RECO3037 Chap.1 Land Tenure, Estates and Legal and Equitable Interests
Land Tenure, Estates and Legal and Equitable Interests
Why every land question in Hong Kong starts with the Government lease
Land in Hong Kong is State property under Article 7 of the Basic Law, and the Government is responsible for leasing or granting it. So when this course talks about a person owning a flat, it means a person holding an estate under a Government lease, subject to the lease conditions and to the Government's right to re-enter if they are broken.
The chapter begins with that history: Hong Kong Island and Kowloon were ceded in the nineteenth century and land there was granted for terms of years, while the New Territories were leased for ninety-nine years from 1898.
Tenure, estate, ownership and possession
Two doctrines sit underneath everything. Tenure is about the terms on which land is held; estate is about how long.
A freehold lasts for an uncertain period and can be inherited, the fee simple being the largest; a leasehold lasts for a period that is fixed or can be fixed. The chapter then separates ownership, the largest set of rights a person can have over property and a question of law, from possession, which is a question of fact and can be gained lawfully or unlawfully.
That separation returns in the chapter on adverse possession.
Legal rights, equitable rights and the purchaser without notice
The centre of the chapter is the difference between a legal right, which binds the whole world, and an equitable right, which binds everyone except a good faith purchaser for value of the legal estate who had no notice of it.
Section 2 of the Conveyancing and Property Ordinance gives the short list of legal estates: a term of years absolute, a legal charge, an easement and a profit. Everything else is equitable. The local case on notice, Wong Chim Ying v Cheng Kam Wing, shows how an occupier's presence gives a buyer constructive notice.
The chapter closes with the formality rules in sections 4, 5 and 6, and with section 14, which turns a developer's right to a Government lease into the lease itself once the conditions are met and a certificate of compliance is issued and registered.
What this chapter covers
- 01
Article 7 of the Basic Law and land held from the Government
- 02
Tenure and estate as two separate doctrines
- 03
Freehold, fee simple and leasehold estates
- 04
Ownership as law and possession as fact
- 05
Legal rights in rem and equitable rights in personam
- 06
The four legal estates in section 2 of the Ordinance
- 07
Actual, imputed and constructive notice
- 08
Deeds, signed writing and interests at will under sections 4 to 6
- 09
Section 14 and the certificate of compliance
Worked example · free
Does a buyer take subject to an occupier's equitable interest
- 3Classify Grace's right as an equitable interest under a trust and explain how it arose without writing.
- 2State the rule that an equitable interest fails only against a good faith purchaser of the legal estate for value without notice.
- 3Apply constructive notice from occupation and give the result for the buyer.
Key terms
- Tenure
- The nature of the rights and obligations on which land is held, which in Hong Kong are the conditions of the Government lease.
- Estate
- The period of time for which a tenure lasts, either freehold of uncertain duration or leasehold of a fixed or fixable term.
- Fee Simple
- The largest freehold estate, of uncertain duration and capable of being inherited indefinitely.
- Constructive Notice
- Notice the law attributes to a purchaser of facts a proper inspection would have revealed, such as a person living in the property.
- Certificate of Compliance
- The Government document which, once issued and registered, confirms the lease conditions are met and lets section 14 deem the lease issued.
Land Tenure, Estates and Legal and Equitable Interests FAQ
Do people in Hong Kong own their land outright?
No. Land is State property under Article 7 of the Basic Law, and the Government leases or grants it. A private owner holds an estate under a Government lease, subject to its conditions, and the Government keeps a right to re-enter if those conditions are broken. That is why leasehold language runs through every topic in the course.
What is the practical difference between a legal and an equitable interest?
It shows itself when the land is sold. A legal interest binds everyone, including a buyer who knew nothing about it. An equitable interest binds everyone except a good faith purchaser of the legal estate for value who had no actual, imputed or constructive notice of it, so a buyer who could not have discovered it may take free of it.
Which interests count as legal estates under the Ordinance?
Section 2 lists four: a term of years absolute, a legal charge, an easement and a profit. Anything outside that list is an equitable interest, including interests under a trust and estate contracts. Learn the list exactly, because whether a right appears on it decides how it must be created and whom it can bind.
Exam move
Draw the tree of interests from memory: State, Government lease, leasehold estate, then the four legal estates and the equitable remainder. Then take three rights you have met, such as a tenancy, a right of way and a share under a trust, and place each one on it before checking against the section.
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