Hong Kong Housing Authority and Housing Department
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Transfer of Ownership
Pursuant to the Housing Ordinance, change of ownership is restricted except for disposal in the Secondary Market after two years has elapsed since the first assignment, or in the open market upon payment of premium. However the Housing Authority (HA) may at its discretion and on the merit of each case give consent to a request for change of ownership under special circumstances.
The usual reasons for applying for a consent to change of ownership are:
Reasons other than the above listed will be considered only in exceptional circumstances.
- The personal data collected shall be used for the purpose of processing the application for transfer of ownership and, upon completion of the transfer, to be transferred to the Rating and Valuation Department and be used for issuing demand notes for rates / Government rent.
- The provision of personal data is voluntary. However, if the applicant does not provide sufficient information, the HA may not be able to process the application.
- The applicant has a right of access and correction in respect of his / her personal data. Enquiries concerning the making of access and correction of personal data may be addressed to "Departmental Data Protection Officer, Hong Kong Housing Authority Headquarters, 33 Fat Kwong Street, Homantin, Kowloon".
- The applicant is required to pay an administrative fee (currently at $2,850) at the time of submitting the application. The administrative fee is not refundable regardless even if the application is not successful or the applicant wishes to withdraw the application.
- The duly completed application form should be delivered to the relevant District Tenancy Management Offices.
- In general, the applicant will be informed of the result of the application within six weeks from the date on which all the required documents have been received by the Housing Subsidies Sub-division.
HOS applicants, who prior to execution of the assignment, need to apply for a change of ownership, can click the following link to download the Application Form for Change of Ownership and return the completed form to:
HOS Sales Unit Podium Level 1 Hong Kong Housing Authority Customer Service Centre 3 Wang Tau Hom South Road Kowloon Hong Kong
REALWorld Law
Sale and purchase, forms of real estate ownership.
- Ownership restrictions
- Mandatory pre-emption rights
What are the categories of property right that can be acquired? Are there any interests in real estate other than exclusive ownership?
Private ownership of land itself is recognized but there is no legal means of contracting to transfer smaller land rights (such as the right of customary dominium utile , right of civil dominium utile , surface right) and right to temporary occupation, is common.
Last modified 1 Aug 2019
The Angolan Constitution recognizes private property, however, it also sets forth that the ownership of land belongs to the state. The acquisition and use of land is mainly regulated by the Land Law (Law 9/04, of 9 November 2004), the Land Law Regulations (Decree 58/07, of 13 July 2007) and the Civil Code. Foreign investors due to restrictions to ownership tend to apply for the granting of one of the above-mentioned smaller land rights, the surface right is the most common due to the fact that it offers more security, since it can be granted for a period of 60 years and may be renewed.
The state enjoys preferential rights and has first preference in the case of sale, accord and satisfaction or tenure of land granted.
- Real estate legislation
- Specific legislation
As mentioned above, property transactions are governed essentially by the Civil Code provisions, along with the Land Law and the Land Law Regulations. There are ancillary statutes that also must be considered with regard to this matter, including the Private Investment Law (Law10/18, of 26 June 2018).
No. The above mentioned laws apply to all.
- Effective transfer of ownership
- Registration of title
- Steps in the transaction
- Due diligence
The transfer of title must be executed by means of a public deed.
There is a Land Registry Office and all transfers of title are subject to registration. However, with regard to earliest transfers the existing records are not completely reliable. There has been an effort from public authorities to update the existing records and thus to assure and reinstate confidence to acquirers, both foreign and national. Title insurance does not exist in Angola.
Are transfers of title recorded in this country?
The procedure for the granting of surface rights (the most common title) is organized by the Instituto Geográfico e Cadastral de Angola (Geographical Institute of Angola). The procedure for the acquisition of such rights is as follows:
- Phase 1 : Filling the application for the granting of surface rights. The application must specify (a) the location of the plot of land, (b) the use that will be made of the plot of land, (c) the price and (d) information on any other surface right granted.
- Phase 2 : Gathering information and reports on suitability of the plot of land, any third-party rights, term and phases of the use of land in accordance with the type and volume of construction, additional clauses for the agreement adjusted to the purpose of the concession.
- Phase 3 : Interim Decision. The procedure may be dismissed or if there is no reason for dismissal, the plot of land will be marked out.
- Phase 4 : Decision. The concession decision will set forth the conditions to which the right will be subject and may determine a deadline during which the concession will be provisional. This is also the time to decide whether a public auction must take place. If not public auction takes place the applicant must confirm within ten days the acceptance of the concession under the terms set forth by the concessionaire. Specific rules apply in case a public auction takes place.
- Phase 5 : Final marking out of the plot of land. Topographic operations that allow the full identification of the plot of land and its location by marking it out with marks made of cement or stone.
- Phase 6 : Public deed of concession. Granting of the public deed. Issuance of the concession decision followed by publication in the Official Gazette.
- Phase 7 : Payment of the price. Depending on the pre-existence of a public action, payment shall be done as follows: if there was a public action payment shall occur under the terms of the procedure of such public action. In case public action was waived by the authorities, payment slips must be obtained 5 days from the gazetting of the concession decision.
The concessionaire must register the concession deed with the Real Estate Registry being all costs bear by the applicant now owner of a surface right.
Yes. Buyers tend to carry out a due diligence process in order to ascertain the current state of the land or property, including to obtain information to confirm title.
Yes. Depending on the transaction and the legal regime of marriage, consent from a spouse may be required.
- Form of contract
- Seller's warranties
- Misrepresentation
A public deed must be executed, before a notary. Full identification of the parties, the object, price and other conditions must be included.
What is a typical contract or SPA in this country like?
If the transaction does not involve the state or any other public authority, Parties typically execute first a promissory agreement and only after the deed is signed.
No. Parties may agree on warranties to be provided by seller however this varies from case to case.
In the event of misrepresentation by the seller, the buyer can, depending on the circumstances, terminate the agreement or file a legal action for the annulment of the agreement, and claim reimbursement of the amounts paid with an indemnification.
- Real estate and public law
- Environmental liability
- Planning/zoning issues
- Agreements with public bodies
- Expropriation/compulsory purchase
Relevant areas of public law are:
- Urban and planning law
- Authorizations relating to the building, and
- Environmental law
Depending on the type of project it may be necessary to obtain an environmental impact assessment study. This document evaluates the environmental feasibility of the project and also the methods for minimizing or neutralizing their effects.
The zoning and planning laws and regulations for each local region are available to the public and copies of the regulations and local decisions can be obtained. Additionally, all documents related to a parcel of real estate must be analysed during the due-diligence process.
Both the Private Investment Law and the Public-Private Partnerships Law aim for the execution of these types of agreements and from these regime benefits (namely tax and customs benefits) are available and may be granted.
Coming soon.
- Taxation of asset deals
- Taxation of share deals
The purchase of a real estate is subject to transfer tax (SISA) at a rate of 2% (levied on the acquisition amount when equal to or higher than the value registered in the Land Registry Office). Additionally, it is also subject to stamp duty at a rate of 0.3% (levied on the acquisition amount). Stamp duty is also due for the execution of a sale and purchase deed at a fixed amount of AOA 2,000.
Costs are not typically shared and are normally entirely paid by buyer.
Typically, share deals do not trigger the payment of SISA. However, in the event the purchaser ends up holding more that 50 percent of a company holding real estate and does not prove that the main purpose of the operation is not the acquisition of the immovable properties then SISA is due.
There is normally no sharing of costs and these are normally paid by the buyer.
Luis Filipe Carvalho
Each Australian state and territory has its own separate legislative regime in relation to the ownership of land and the various available tenures.
An interest in land can either be held under freehold or leasehold ownership. Freehold is the highest category of land ownership in Australia and effectively confers absolute ownership. The land can be held outright by one owner or a part interest or share can be held.
Leasehold land confers rights of exclusive possession and use, pursuant to specific legislation. Some leasehold interests are ‘perpetual’ in nature, and others are granted for fixed periods of time.
A real estate owner can also give non-exclusive rights to third parties to use their land, such as granting an easement for a right of way. If registered, easements are binding on successors in title to the burdened and benefited land.
Last modified 5 Jul 2016
The most extensive interest in real estate after full ownership is a usufruct, or a right to use the property concerned and to benefit from its profits and/or products. This excludes the right to transfer or demolish the property. A usufruct is always linked to the property itself, ending after 99 years or on the death of the individual granted the right (in this context the duration of the usufruct can exceed 99 years and will run until the death of the individual older than 99 years).
Other real estate rights include the ‘right to use or to inhabit’ property. This is similar to the right of usufruct, but cannot be transferred since it is only granted to a specific individual.
