1) sets out how it must determine an application — and the first step is the minority owner's dispute about value:

The order matters: the valuation dispute of a minority owner is heard and determined first (and where a minority owner cannot be found, the majority owner must satisfy the Tribunal that the assessed value is not less than fair and reasonable), and only then does the Tribunal make or refuse the order for sale. Section 4(1) is itself expressed "Subject to subsection (2)", and subsection (2) is:

Registration of the order for sale, and its effect, are in section 7(1):