Tutorial Questions

Objectives:

• How the LRO and Doctrine of Notice help to manage the risks/threats to title in a property conveyance.

• Sihombing and Wilkinson, A Guide to Hong Kong Conveyancing (8^th ed., Student).In particular:
  • Note Ch.11, Section 8 on the Land Registration Ordinance, in particular subsections 8.5 (what is registrable) and 8.6 (purpose of registration and 8.9 (unwritten equities).
  • NOTE: If your edition of the Sihombing and Wilkinson text has different page references (or no page references), look up the relevant sections of the LRO and the leading cases (***) above in the table of contents for the relevant discussion on registration.

1. John has been saving his income for several years with the goal of purchasing a flat. He has saved up enough to make a down payment for a small flat. Since he had a tight budget, he hired Karen, a property agent, to help him look for suitable flats on the market to consider. For several weeks, Karen took John to look at many different flats around Kowloon.

On 1^st June 2020, Karen took John to view Flat C, 5^th Floor, Barton Villa ("Flat C") which was available for sale. Jenny was the sole registered owner of Flat C. When they went to inspect Flat C, Karen said that the occupier of Flat C was not at home but someone would be there to let them in.When Karen and John arrived, the domestic helper opened the door for them and Karen and John inspected Flat C.John was very impressed by the usable floor space, furnishings and renovations in Flat C (as well as the location and view). That evening, John told Karen that he was interested in purchasing Flat C.

What precautionary steps should John take before he signs the Provisional Agreement for Sale and Purchase of Flat C and why?

1. Assume that the sale and purchase goes ahead and Flat C is assigned by Jenny to John and registered on 1^st September 2020.Consider the following alternative scenarios:

1. [scenario 1] John assumed all along that Jenny was the occupier in Flat C. After completion, John discovers that Jenny had rented out Flat C to Ben. Ben was the occupier of Flat C when Karen and John came to inspect the flat. Jenny had granted a 2 year tenancy dated 1^st January 2020 in favour of Ben at a market monthly rent of HK$50,000.

1. Assume the Sale and Purchase Agreement between John and Jenny was in the form of Form 2 of the Third Schedule of the Conveyancing and Property Ordinance (Cap.219). Which term(s) might be relevant to addressing this situation?

1. Is John bound by the tenancy agreement? If further information is needed, explain what it is.

1. Assume that Jenny had told Karen about Ben's tenancy agreement during the negotiations for Flat C. Would that change your answer to (i) above?

1. Assume the tenancy agreement had an option to renew for another 2 years. Would that change your answer to (i) and (ii) above?

1. [scenario 2] After completion, Jenny's son (Danny) contacts John and claims that on 1^st February 2018, Jenny had orally declared in front of the whole family that she was holding Flat C on trust for Danny.

1. Danny demands that John transfer Flat C to him as the rightful owner immediately. Discuss.

1. Would your answer to (i) change if Danny now tries to register a written declaration of trust of Flat C in favour of Danny (signed by Jenny)?

1. [scenario 3] After completion, Jenny suddenly dies. Under Jenny's Will, her daughter Emily is the beneficiary of Flat C.Emily demands that John transfer Flat C to him as the rightful owner immediately. Discuss.

1. [scenario 4] After completion, John moves into Flat C. Several months later, Jenny's husband, Ken, contacts John and claims that he contributed 100% of the purchase price of Flat C which was held in Jenny's name. Ken and demands that John transfer Flat C to him as the rightful owner immediately.