Long leases ( emphytéose/erfpacht ) can be granted, giving the right to use and build on real estate in return for the payment of an annual ground rent. A long lease is normally granted for a minimum of 15 years and a maximum of 99 years. There is a possible exception to this: the emphyteusis right can be perpetual if and as long as it is established for public domain purposes by the owner of the property.
Building rights ( superficie/opstal ) can also be granted, allowing buildings to be erected on a property. When the building rights granted come to an end, the property owner will acquire the rights to these, either with or without payment. Building rights can be granted for a maximum period of 99 years. If a shorter period has been agreed, renewal is possible, but it cannot exceed the maximum period of 99 years. There is a possible exception to this: the building rights can be perpetual if and as long as it is established by the owner of the land (1) either for purposes of the public domain (2) or to allow the division into volumes of a complex and heterogeneous real estate entity that includes different volumes that can be used independently and diversely do not have a common part.
Both long leases and building rights are commonly used in tax-driven agreements.
Finally, the right of easement ( servitude/erfdienstbaarheid ) allows one property to be used in order to facilitate the use of another property. Easements can remain in force for unlimited or limited periods of time. The former are legally linked to the right of ownership of the property concerned (for example, easements to refrain from building on real estate located next to airports, or to gain access to public roads). The latter can be agreed between parties.
Last modified 26 Aug 2022
Bosnia-Herzegovina
In addition to ownership rights, there are also:
- construction rights
- charges securing financial obligations
- mining rights
- easements, and
- concessions.
It should be noted that in the Federation of Bosnia and Herzegovina the rights to use and to dispose of real estate exist as a result of the previous regime, when state ownership prevented individuals or legal entities from owning the real estate that they occupied and used. Under current regulations, these rights to use and dispose of real estate can be converted into ownership, but this can be a slow process.
Last modified 1 Sep 2021
Property rights fall under the jurisdiction of the provinces of Canada and each province or territory has its own legislative scheme governing the ownership of land.
An interest in land may be either a freehold interest or a leasehold interest. A fee simple interest, a type of freehold interest, is the highest category of ownership in Canada and effectively confers absolute ownership. A leasehold interest is an interest less than freehold and is characterized by a right of exclusive possession and use of land for a limited or terminable period of time.
An owner of an interest in land can also give rights to third parties, such as granting an easement for a right of way. Easements are typically non-exclusive rights to use land for the benefit of adjacent land and if registered are binding on successors in title to the properties.
Interests in land can be divided and concurrently owned in any proportion by one or more parties.
Last modified 1 Apr 2021
In the PRC, there is no private ownership of land. Although ownership of land is not possible for private individuals or entities, it is possible to obtain the right to use land from the State. Such rights are usually known as land use rights.
Land ownership in the PRC is split into two categories: State-owned land and collectively-owned land. State-owned land is owned by the State and administered by the State Council. Collectively-owned land refers to land owned by collective economic organizations, which are generally committees of local villagers. Only State-owned land can be managed and developed by individuals and legal persons through the holding of land use rights.
The primary means by which land use rights for State-owned land can be acquired is through land grants. Land grants involve the local Land Administration Bureau entering into a land grant agreement with an individual land user, in which in return for the payment of a substantial land grant premium, the Land Administration Bureau grants the land user land use rights for a fixed period of time.
In addition to land grants, the PRC government allocates land use rights for the construction of public interest projects.
Other categories of property right include leases and licences.
Last modified 30 Jun 2015
In Croatia, the following types of property can be acquired:
- Full ownership
- Co-ownership/joint ownership, and
- Condominium (condominium is sole ownership of a flat or a separate part of a larger parcel of real estate, associated with a co-ownership right over the whole parcel of real estate - etažno vlasništvo )
Real estate interests, other than exclusive ownership, are:
- Personal easements
- Real easements, and
- The right to build
Real easements are rights allowing one landowner to use another's land. These are linked to the land and are binding on future owners of the property, whereas personal easements ( usufructs ) allow rights to be granted to specific individuals.
The right to reside is another personal right allowing the holder to live in a building owned by someone else.
The right to build allows the holder to erect and maintain their own building on someone else's land and is normally granted for a limited period of time agreed between the landowner and the builder.
Last modified 1 May 2018
Czech Republic
Czech law distinguishes between the following property rights:
- The right of ownership which gives the owner of a property the full range of property rights, including the right to use, encumber or dispose of the property.
- The right of easement, ie the right to use a property owned by someone else either for a definite or an indefinite period of time. This right can be held by specific individuals (easement in gross) or can be created for the benefit of another property (easement appurtenant) where all owners of that property are entitled to benefit from it.
- Possession – a special arrangement similar to ownership whereby the possessor treats the property as his own although he is not technically the legal owner. After a certain period of time elapses (10 years in the case of real estate) the possessor (if he has taken possession in good faith) becomes the owner of the property.
- The right of construction (a perpetual leasehold), ie the right to maintain a building on someone's else land (to build it or to own an existing building on the land). The building is the property of the owner of the right. This right of construction is only temporary as it cannot last longer than 99 years.
Last modified 11 Aug 2022
The categories of property rights are legal ownership (known in common law as freehold), which is the complete and absolute right of ownership, and leasehold.
Other interests in real estate are rights in the nature of easements or of security by mortgage or by distraint ( garnishment ) of assets.
In addition to exclusive ownership, the French system recognizes the division of ownership between a right of usufruct (a right to receive the income and produce from real estate without outright ownership) and a bare ownership (ownership without the right to use and derive profit from the property) as well as timeshare arrangements.
Last modified 10 Aug 2022
In addition to exclusive ownership there is also joint ownership or condominium ownership (where individual units in the same building can be owned by different people) ( Wohnungseigentum ), and hereditary building rights. Hereditary building rights are long-term leases (often of 99 years) which include the right to erect and maintain buildings on a property. They are registered in the land register and can be encumbered with mortgages and land charges in the same way as full ownership.
The concept of leasehold under German law is different from that in a number of other countries including the UK. In Germany a lease is only a contractual right relating to the leased property, while ownership gives full rights over the property.
Hong Kong, SAR
An interest in land/real estate can either be held under freehold or leasehold ownership. If you acquire a freehold property, you acquire the exclusive right to both the building and the land where the building is erected on. A freehold owner can use and make alterations to the building as it wishes so long as it acts lawfully. On the other hand, if the property is held under leasehold ownership, the acquirer, namely the lessee, only acquires a right to use the property excluding the land beneath it for a limited period of time known as the term. Anything done to the property is governed by the terms of the lease.
In Hong Kong, since 1997, all land has become the property of the People's Republic of China while the government of the Hong Kong Special Administrative Region is responsible for its management, use and development. In other words, every piece of land in Hong Kong (with the sole exception of St. John's Cathedral, the only freehold property in Hong Kong) is leasehold property .
When the government decides to release land for building it usually does this by selling the land (or ‘parcel’ or ‘lot’) at an auction. Legally speaking, the government does not sell the land; it sells the right to occupy it for a term of years. This system gives the Hong Kong Government as the grantor a high degree of control over the way in which land is developed and used through covenants and conditions imposed on the grantee and contained in the lease. Since 1997, the term granted to the lessee has been 50 years from the date of the grant.
In the past, the government as lessor would issue a Government Lease to the purchaser (usually a developer) (as the lessee). Nowadays, instead, the government executes Conditions of Sale/Exchange/Grant/Re-grant/Extension depending on the purpose of grant. These are contracts giving a conditional right to the purchaser which will be converted to a form of legal ownership upon compliance with all the conditions stipulated. After a successful acquisition of the land, the purchaser (who is usually a developer) will recoup his investment in the construction and make a profit before the term runs out. Once a unit is sold or if the entire building as a whole is sold to a property company, the developer ceases to be involved. The purchasers take its place and they will also be able to sell their leasehold interests later or to assign the right to use to new tenants.
In Hong Kong where supply of land is limited, real estate is usually developed in form of a multistorey building. Under this system, the entire land and building is notionally divided into a number of undivided shares which are allocated to different flats. The sale of flat to a purchaser is effected by transferring the relevant undivided shares attached to the flat. Legally speaking, as the division of land into shares is only notional, all the flat owners own the land in common. For practical reasons, exclusive possession of a flat is at the same time guaranteed by execution of a document called a ‘deed of mutual covenant’ involving the developer, the first purchaser and sometimes the management company. Therefore, each flat owner, by assignment, owns a number of undivided shares in the land together with the exclusive right to occupy his/her flat.
Apart from a leasehold interest, a purchaser also enjoys an easement, meaning the non-exclusive right to use another’s land in a particular way for the benefit of the use of one’s own land. This is a proprietary interest which can be granted expressly, impliedly or by statute. Examples are a right of way and a right to park cars on neighbouring land.
