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Caveat: The matters discussed below involve complex legal arguments for which legal advice must be sought.

I. Overview

The names of the legal owner(s) of a property can be ascertained from the title deeds or title documents relating to the property, which can be found in the land records maintained by the Land Registry.

The Land Registration Ordinance , Cap. 128 , Laws of Hong Kong, provides for the registration of deeds, conveyances, judgments and other instruments affecting real or immovable property, the keeping of Land Registry records, and for other matters relating to land registration.

Legal or nominal ownership is sometimes called the “paper title”, which can easily be traced or ascertained from looking at the title documents. However, legal ownership does not necessarily reflect the beneficial ownership of a property. Beneficial ownership is the right to enjoyment or entitlement to the benefit of a property, in contrast to legal or nominal ownership. It derives from monetary contribution (in most cases) towards the purchase price of the property, by virtue of a resulting trust or constructive trust.

Where a property is purchased in the name of X but the money comes from Y, and there is nothing to show Y intended to give up his beneficial interest, then it is presumed that Y intended to keep the beneficial interest and X would be said to be holding the property in “resulting trust” for Y.

A constructive trust is one which arises by the operation of law without reference to any presumed intention of the parties. The principle is that where a person holds a property in circumstances in which in equity and good conscience it should be held or enjoyed by another, he is compelled to hold the property on trust for the other person.

For example, X buys a flat with his own money in his sole name. The flat is occupied by Y, his girlfriend, and him. Y did not contribute anything towards the purchase price of the flat, but has made a great number of improvements to the flat, as well as doing ordinary housework. Y could claim an interest in the flat by way of a constructive trust. Constructive trust does not depend on intention of the parties. It is a question of fairness. So it does not matter that X did not have the intention to give Y an interest in the property. The issue is whether Y has done "enough" to justify an equitable claim.

Most of the time we can also ascertain beneficial ownership by referring to the documents kept by the Lands Registry, e.g. an action or proceeding pending in a court or tribunal that relates to land or any interest in or charge on land and a bankruptcy petition. For example, if the property is subject to a mortgage to a bank, then the bank will have a beneficial interest in the property until the mortgage is paid off.

Sometimes it is not easy to ascertain beneficial ownership of a property, e.g. when the property is registered in the name of the husband only, but the property is in fact the matrimonial home. The wife’s beneficial interest may not be ascertained simply by looking at the title deed.

The “paper title” of a matrimonial home may be in the name of both husband and wife, or in the name of only one spouse. The husband and wife may both contribute towards the purchase price or only one party may pay for it.

If both parties contribute towards the purchase price, they are co-owners of the property. They are either “joint tenants” or “tenants in common”, as the case may be.

If the property is registered in the sole name of one spouse, but was paid for by both spouses, the party whose name does not appear on the title deeds can claim that he or she is a beneficial owner of the property. They are “co-owners” of the property despite the fact that the property is registered in the sole name of only one spouse. For more detailed discussion of this, please go to “Sale and Purchase of Property” on the CLIC website.

II. Co-Ownership

When two (or more) persons purchase property together and provide the money in equal shares, they are presumed to be joint tenants. If their contributions are unequal, they are presumed to take beneficially, as tenants in common, shares proportionate to the sums paid. For example, if H contributes one-third and W two-thirds of the purchase price, they are presumed to be equitable tenants in common as to one-third and two-thirds, respectively.

This presumption may be rebutted by evidence that the parties intended to hold as joint tenants despite their unequal contributions, or that they intended to take as tenants in common despite equal contributions.

III. Joint Tenancy

A joint tenancy must display ‘the four unities’: unities of possession, interest, title, and time.

“Unity of possession” means that no co-owner is entitled to the possession of any particular part of the property to the exclusion of the other co-owner.

“Unity of interest” means that joint tenants hold the same interest. Tenants in common, however, may hold in different shares or proportions.

“Unity of title” means that the joint tenants must derive their interest from the same document or act. They must acquire their interest under the same instrument, e.g. an assignment of land.

“Unity of time” means that the joint tenants must acquire their interest at the same time.

A joint tenant does not hold any interest in the property in his individual capacity. His only interest is that which he holds jointly with his fellow joint tenant(s). A joint tenant is said to hold the whole with other joint tenant(s) but nothing by himself. There is only one estate in property which is held jointly and, although the joint tenants between themselves may have distinct rights, to everyone else, they are regarded as a sole owner.

If any one of the four unities is missing, then the co-owners are tenants in common, not joint tenants.