In the case of a multi-storey building, the tenants also enjoy the right to use the common parts of the building, which refer to those parts which are not delineated as being for the exclusive use of one tenant in the deed of mutual covenants. Common examples are the corridors and staircase. This right can be expressly specified in the first assignment, Deed of Mutual Covenant and Sub-Deed of Mutual Covenant (if any) or implied by the Building Management Ordinance.
Under Hungarian law the following rights may be exercised in relation to real estate:
The owner of a building built on land has the right to use the land during the life of the building.
A right to possess, use and collect income and other proceeds from a property owned by someone else.
Right to use (beneficial use)
This is similar to usufruct, but the individual can only use the property to meet his or her own needs and those of his or her relatives living in the same household.
These are granted to enable an individual to use someone else's property for a specific purpose or require the owner to refrain from certain activities.
Easements include:
- the grant of rights of way
- the supply and drainage of water
- the building of a cellar
- installing pylons
- buttressing a building etc.
The mortgagee is entitled to sell the mortgaged property in order to recover unpaid claims secured by the mortgage.
Call option
The beneficiary of the call option is entitled to purchase the property at any time within the option period on payment of the agreed purchase price.
The beneficiary of the put option is entitled to sell the property at any time within the option period for the agreed purchase price.
Pre-emption right
The beneficiary of the pre-emption right is entitled to purchase the property on the same terms and conditions as a purchase offer made by a third party.
Legal ownership of property in Ireland is divided into freehold and leasehold. A wide range of possible interests in real estate exists, ranging from a week‑to‑week tenancy to exclusive ownership.
Other interests in commercial property include short leaseholds for terms of up to five years and long leaseholds for terms of 20 years or more. In the case of a lease term in excess of five years, a commercial tenant may acquire a right to renew after five years.
Last modified 23 Mar 2020
Property rights under Italian law include the following:
- Absolute freehold ( piena proprietà ) which is the right to fully and exclusively enjoy and dispose of the property.
- A right to build ( d iritto di superficie ) which is the right to build and maintain a building on or underneath a third party's property, granted for a specific period of time. When this expires the landowner becomes the legal owner of the building. It is also possible to sell the title to a building without owning the title to the underlying land (where the seller is a public authority the sale will be for a maximum 99-year term).
- A beneficial interest ( diritto di usufrutto ) which is the right to enjoy a third party's real estate for a specific period of time. This cannot be longer than the lifetime of the beneficiary if they are an individual, or more than 30 years if the beneficiary is a legal entity. The beneficiary can use the real estate in the same way as an owner, including having the right to collect interest or to grant leases, provided the original use is maintained.
- Right of use ( diritto d'uso e di abitazione ) which is the right to use real estate in order to meet the needs of the person holding the right and those of their immediate family.
Property rights, including the right of full ownership of real estate, may be co-owned by two or more persons, companies and/or other legal entities. The co-ownership can be established on a “voluntary” basis (where agreed by the parties involved) and/or on a “legal” basis (where set forth by applicable laws, as in the case of hereditary co-ownership). Each co-owner has the right to divest its quotas on the co-ownership but cannot dispose of the entire co-owned real estate.
Co-ownership can also take the form of condominium: usually in relation to housing but also, in certain cases, to shopping malls where different units in the same building and/or different buildings in the same real estate complex are owned by different owners but some of the areas and services are used by the owners collectively. The members of the condominium have a right of co-ownership over the common assets which are proportionate to the value of their respective interests in relation to the value of the entire building/real estate complex. The rights of co-ownership in a condominium are expressed in millesimi (ie participation interests calculated on the basis of 1/1,000) and listed in a millesimal chart; the millesimal quota represents the value of the voting rights of each member of the condominium and, normally, also the parameter on the basis of which the condominium charges are allocated.
Last modified 10 Oct 2022
Ownership of real property and trust beneficial interest representing real property can be acquired. Ownership, includes, without limitation, ownership of strata title (not a whole building). In addition to exclusive ownership, joint ownership is possible. There is no ownership of real property for certain period of each year. Therefore, timeshares are often structured using not ownership but ‘use right’ of real property.
Netherlands
The main types of property right in the Netherlands are:
- Absolute ownership: full ownership of land includes ownership of all its constituent parts (everything above and beneath the surface), by way of accession (natrekking). This includes all building and underground structures, with the exception of underground cables and pipelines
- Rights of superficies: the right to have, hold and maintain buildings, works or plant in, on or above land owned by another party - as such, the right of superficies prevents buildings, works or plant on land owned by another party passing into the ownership of that party
- Apartment rights (condominium) – ownership of part of a property, including the exclusive right to an apartment plus shared rights and obligations in relation to common areas (for example walls, roof, external spaces)
- Rights of leasehold – long leases (usually around 50 or 100 years, but they can also be perpetual) are a very common way of holding property owned by the municipalities of Amsterdam, Rotterdam and The Hague. Leasehold rights may be transferred or mortgaged.
Last modified 20 Oct 2022
Prior to the enactment of the Land Use Act, 1978 (“the Act”), land could be held under freehold ownership in Nigeria. However, the Act now vests control and administration of all land within the territory of a State in the Governor of the State. By this, freehold ownership has been abolished and converted to leasehold ownership. The Act also empowers the Governor of a State to grant rights of occupancy over lands within the State for a maximum term of 99 years. By Section 49 of the Act, title to land can be held by the Federal Government or any of its agencies.
Private ownership of land is recognized but it is subject to the rights of the State Government or Federal Government to the reversion of the interests after the expiration of the term granted to the owner, such terms of years on expiry are renewable continuously subject to compliance with the conditions of grant and renewal imposed by the State.
Also, private ownership of land can before expiry of the term be terminated by revocation for breach of the terms of the grant or provisions of State regulations or by State acquisition where the property or land is required for public use or purposes.
Last modified 18 Oct 2022
Interests in real estate ownership can be classified under Norwegian law as follows:
- Exclusive ownership ( eiendomsrett ) either directly as an owner and title holder or indirectly through ownership of shares in a company that owns the property.
- ‘Land lease/Leasehold’ ( tomtefeste ) confers the right to build and maintain a building on a third party’s property. This right is granted for a certain period of time and when this expires the owner of the building can have the right to buy the property.
- ‘Right of renting/leasing’ ( husleie ) confers the right to use another person’s property for a certain period of time.
- ‘Joint-property’ ( sameie ) confers the right to co-ownership of a property.
- ‘Housing cooperative’ either by way of owning a right of occupancy combined with an ownership position in a cooperative which owns the property ( borettslag ), or by directly owning a condominium unit combined with an ownership position in a cooperative which owns the property ( eierseksjonssameie ), or by renting the property in combination with owning shares in the limited liability company which holds the formal position of property owner or lessor ( aksjeleilighet ).
- ‘Easement’ ( servitutt ) confers a restricted right to use part of a third party’s property for a certain period of time.
Last modified 4 Oct 2022
In addition to absolute ownership which gives title to real estate with the broadest legal rights, Polish law also recognizes perpetual usufruct rights. These are transferable, alienable and mortgageable rights to use property.
Perpetual usufruct can be granted in relation to state-owned (and situated within the administrative borders of a city or beyond those borders but within the area included in the development plan for a city) or local-government-owned real estate for a specified period of time of between 40 and 99 years, after which it expires unless extended for another period of between 40 and 99 years. Buildings and other installations situated on land that is subject to a right of perpetual usufruct are owned by the perpetual usufructuary.
The usufructuary is required to pay an annual fee to the state or the local government unit. The broad rights granted to the usufructuary result in the rights of the owner (ie the State Treasury or local government unit) being limited in that he may neither encumber nor sell the property to a third party other than the usufructuary.
Polish law also provides for the following real estate interests:
- Lease (najem) – the right to use property for a definite or indefinite period of time subject to payment
- Tenancy (dzierżawa) – the right to use and collect profits from real estate for a definite or indefinite period of time subject to payment
- Easements (real and personal) – Polish law recognizes three types of easement. Real easements can be established for the benefit of the owner (perpetual usufructuary) of a (dominant) property, usually in relation to neighbouring land, in order to improve the utility of the property. Personal easements can be established for the benefit of an individual to satisfy his personal needs (for example, an easement of habitation). A transmission line easement can be established in favour of a business which intends to build transmission equipment (for the transmission of liquid, gas, electricity etc)
In Portugal, the property rights that can be acquired are the following:
- Full ownership or freehold , consisting of full and exclusive right of possessing, enjoying and disposing of real property.
- Surface right , consisting of a right to build and maintain a building, using and enjoying the building, on, or under, a third party's land, or to plant any crops on said piece of land. Surface rights can be created for a defined period of time or can be perpetual. When surface right terminates, the owner of the land becomes the owner of the building incorporated in the land.
- Usufruct , consisting of a right to use and enjoy a third party's real property for a certain period of time, which cannot extend after the death of the beneficiary or be granted for periods longer than 30 years if the beneficiary is a legal person. The beneficiary can use the real estate in the same way as if he was the owner and collect natural profits, industrial profits or civil profits, provided the original economic function of the real estate is maintained.
- Right of use , consisting of a right to use a third party's property to meet one's own specific needs or the needs of one's family.
Last modified 9 Aug 2022
The “right of ownership” entitles the owner to full powers including the following rights – to possess, to use and to dispose of the property.
“Common ownership” can be either:
- Joint ownership (ownership by two or more persons holding undivided shares over the property)
- Co-ownership (ownership by two or more persons holding ascertained shares over the property ) which, in turn, can be ordinary co-ownership or forced co-ownership (eg forced co-ownership over the common parts of a building)
The beneficiary of a “superficies right” has a complex right consisting of:
- The right to own or to construct a building on another person's land
- The right of use over the relevant land
A superficies right can be transferred only through a deed authenticated by a notary public and only together with the ownership of the building (as opposed to the ownership of the land, which can be transferred independently). A superficies right can be granted for a period of no more than 99 years, with an option to renew.
A “right of usufruct” is a right for a person to hold and use an asset owned by another person and to benefit from its products. The beneficiary of the right of usufruct cannot sell or otherwise dispose of the relevant asset and cannot alter the asset's substance in any way, but can assign the right. A right of usufruct can be granted for:
- The lifetime of the beneficiary, if the beneficiary is an individual
- For a period of no more than 30 years, if the beneficiary is a legal entity
A “right of use” is the right for a person to hold and use an asset owned by another person and to take its products (except from products resulting from the conclusion of agreements related to the asset), but only for household needs. The beneficiary of a right of use cannot assign its right. A “right of habitation” has the same characteristics as a right of use but applies where the property is a dwelling.
“Easements” are the rights for the benefit of the owner of one plot of land (the dominant tenement) in relation to a plot of land owned by another person (the servient tenement).
A “concession right” is a right and at the same time an obligation for a person, granted following a public tender procedure, to use part of the private or public property of the Romanian state or its administrative bodies for a limited period of time (ie a maximum of 49 years with the possibility of an extension for a further period equal to half of the initial duration).
Slovak Republic
There are following categories of property rights under Slovak law:
- Right of ownership ( vlastnícke právo ) is the right to hold, use or dispose of the real estate and all its attributes. This includes protection against any unauthorized restriction or limitation of the owner's rights.
- Possession ( držba ) is the right to hold goods and to dispose of them as one's own. Possession can be relevant in terms of the institute of usucaption ( vydržanie ) as it constitutes one of the legal requirements for this type of underived acquisition of ownership right. After a certain period of time elapses (10 years in the case of real estate), the bona fide possessor becomes the owner of the property.
- Right to lease/sub-lease ( nájom/podnájom ) is the right to let or sublet real estate to a tenant in return for payment.
- Right of pledge ( záložné právo ) is the right of a pledgee to satisfy a claim against a pledgor from the security provided if his claim is not satisfied adequately and in a reasonable time.
- Easement ( vecné bremeno ) is a right to enjoy certain benefits (such as a right of access, a right to build, etc.) relating to a third party's real estate. This right either belongs to a specific individual (in personam) or to the owner of a certain property (in rem).
Last modified 22 Dec 2022
The following property rights are recognized under Spanish law:
- Absolute freehold ( propiedad en pleno dominio ) is the right to fully and exclusively enjoy and dispose of a property.
- Co-ownership ( propiedad en pro indiviso ) is the right to a share in the ownership of a property.
- Time sharing ( derecho de aprovechamiento por turnos ) is the right to use a specified and furnished property for a certain period of time during each year (not less than a week) for a term of between one and fifty years.
- Right to build ( derecho de superficie ) is the right to build and maintain a building on (or under) a third party's land for a specific period of time.
- Bare ownership ( nuda propiedad ) is the right of a person over a real estate asset of which it is the sole owner, with the limitation of not having the right to its possession and enjoyment, which will be the rights of the third party who disposes of the beneficial interest ( derecho de usufructo ).
- Beneficial interest ( derecho de usufructo ) is the right to use a third party's real estate for a specific period of time in the same way as an owner would, including the right to collect interest and grant leaseholds, provided that the original use is maintained.
- Right of use ( derecho de uso y habitación ) is the right to use real estate as necessary to meet the specific needs of the right-holder and those of their close family.
- Easements ( servidumbres ) are benefits created in relation to another owner's real estate (water easements, rights of way, etc).
- Leasehold ( arrendamiento ) is the right to use and enjoy a real estate asset for a fixed period of time for an agreed price.
The only existing form of complete and absolute ownership in Sweden is the freehold. A property may also be held by site-leasehold ( tomträtt ), a form of leasehold. A site-leasehold may only be granted for property owned by the state, a municipality or other public body. Site-leaseholds are granted for an indefinite period of time and may only be terminated in very specific situations. In return, the site-leaseholder pays a fixed annual fee which can only be renegotiated every 10 years or more. A site-leaseholder is therefore considered to be in a similar legal position to an owner of the property. Site-leaseholds may be transferred and the holder can also raise mortgages assignable to the property.
There are two categories of property right that can be acquired: ownership and the right of possession.
In addition to exclusive ownership, the Thai Civil and Commercial Code recognizes the following rights:
- Lease: Leases allow the use of land or real estate for a maximum term of 30 years, apart from the lease for commercial or industrial purposes, which may have a lease term of up to 50 years. In order to be enforceable, any lease for a period of longer than three years or for the life of the lessor or lessee (in the case of an individual) must be registered.
- Servitude: Land or real estate may be subject to a servitude by virtue of which the owner of the property is bound for the benefit of another parcel of land or real estate, to allow certain acts affecting its land or real estate or to refrain from exercising certain rights inherent in its ownership, such as granting a right of way.
- Habitation: A person who has been granted a right of habitation in a building is entitled to occupy the building as a dwelling place without paying rent. The maximum term for a habitation right is 30 years or for the life of the grantee (in the case of an individual).
- Superficies: The landowner may create a right of superficies for the benefit of another person by giving him the right to own buildings, structures or planting which are either on or under the land. The maximum term of a superficies right is 30 years or for the life of the landowner or the superficiary (in the case of an individual).
- Usufruct: Land or real estate may be subject to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property. The maximum term of a usufruct right is 30 years or for the life of the usufructuary (in the case of an individual).
United Arab Emirates - Abu Dhabi
Within abu dhabi and outside the abu dhabi global market free zone.
An interest in land can consist of:
- A freehold right
- Usufruct: A right in rem in favour of the usufructuary to use property of another and to exploit it, provided that it remains in its original condition. This right can be held by UAE nationals throughout the UAE, but may only be held by non-UAE nationals (and companies owned in whole or in part by non-UAE nationals) in one of the designated investment areas in the emirate of Abu Dhabi (and is restricted to a maximum term of 99 years).
- Musataha : A right in rem conferring upon the owner the right to build a building or to plant on the land of another. Again, this can only be held by UAE nationals throughout the UAE, but may only be held by non-UAE nationals (and companies owned in whole or in part by non-UAE nationals) in investment areas (restricted to a 50-year renewable term).
Usufructs and musatahas are investment interests allowing exploitation and development respectively as well as occupancy. Non-UAE nationals may only hold these interests within the designated investment areas, subject to the time limits which apply. A standard form musataha agreement has been introduced for use within Abu Dhabi for government-owned property.
A real estate owner can also grant non-exclusive rights, known as easements, to third parties to use the relevant land, such as granting a right of way. If correctly registered, easements are binding on any successors in title to the property.
In Abu Dhabi, a lease is a personal contract of hire, more akin to a licence and not an interest in land. Most non-owner occupiers in both the residential and commercial sectors are tenants under leases. Please see section on Commercial Leases for more information on leases in Abu Dhabi.