When a joint tenant dies, his interest is automatically extinguished and the surviving joint tenant(s) become(s) entitled to the property. If there are two joint tenants, the surviving tenant will become the sole owner of the property. If there are more than two join tenants, the shares of the late joint tenant will be divided and pass to the surviving tenants in equal shares. This special feature of a joint tenancy is known as the “right of survivorship”. The right of survivorship is the right of a person to property by reason of his having survived another person who had an interest in it.

IV. Tenancy in Common

A tenant in common’s interest forms part of his estate on his death and passes according to his will (a disposition or declaration by which the person making it provides for the distribution or administration of his property after his death) or the laws of intestacy (a person dying without a will). The main legislation on intestacy is the Intestates’ Estate Ordinance , Cap. 73 , Laws of Hong Kong.

A tenancy in common must display unity of possession. A tenant in common is regarded as holding a distinct yet undivided share in the property independently of the other co-owner(s). Each tenant in common holds a separate interest in the property. While the interests of joint tenants are equal, the shares of tenants in common may be unequal.

V. Division of Assets following a Divorce

When a husband and wife decide to divorce, what follows is the division of matrimonial property. However, it does not necessarily follow that the division is in accordance with their respective contribution towards the purchase price of the property.

Section 7 of the Matrimonial Proceedings and Property Ordinance , Cap.192 (“MPPO”) sets out what the court must do when deciding how the matrimonial property is to be divided:

“1. It shall be the duty of the court in deciding whether to exercise its powers under section 4 , 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say –

  • the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
  • the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
  • the standard of living enjoyed by the family before the breakdown of the marriage;
  • the age of each party to the marriage and the duration of the marriage;
  • any physical or mental disability of either of the parties to the marriage;
  • the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage that party will lose the chance of acquiring.”

Section 7(1) is based on section 25(1) of the Matrimonial Causes Act 1973 and section 3 of the Matrimonial and Family Proceedings Act 1984 of the United Kingdom.

Since the House of Lords’ landmark decision in White v White [2001] and the subsequent decision in Miller v Miller and McFarlane v McFarlane [2006], the task of the Court has been to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses.

A non-financial contribution to the welfare of the family is regarded as an important factor. The equal status of husband and wife in a matrimonial union is also to be reflected in the division of assets. The starting point is a more or less equal division of the available assets.

The Hong Kong Court of Appeal in DD v LKW sets out the relevant principles:

‘In the majority of the cases where the parties only have limited financial resources, the focus of the inquiry on fairness is to divide the assets of the parties so as to make provision for their housing and financial needs. It may be necessary to augment the available assets by making orders for periodical payments.

Where there are assets which are available beyond satisfying the immediate housing and financial needs, equality in the division of the assets should be made unless there is a good reason to the contrary. This approach is not confined to ‘big money cases’ but to all cases where assets are available beyond what is required to satisfy the needs of the parties.

The inquiry should be conducted in two stages :

First, there should be a computation of the available assets of the parties, such as property, income (including earning capacity), and any other financial resources which the parties have or are likely to have in the foreseeable future.

Second, the assets should be distributed according to the three principles of need (generously interpreted), compensation and sharing. These principles can be gleaned from section 7(1) , and each of the matters set out in section 7(1)(a)–(g) can be assigned to one or another of the three principles.’

In W v H , the Court of Appeal suggested flexibility in the exercise of the court’s discretion:

' … I consider that there are grave difficulties in accepting that the Hong Kong courts are bound by the decisions of English courts. Naturally, decisions of the House of Lords are to be given respect. But since the resumption of sovereignty in 1997, it would appear difficult to suggest that decisions, even of the House of Lords, could be considered as binding.'

‘I consider it unnecessary to examine what was said in all the cases, but the provisions of the Ordinance mandate a flexibility in the exercise of discretion which in each case is necessary to meet the circumstances of the case. The English decisions have shown a progression towards the realisation that fairness often dictates that, on dissolution of the marriage, the family assets should, in principle, be shared between the parties unless there was good reason to depart from such a distribution. Nevertheless, each case must be decided on its own facts and its own merits. In cases of divorce, the facts and circumstances relating to the parties and the marriage can and do vary significantly. In my view it would be dangerous to attempt to decree a principle that is applicable in all cases.’

The ultimate goal is to achieve fairness in the distribution of the couple’s assets, not necessarily a strict 50/50 division.

Complications arise when the purchase price of the matrimonial property was funded (in whole or in part) by a third party. In that case, the third party may have a claim on the property for his or her contribution.

For example, if the matrimonial home was purchased at, say, HK$3 million, and the husband and the wife each contributed $1 million, with the remaining HK$1 million contributed by a brother of the husband, then the brother could have a 1/3 interest in the value of the matrimonial home at the time of the divorce, and that 1/3 would not form part of the pool of matrimonial property to be divided between the husband and wife.