Within the Abu Dhabi Global Market free zone
There are 10 categories of real estate interests that can be created in the Abu Dhabi Global Market free zone:
- Freehold interests in land (restricted to GCC-citizens) – this is an outright ownership in an estate in land for an indeterminate duration
- Freehold interests in real property (other than land)
- Future interests in real property that become effective at a future date, such as reversion and remainder interests
- Joint estates – these are interests in real property held by more than one person (including joint tenancy and tenancy in common)
- Leasehold (which could include one or more sublease interests and excludes occupational (or otherwise) licence arrangements) – this gives the tenant the right to use and occupy the property for a specified period of time
- Strata interests – as a means of dividing real property into lots or sub-lots for strata ownership
- Mortgages of real property
- Easements – an agreement giving an owner of real property a non-possessory right (such as right to light) over another parcel of real property
- Statutory charges imposing restrictions on use and dealings with real property
- Covenants – an agreement by the owner of real property in favour of another
The real estate laws of Abu Dhabi in relation to usufructs and musatahas apply to such rights located throughout Abu Dhabi, including those located within the ADGM where such rights were created prior to 3 March 2015 (the date upon which the ADGM regulations came into force) and where no election has been made by the parties to the musataha or usufruct (as applicable) to convert the relevant agreement to a lease. Under the ADGM regulations, usufructuary and musataha rights are not recognised interests and so no further usufructuary or musataha interests will be created within the ADGM following the implementation of the regulations.
United Arab Emirates - Dubai
In Dubai, the following property rights exist:
- Absolute ownership, not restricted in time, ie freehold.
- Grant - this is land which is 'granted' by the Ruler of Dubai to citizens of the United Arab Emirates and which can be taken back by the Ruler as he wishes. The Ruler may also impose conditions of grant, for example, a restriction on further transfers.
- Usufruct – this is similar in nature to a lease but is a 'real' right.
- Musataha – this is also similar to a lease but includes the right to develop the land and own any buildings constructed on it for a maximum of 50 years.
- Leasehold – a personal right between two parties, where the landlord grants the right of exclusive occupation to the tenant of a specified property.
- No concept of a non-exclusive 'licence' to occupy exists in law but, as a commercial agreement, there is nothing in principle to prevent such an arrangement being entered into.
Last modified 29 Aug 2022
UK - England and Wales
The uk’s decision to leave the european union is likely to cause some uncertainty. fiscal consequences may include changes in stamp duty land tax (england), land and building transaction tax (scotland) and land transaction tax (wales). there may well be some other changes. if you have a contact in dla piper, please do check the latest position with him or her..
An interest in land/real estate can either be held under freehold or leasehold ownership. Freehold is the highest category of ownership in England and Wales and, in most cases, effectively confers absolute ownership. Leasehold confers rights of exclusive possession and use of land for a limited period of time.
A real estate owner can also give non-exclusive rights, known as easements, to third parties to use the land, such as granting a right of way. If correctly registered, easements are binding on any future owners of the property.
UK - Scotland
As well as full ownership, it is possible to own property jointly with other parties, although this is not common where the parties are unconnected. In addition, interests under leases can be acquired and disposed of in the same way as freehold interests, subject to any limitations set out in the lease agreement.
A real estate owner can also grant non-exclusive rights to third parties to use the property, for example rights of access across the land. These rights are generally known as servitudes and are binding on the successors in title to the person who granted the original right, provided they are correctly drafted in the title document and registered. (It is also possible to acquire such rights through the principle of prescription if they have been used without objection for a number of years.)
Ukrainian law provides for the following real estate rights, apart from full ownership:
- Lease (the right to use immovable property for a certain period subject to payment).
- Possession of someone else's immovable property (actual possession of property that belongs to another person).
- Use of someone else's immovable property (servitude – the right to use someone else's land in order to meet one's own needs, if these cannot be met in any other way).
- Use of someone else's land for agricultural purposes ( emphyteusis ).
- Use of someone else's land for construction ( superficies ).
- Permanent use of a plot of land (for an unlimited term and only in relation to plots that are state or municipal property). This right is granted only to state or municipal enterprises, organizations and institutions, religious organizations or to civil organizations whose members are disabled.
- A right of economic management (applicable to real estate other than plots of land). This right is granted to state or municipal commercial enterprises.
- A right of operational management (applicable to real estate other than plots of land). This right is granted to state or municipal non-commercial enterprises.
- Concession (as a form of public-private partnership). The person who obtains the right of concession is entitled to use state property on a long-term basis after investing in such state-owned property.
United States
An interest in land can either be held under fee or leasehold ownership. Fee ownership is the highest category of ownership in the US and effectively confers absolute ownership. Leasehold confers rights of exclusive possession and use of land for a limited period of time.
A real estate owner can also give exclusive and non-exclusive rights, known as easements and licenses, to third parties to use the land, such as granting a right of way. Recorded easements are binding on any successors in title to the property, whereas licenses are typically for a shorter duration.
In Zimbabwe there are two categories of property rights: real rights and personal rights
A real right is an exclusive interest or benefit enjoyed by a person in a thing. It is an absolute right and entitles the holder to enforce it against other persons. Real rights are registrable, while personal rights are not. Real rights include long leases and servitudes.
A personal right is a right that is enforceable against only a particular person and is based on the existence of a special legal relationship, such as a contract. It is a right from a person to a person. An example of this would be short-term leasehold.
- How Can Transferring a Property to a Rel...
How Can Transferring a Property to a Relative Save Taxes in Hong Kong?
20 September 2019 - While Hong Kong's property market has certainly been affected by the recent uncertainties (both local and the broader trade war), the effect has not been as significant as some reports suggest. August residential sales volumes were down 15% from July, 15% below August 2018 levels, and actually 60% higher than average monthly transactions in 3Q2018. There are people who remain confident in the long term and are investing opportunistically. Nonetheless, volumes are certainly down from pre-protest levels.
For those who are indeed looking to invest in properties, transferring a property to a close relative is a legal means of acquiring properties and avoiding taxes in Hong Kong. After the Government implemented the double stamp duty in 2013, then increased the property stamp for second-home buyers to 15% in 2016, homeowners began transferring the title of a property from joint ownership to single ownership. Doing so enables them to restore the “first-time purchaser” status for one party in order to re-enter the property market without triggering the 15% additional tax.
Notably, a study by QFang indicated that transactions involving close relatives constituted over 10% of the second-hand residential transactions in the first seven months of the year. The same study indicated that this has increased in recent months and was 16% of all second-hand sales in July. This may indicate that some buyers are optimistic about the market outlook and are preparing to make a new purchase by restoring their “first-time purchaser” status.
How does it work?
A person (HKPR) holding a property as a joint proprietor or individual owner may transfer (sell) their ownership of the property to a close relative such as a parent, sibling, spouse or child. This “close relative” status exempts the relative from paying the 15% Ad Valorem Stamp Duty (AVD). The transaction is subject to Stamp Duty based on the determined value of the property, but the person (transferor) becomes eligible for first-time buyer status, exempting them from the 15% (AVD) on a future purchase.
How It Saves Taxes – An Illustration (Only Available for HKPR)
For example, a couple jointly owns a property with a market value of HK$6 million. The husband transfers the title of the property to his spouse. The total amount of tax rate payable is HK$45,000 ($3,000,000 x 1.5%). Later, the husband purchases a residential unit with a market value of HKD$8 million as a first-time buyer, avoiding the 15% AVD (HK$1.2 million), instead paying only the 3.75% stamp duty (HK$300,000). This results in a net tax savings of HK$855,000 compared to what would have been paid had he purchased the property without having transferred ownership of the original property.
Under current laws, the husband may do this repeatedly - buy a property and then transfer it to his wife – and be entitled to the first-time buyer status and exempt from the AVD on each new purchase. Compared with the 15% AVD, the stamp duty applicable to first-time home buyers is much lower, ranging from 1.5% to 4.25%. If the property price is under HK$2 million, only a printing fee of HK$100 is required.
In the first-hand property market, a similar strategy has evolved, with some with prospective buyers “borrowing” their relatives names and registering multiple lottery applications in order to increase their chances of purchasing units. If successful, they can transfer the property ownership from their relative to themselves, typically after waiting three years to avoid being subject to the Special Stamp Duty (SSD), an additional tax payable if you sell or transfer within 3 years of purchase.
These tax-saving strategies are not illegal and sound like no-brainers for anyone seeking to build a portfolio of properties. So why doesn’t everyone (who can afford to buy multiple properties) do this? This approach is obviously beneficial, but one must also pay attention to the risks involved.
Risks of Transfers
Although transferring property titles helps some buyers to reduce taxes, there are other considerations.
Mortgage Financing : Banks are naturally careful about awarding a mortgage considering the financial strength of all parties involved, particularly for older purchasers or those with multiple properties in their portfolio. In the above example, the husband may qualify for a mortgage when acquiring a property but may later find that the bank will not transfer the mortgage to his wife if she doesn’t meet various stress tests (ie. debt-to-income, etc.). Or the bank may allow the mortgage transfer but at a higher interest rate. In such cases, the husband could provide a personal guarantee on his wife’s mortgage, though again the bank will review the combined financial strength of the two parties. The same applies to a parent transferring ownership to a child. Just as importantly, a family should not undertake more debt (i.e. risk) than they can comfortably support.
Costs : One must consider the costs of the transaction, both the immediate costs (such as attorney’s fees) and costs that may be incurred later. If the mortgage is transferred before the expiry of a penalty period, it may be necessary to return the cash rebate and pay the penalty interest to the bank.
Estate Planning : With joint-ownership, if one party passes away, the ownership automatically transfers to the other. Moving to separate ownership results in a more protracted probate process of the sole owner dies, especially if they do not have an updated will, which then leads to an even more exhaustive intestate court process and potentially legal disputes amongst the family.
Other Tax and Title Considerations : Some owners may attempt to transfer their property at a below-market price (to reduce stamp duty). However, tax authorities have the right to recover the difference, potentially with a penalty. If the title transfer is done as a Deed of Gift (with no money changing hands between the parties), it is still considered a property transfer and subject to the same tax treatment as a sale. Properties transferred via a Deed of Gift are also subject to claims by creditors if the donor declares bankruptcy within 5 years. This title encumbrance can cause complications later, making the property difficult to sell, since banks may be unwilling to provide a mortgage to a new buyer during that 5-year period.
In summary, property transfers are legal ways to reduce your property taxes. However, there are potential complexities to consider and you should engage professional legal and tax advisors to assist you in making an informed decision before employing this strategy. In addition, the Government has indicated that it is closely monitoring such transfers, so stay abreast of the latest policies in case they change.
Note: Illustrations in this article are for reference only and no representation or warranty is made regarding their accuracy. This article in no way represents legal, tax, accounting or investment advice. Readers considering real estate transactions should consult professionals in these areas for advice.
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- 3. If I want to sell or transfer my flat to a member of my family or a relative, what should I be aware of?
- You don't need an estate agent;
- You don't need to sign any provisional agreement;
- You still have to appoint a solicitor to handle the sale or transfer;
- If the person is a relative related to you by blood, marriage or adoption, one solicitor can represent both parties . Otherwise, you must appoint another solicitor to represent your relative;
- The stamp duty will be calculated according to the market price of the property if the purchase price is below the market price or if the property is transferred as a gift ( i.e. no purchase price is payable) . Please check with your solicitor or the Stamp Office for details of the calculation.
Choosing a subtopic
- 1. Am I holding a Government lease while owning a flat in a multi-storey building?
- 2. What are the different ways of owning a property? What is sole ownership and what are joint tenants and tenants-in-common?
- 3. Can I sell my property if I am one of the joint tenants/tenants in common?
- 4. I am not the "registered owner" of a flat although I have paid part or all of the money to purchase the flat. Do I have a say in matters concerning the property? Can I stop the "registered owner" from selling the property?
- 1. I want to sell my flat. What services can I expect from an estate agent?
- 2. As a vendor, must I sign an estate agency agreement when I ask an agent to help me sell my flat?
- 3. Can the same agent serve both the vendor and the purchaser?
- 4. Do I pay less commission if the same agent serves both the purchaser and me (the vendor)?
- 5. I want to buy a flat. What services can I expect and what information can I obtain from the agent who shows me a flat?
- 6. As a purchaser, must I sign an estate agency agreement when I ask an agent to show me a flat?
- 7. Do I pay less commission if the same agent serves both the vendor and me (the purchaser)?
- 8. What if I sign a 'Form 4' with an agent who shows me a flat, and later, I buy the flat through another agent or directly from the vendor?
- 9. What if I sign a 'Form 4' with an agent who shows me a flat, and later, someone related to me (e.g. my spouse) buys the flat through another agent or directly from the vendor?
- 10. Where can I go to make a complaint if I am not satisfied with my agent?
- 11. Before I buy the flat, I find out that my agent gave me false information or he forgot to tell me some important information about the flat. Can I terminate the provisional agreement and sue my agent (and his employer) for compensation?
- 1. I want to purchase a flat. What should I do before I sign the provisional sale and purchase agreement and pay the initial deposit?
- 2. When the property is sold with an existing tenancy, what should the purchaser and the vendor be aware of?
- 3. What are the usual terms that would be contained in the provisional sale and purchase agreement?
- 4. Should the provisional sale and purchase agreement be stamped and registered?
- 5. What should a purchaser be aware of if there is an existing mortgage on the flat before he/she signs the provisional sale and purchase agreement?
- 6. If a purchaser intends to buy a flat over which there is a negative equity (the purchase price to be paid cannot fully offset the outstanding mortgage loan), how can the purchaser deal with the risk?
- 7. What should a purchaser do if a mortgage is needed?
- 8. Can a purchaser re-sell the property after signing the provisional sale and purchase agreement?
- 9. Can a purchaser refuse to complete the purchase of a stigmatized property after signing the provisional or formal sale and purchase agreement?
- 1. What are the usual steps for signing the formal sale and purchase agreement and paying the further deposit?
- 10. What happens if there are discrepancies in the terms between the provisional agreement and the formal agreement?
- 2. I (as a purchaser) signed the provisional agreement but I want to add my spouse's name or my parents' names into the subsequent formal agreement. Can I do that?
- 4. Should I enter into a sale and purchase agreement or execute a deed of gift if I want to give my property to my husband/wife?
- 5. How much stamp duty is payable for the sale and purchase agreement for a residential property?
- 6. Is there any difference between 'residential' and 'commercial' properties as far as stamp duty is concerned?
- 7. Can the purchaser apply for deferring payment of stamp duty?
- 8. Should the sale and purchase agreement for the property be registered at the Land Registry? How much is the registration fee?
- 9. How much will I have to pay the solicitor for a property transaction? Is there a fixed scale?
- 11. If the vendor/purchaser anticipates that he will be out of Hong Kong and therefore cannot sign the formal agreement, what can he do?
- 1. If one party commits other wrongful acts, e.g. the vendor broke a small window in the kitchen, can the other party terminate the sale and purchase agreement or claim for compensation?
- 1. If there are some "new expenses" (e.g. repair costs for the relevant building) come out after the parties signed the formal sale and purchase agreement but before the completion day, should the vendor or the purchaser bear these expenses?
- Sale and purchase of Home Ownership Scheme (HOS) flats
- 1. Sale and purchase of property under construction is governed by either the "Consent Scheme" or the "Non-Consent Scheme". What are the differences between these two schemes?
- 2. If the developer/vendor fails to complete the building and hand over the flats to the purchasers on time, can the purchasers terminate the agreement and sue for compensation?
- 1. What are the functions of the Owners' Corporation and the building manager?
- 2. How to set up an Owners' Corporation?
- Case Illustration
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Hong Kong: Transfer Of Property In A Divorce Settlement In Hong Kong
According to the Hong Kong Census and Statistics Department , in 2019, 35% of marriages in Hong Kong were remarriages. The pandemic also brought a spike in divorce rates as couples' marriage soured. Divorce proceedings often involve the division of former matrimonial properties between divorcing couples, whether such properties are solely owned by one, co-owned by both parties, or through corporate vehicles. The couple may choose or the Court may decide to sell the properties and distribute the sales proceeds between themselves, but it gets more complicated when properties (or a share of the properties respectively owned by each) are to be transferred amongst themselves. It would be beneficial for the parties to consider the issues they will need to consider to make the most appropriate arrangement in the divorce settlement or to present their case in Court.
This article highlights the important issues and/or common areas of misconception relating to property transfer in a divorce proceeding that divorcing couples should pay special attention to.
1. Stamp duty liability
There is a misunderstanding that no stamp duty is chargeable on a property transfer pursuant to a divorce order granted by the Family Court of Hong Kong. In fact, even if the property transfer is ordered by the Court, the parties are liable to payment of ad valorem stamp duty for both transfer of residential properties and non-residential properties at Scale 2 rates under Head 1(1A) of the First Schedule of the Stamp Duty Ordinance (namely, the lower ad valorem stamp duty rates). How much is payable will depend on the consideration of the transfer or the properties' market value, and whether or not any consideration is stated in the instrument effecting the transfer. It is a common practice that parties should agree on who will bear the stamp duty liability in preparing the settlement.
It is also worth noting that application for Scale 2 stamp duty rates for the property transfer between the divorcing couples would only be considered if the transfer is pursuant to a court order. For this purpose, "court" only refers to any court of Hong Kong of competent jurisdiction. A divorced party who is the owner of a residential property in Hong Kong and agrees to receive an additional residential property in Hong Kong under the terms of a divorce court order issued by the court outside Hong Kong cannot obtain the benefit of a lower stamp duty. Thus, divorcing couples will need to consider which jurisdiction to enforce divorce proceedings that will result in the most benefit in terms of stamp duty liability when the settlement involves properties in Hong Kong.
The assessment of stamp duty can be a complicated issue. The stated consideration or market value is only one of the several factors to be taken into account. Following the cases of Ngai Sau Ying v Collector of Stamp Revenue (CACV 460/2018) and Hung Ip Shing v Collector of Stamp Revenue (CACV 461/2018) , the division of properties between divorcing parties can be regarded as an exchange of properties in substance, and thus for stamp duty purpose, the difference in property value, namely the "equality money" will be the basis for the computation. Under the fairness principle in a divorce proceeding, both monetary and non-monetary consideration given by one party to another pursuant to the divorce order, whether in the form of real property (no matter in Hong Kong or overseas), lump sum payments, other financial assets, abandonment of rights to ancillary relief, etc., will all have an impact on how much stamp duty shall be paid and by whom.
One should note that the transfer of multiple properties together between the same parties, especially when performed concurrently, may be caught under the "series of transactions" regime under the Stamp Duty Ordinance (Cap. 117), i.e., the Stamp Office may question whether the transfer forms "part of a larger transaction or a series of transaction". In this situation, the aggregate of all the properties' values will be considered in determining the stamp duty rate in the assessment.
The lengthy process of adjudication of stamp duty is also a factor for consideration. As the Stamp Office may need to collaborate with other Government bodies such as the Rating and Valuation Department, coupled with the requisition process between the Stamp Office and the lodging party of the instrument, the assessment of stamp duty can take up to a year or even more in certain cases. It is therefore prudent for the divorcing parties to take the timing of the whole stamping process into account.
2. Potential risk of voidable transaction at an undervalue
Very often the transfers of properties between divorced couples are at "nil" consideration. Parties should be mindful of the potential risks associated with such arrangement because pursuant to sections 49, 51 and 51A of the Bankruptcy Ordinance (Cap. 6), section 265E and 266B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and section 60 of the Conveyancing and Property Ordinance (Cap. 219), a transaction shall be voidable if it is undervalued or is considered as a disposition made with intent to defraud creditors. The "relevant time" for a transaction at an undervalue is any time within the period of 5 years, ending with the commencement of the bankruptcy/winding-up. Therefore, most banks in Hong Kong incline to refuse a mortgage application by a property owner if he/she was assigned the property under any transaction at nil consideration within the last 5 years. Equal hardship will be faced by the property owner if he/she intends to sell the property within 5 years subsequent to a nil-consideration transaction due to the difficulty in proving good title. Thus, whether the divorced parties intend to mortgage or sell the properties within 5 years after the transfer, this needs to be taken into consideration when making divorce settlement arrangement.
3. Effecting transfer of properties with existing mortgage
It is another misconception that the existing mortgage of a property and all the rights and obligations thereunder will automatically be assumed by the new owner after the divorced couple has completed their property transfer. A change in ownership of the property is prohibited under the standard terms of a mortgage. The existing mortgage of the property should therefore be discharged or released before or upon completion of the transfer, even though the property assignee is already one of the co-owners and mortgagors. Some important considerations and topics that divorcing couples should bear in mind are:-
- Who shall be responsible for the repayment of the outstanding loan to the bank
- Who shall bear the costs of the discharge and redemption of the existing mortgage
- Whether any new mortgage loan is required right after the completion of the transfer in order to finance the repayment of the existing loan
- Whether any consent is required from the bank or other third party in taking out a new mortgage (for example, consent from the Hong Kong Housing Authority when the property is subject to alienation restriction prohibiting such transfer and mortgage without the HKHA's consent)
- Whether there is any premium payable when the property is transferred
- Whether the divorcing party to whom the property is transferred is financially capable of applying for a new mortgage loan (i.e., fulfilment of banks' stress test)
- The possibility of having additional borrowers and/or guarantors for securing the new mortgage loan
- The sequence of the transfers for different properties, if the fund for redemption comes from sale proceeds of other property(ies)*
Banks tend to be more conservative when considering a mortgage application when the property transfer to the new mortgage loan applicant is at nil consideration. It is most crucial for the divorcing parties to enquire with the intended mortgagee bank about the requirement and possibility to grant the new mortgage loan in the circumstances prior to making any settlement arrangement.
4. Dealing with rights relating to the property
The transfer of real property does not only deal with ownership of property but may come with a "basket" of other rights. For example, if the property is transferred subject to an existing tenancy, the divorcing couple will need to agree on the responsibility in managing the tenancy issues such as entering into, amending, terminating, renewing of the tenancy agreement, maintaining the property, liability of landlord's obligations, collecting of rentals, distributing of rental proceeds and returning of rental deposit etc.
Occasionally, the divorced couple may settle on the property transfer decision on the condition that sufficient protection is given to secure the right of occupation in the matrimonial property of one party or their children or other family members for a period of time after the divorce order is granted. Alternatively, the parties may agree to sever the joint tenancy of a property into tenancy in common for ease of property management and distribution, whilst they equally wish to secure such occupation right of their children or family members. When negotiating for the occupation arrangement, the divorcing couple shall ensure that a high level of consensus is attained especially regarding the period of occupation, the termination of such occupation right, the timing and arrangement relating to the sale of the property, so as to avoid any doubts on title and encumbrances of the property upon a future disposal of the property.
For further protection of any third party right (such as the occupants' right) in the property, parties may consider obtaining and registration of a truncated Court Order setting out the arrangements of such rights at the Land Registry.
The above only sets forth a few of the considerations that divorcing couples should take into account when considering settlement or how to present their case in Court. From our experience, there are often other complicated issues that may evolve during the divorce process which may involve the divorced couples' companies shareholdings and trust and equitable interests. Should you have any enquiry, our teams of matrimonial and conveyancing lawyers are ready to share more details on this topic.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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- What are the usual documents involved in such transactions?
- What are the warranties given by a seller to a buyer?
- When is the sale legally binding?
- When is title transferred?
- What are the costs usually shouldered by the parties?
In most transactions, the parties will first sign a provisional or preliminary sale and purchase agreement. A formal sale and purchase agreement will later be signed by the parties, superseding the terms in the provisional or preliminary sale and purchase agreement. On completion, an assignment will be executed for the formal transfer of the title.
A formal sale and purchase agreement may contain one or more of the following warranties by the seller to the buyer:
- The government has not given any notice or made any order for the resumption of the land concerned
- The property is not adversely affected by any easement, right, privilege or liability of which the seller is aware other than those disclosed in the agreement of those of which the buyer is aware or could have ascertained on reasonable inspection of the property
- The seller has not received any notice or order requiring him/her to demolish or reinstate any part of the property
- The seller has not received any notice or order requiring him/her as one of the co-owners of a multiple-ownership building to contribute to a specified sum towards the cost of repair of any common part of the building
The exact scope of any particular warranty, and whether any particular warranty is to be given, depends on the negotiation between the seller and the buyer.
Where the seller is expressed to assign the property as beneficial owner, certain covenants are implied into the assignment (and will therefore be given on completion of the purchase), including the following:
- The land grant is good, valid and subsisting
- The seller has good right and title to assign the property free from encumbrances save as specified in the assignment
- The covenants contained in the land grant and any deed of mutual covenant have been observed and performed up to the date of the assignment
After 29 April 2013, all preliminary agreement for sale and purchase and agreement for sale and purchase used in the sale and purchase of first-hand residential properties must contain certain provisions (including certain warranties to be given by the seller) as required under the Residential Properties (First-hand Sales) Ordinance (Cap. 621). Any person who fails to include the terms required by this ordinance commits an offense and is liable to a maximum fine of HKD 500,000.
In Hong Kong, a seller and a buyer will very often sign a provisional or preliminary agreement. A provisional or preliminary agreement usually binds the parties.
Whether or not a provisional or preliminary agreement constitutes a binding agreement depends upon the intention of the parties as evidenced by the wording of the agreement. It will depend on whether the execution of a formal agreement is an essential precondition before the parties will be bound or whether it is simply contemplated that the preliminary agreement, which is already legally binding on the parties, will be superseded by a formal agreement. This is a question of fact and will be determined by the court on a case-by-case basis.
However, under the Residential Properties (First-hand Sales) Ordinance (Cap. 621), after a buyer enters into a preliminary agreement for sale and purchase of a first-hand residential property, and the buyer pulls out and does not sign the formal agreement for sale and purchase within five working days after the date of the preliminary agreement for sale and purchase as required by the ordinance, 5% of the purchase price of the property (ie, the preliminary deposit) will be forfeited to the seller, and the seller does not have any further claim against the buyer.
The legal title will be transferred from the seller to the buyer upon execution and delivery of the assignment.
Buyers and sellers in general will bear their respective agents’ fees and legal costs.
In addition, the buyer usually bears the following:
- Ad Valorem Stamp Duty (AVD), which is payable on the sale and purchase of real estate at the rate of 15% (for residential properties) or at the maximum rate of 8.5% (for non-residential properties) of the stated consideration or the market value of the property (whichever is the higher). There is an exemption for Hong Kong permanent residents buying residential properties but do not own any interest in any residential property in Hong Kong on the date of acquisition, the maximum rate is 4.25% of the stated consideration or the market value of the property (whichever is the higher) in such cases. However, from 12 April 2017 onwards, where such a Hong Kong permanent resident buys more than one residential property under one agreement, the aforesaid exemption will not apply (note: the passing of legislative amendment bill for such a rule is pending as of December 2017). The AVD will be payable on the sale and purchase agreement.
- Buyer's Stamp Duty (BSD), which applies to the acquisition of residential properties by companies and non-Hong Kong permanent residents, the rate is 15% of the stated consideration or the market value of the property (whichever is the higher) in addition to the AVD and the SSD, if applicable.
- 20% of the stated consideration or the market value of the property (whichever is the higher) if the residential property has been held for six months or less
- 15% of the stated consideration or the market value of the property (whichever is the higher) if the residential property has been held for more than six months but for 12 months or less
- 10% of the stated consideration or the market value of the property (whichever is the higher) if the residential property has been held for more than 12 months but for 36 months or less.
- Fees in relation to registering the agreement for sale and purchase and assignment at the Land Registry (between HKD 210 and HKD 450 as of December 2017)
- Feeds in relation to certified copies of the title deeds (where the transaction is in respect of a property purchased from the developer)
- In the case of the first assignment by the developer of a unit in a multiple-ownership building, lump sum payments payable by the first assignee of the unit under the deed of mutual covenant (eg, advance payment of management fee, management fee deposit, fee for the removal of debris/waste materials resulting from decoration, and fitting out and contribution to sinking fund for the building)
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Hong Kong SAR
Corporate - other taxes, value-added tax (vat).
Hong Kong SAR does not have a VAT, goods and services tax, or sales tax.
Customs duties
There is no tariff on general imports in Hong Kong SAR.
Duties are levied on limited categories of dutiable commodities (i.e. tobacco, liquor, methyl alcohol, and hydrocarbons), regardless of whether they are imported or locally manufactured.
Property tax
Property tax is charged annually to the owner of any land or buildings (except government and consular properties) in Hong Kong SAR at the standard rate of 15% on the net assessable value of such land or buildings. Net assessable value of a property is the consideration payable to the owner for the right to use the land or buildings less rates paid by the owner and a 20% notional allowance.
Rental income derived by a corporation from a Hong Kong property is subject to profits tax. The corporation that is subject to profits tax may apply for an exemption from property tax in respect of the property. If no exemption is applied, the property tax paid can be used to offset against the profits tax payable by the corporation.
Stamp duty is charged on transfer of Hong Kong stock by way of sale and purchase at 0.26% of the consideration (or the market value if it is higher) per transaction. Hong Kong stock is defined as stock the transfer of which must be registered in Hong Kong SAR.
For conveyance on sale of immovable property in Hong Kong SAR, the stamp duty payable depends on the type of property transferred (i.e. residential property vs. non-residential property) and the property consideration. Currently, stamp duty on transfer of properties is charged as follows:
- Transfer of residential property: A flat rate of 15%, with certain exceptions. One common exception is the acquisition of a single residential property by a Hong Kong permanent resident who does not own any other residential property in Hong Kong SAR at the time of acquisition ( see 2 below ).
- Acquisition of a single residential property by a Hong Kong permanent resident who does not own any other residential property in Hong Kong SAR at the time of acquisition, and some other specified circumstances: Scale 2 rates ranging from HKD 100 (for property consideration of up to HKD 2 million) to 4.25% (for property consideration exceeding HKD 20 million).
- Transfer of non-residential property: Scale 2 rates ranging from HKD 100 (for property consideration of up to HKD 2 million) to 4.25% (for property consideration exceeding HKD 20 million).
The stamp duty payable is computed by applying the relevant rate to the consideration or market value of the property (whichever is higher). When Scale 2 rates are applicable, marginal relief is available for transfer where the consideration is marginally above the lower bound of each rate band.
For lease of immovable property in Hong Kong SAR, stamp duty is calculated at a specified rate of the annual rental that varies with the term of the lease. Currently, the applicable rate ranges from 0.25% (for lease period of not more than one year) to 1% (for lease period of more than three years).
Exemption is available for certain transactions, such as transfer of shares or immovable property between associated bodies corporate, transfer of shares or units of exchange traded funds (ETFs) listed in Hong Kong SAR, transfer of shares by ETF market makers in the course of allotting and redeeming ETF units listed in Hong Kong SAR, and certain stock borrowing and lending transactions, provided that the specified conditions for exemption (if any) are satisfied.
Special Stamp Duty (SSD)
There is an SSD on resale of residential property within 36 months from the date of acquisition. The SSD is imposed on top of the stamp duty payable on conveyance on sale or agreement for sale of residential property, with a few exemptions. The SSD payable will be calculated based on the stated consideration or the market value (whichever is higher) of the resold property at the regressive rates indicated below.
- 20% for residential properties held for six months or less.
- 15% for residential properties held for more than six months but for 12 months or less.
- 10% for residential properties held for more than 12 months but for 36 months or less.
Buyer's Stamp Duty (BSD)
A BSD is payable on acquisition of Hong Kong residential properties by any person (including Hong Kong and foreign companies) other than a Hong Kong permanent resident. The BSD is charged at a flat rate of 15% on the stated consideration or the market value of the property acquired, whichever is higher. The BSD is imposed on top of the stamp duty and the SSD (if applicable), with exemptions in certain situations.
Business registration fees
Every person who carries on a business in Hong Kong SAR is required to apply for business registration with a fee within one month from the date of commencement of the business. The business registration certificate has to be renewed either on an annual basis or every three years with a payment of a business registration (renewal) fee. Special registration and licence fees are applicable to banks and deposit-taking companies.
Capital duty
There is currently no capital duty in Hong Kong SAR.
Government rates and rent
Rates are an indirect tax levied on properties in Hong Kong SAR. Rates are charged at 5% of the rateable value, which is the estimated annual rental value of a property at the designated valuation reference date of 1 October.
Privately owned land in Hong Kong SAR is normally held by way of a government lease under which rent is payable to the Hong Kong SAR government in return for the right to hold and occupy the land for the term (i.e. the duration) specified in the lease document. Currently, government rent is calculated at 3% of the rateable value of the property and is adjusted in step with any subsequent changes in the rateable value.
Payroll taxes
In Hong Kong SAR, there are no payroll taxes other than the Mandatory Provident Fund (MPF) contribution ( see below ).
Mandatory Provident Fund (MPF) contribution
Under the MPF scheme, an employer is required to make a mandatory contribution for an employee in the amount equal to 5% of the monthly income of that employee. The maximum level of income for contribution purposes is HKD 30,000 per month. An employer may make voluntary contributions in addition to the mandatory contribution required.
Environmental taxes
Plastic shopping bag (psb) charging scheme.
Except for plastics bags used for food hygiene reasons, all plastic bags (including flat-top bags) used for retail sales are subject to PSB charges. Retailers are required to charge at least HKD 1 for each PSB provided to consumers. The proceeds from the PSB charges are retained by the retailers.
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2022/23 Hong Kong Tax Facts and Figures
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IMAGES
VIDEO
COMMENTS
Under the prevailing policy of the HA, transfer of ownership must be by way of a Deed of Assignment at nil monetary consideration (except in
Yes. The contract must be in writing and signed by each party. It must contain all the terms of the sale, including details of the land to be sold and the price
A person (HKPR) holding a property as a joint proprietor or individual owner may transfer (sell) their ownership of the property to a close
The final steps will involve registering the assignment at the Land Registry. Once done, your solicitor will give you the title deed, if there
If I want to sell or transfer my flat to a member of my family or a relative, what should I be aware of? ... Basic knowledge of land ownership in Hong Kong.
A divorced party who is the owner of a residential property in Hong Kong and agrees to receive an additional residential property in Hong Kong
On Transfer of Hong Kong Stock ; Contract Note for sale or purchase of any Hong Kong stock. 0.13% of the amount of the consideration or of its value on every
Registration is effected by submitting the instrument concerned to the Land Registry together with a memorial in the prescribed form. The memorial describes the
Buyer's Stamp Duty (BSD), which applies to the acquisition of residential properties by companies and non-Hong Kong permanent residents, the rate is 15% of the
Transfer of residential property: A flat rate of 15%, with certain exceptions. One common exception is the acquisition of a single residential