VI. Other Scenarios

When property is registered in the name of one person only but the purchase price was contributed by more than one person, the other person(s) who contributed towards the purchase price could claim a beneficial interest by way of resulting trust or constructive trust.

Parties to co-habitation are not subject to the Matrimonial Proceedings and Property Ordinance . Their claims to the property are in accordance with their respective contributions to the purchase price. Sometimes non-monetary contributions are also taken into account.

The same applies when the property was purchased jointly by siblings. Their claims to the property would be in accordance with their respective contributions.

However, if a parent funded the purchase of property for his or her child, there is a presumption that the parent intended it to be a gift to the child. This is called the “Presumption of Advancement or Gift”. This presumption is rebuttable by evidence that the parent intended to keep the beneficial interest for himself or herself.

FAQ

1. If I buy a property in the name of my partner, am I entitled to any interest in the property?

If a property is purchased in your partner’s name but you have contributed towards the purchase price, and there is nothing to show that you intend to give up your interest in the property, then it is presumed that you intend to keep the interest (known as "beneficial interest") and your partner is holding your interest in the property on trust for you. Unless this presumption is rebutted, you would be a "beneficial owner" of the flat even though you are not a registered legal owner. In the situation where the purchase price is paid solely by you, you may even be the sole beneficial owner of the property.

For more details, please visit Properties Arrangements > Purchasing property together > Overview .

2. My partner and I decided to live together. The flat was bought in his/her name. He/She paid the down payment and the monthly mortgage, and I am responsible for all household expenses and improvement works of the flat. Do I have any entitlement to the flat?

If it is shown that you and your partner had an intention (whether express, implied or presumed) as to how the flat was to be owned, then generally the intention would prevail. But if no such intention can be shown, then whether you have any interest in the flat would depend on whether the circumstances have given rise to a "constructive trust" in your favour. The principle is that if the flat is held in your partner's name in circumstances where it is fair and just that you should have a share in the flat, your partner is compelled to hold your share on a "constructive trust" for you. The issue is whether you have done “enough” to justify an equitable claim.

If you want to know more, you may refer to Properties Arrangements > Purchasing property together > Overview .

3. My husband and I have both paid for the purchase price of our home. The flat is registered in my name only. Is my husband an owner of the flat as well? If so, how would our shares of the flat be worked out?

If you and your husband have contributed towards the purchase price of the flat, both of you are co-owners of the flat. Even though your husband is not a registered legal owner, he would be a beneficial owner of the flat.

As to how your shares of the flat are worked out, it would depend on the respective contributions of you and your husband towards the purchase price. If both of you have contributed equally towards the purchase price, both of you are presumed to own the flat equally as "joint tenants". Joint tenants are subject to the “right of survivorship”, which stipulates that upon the death of an owner, his/her interest will automatically pass to and shared equally by the surviving owners.

On the other hand, if the contributions of you and your husband are unequal, then it is presumed that both of you own the flat as "tenants in common", with each owning a share proportionate to the amount of your contributions. For example, if your husband has contributed one-third and you two-thirds of the purchase price, your husband and you will own respectively one-third and two-thirds of the flat as tenants in common. Tenants in common are not subject to the "right of survivorship", and the interest of any owner who dies will pass under his/her will (or under the law of intestacy, if the owner dies without a will).

The presumptions of "joint tenants" and "tenants in common" can be rebutted by evidence that you and your husband intended to hold as joint tenants despite unequal contributions, or that both of you intended to own as tenants in common despite equal contributions.

For further explanations, please refer to Properties Arrangements > Purchasing property together > Co-ownership , Joint tenancy and Tenancy in common . For divorce scenarios, please refer to Q4.

4. If a married couple ended up in divorce, how would the court divide up their interests in the matrimonial property?

This is a complicated issue.

When a married couple undergoes a divorce, the division of their matrimonial property does not necessarily follow from their respective contributions towards the purchase price of the property. The power of the court in this regard is governed by the Matrimonial Proceedings and Property Ordinance . Generally speaking, the court would take into consideration the conduct of the parties and all the circumstances of the case, such as the financial resources, financial needs and age of each of the parties, the contribution of each party to the welfare of the family, the standard of living enjoyed by the family before the breakdown of the marriage, and the duration of the marriage. The ultimate goal is to achieve fairness in the distribution of the couple’s assets, which is not necessarily a strict 50/50 division.

If you want to know more on the division of matrimonial property upon divorce, you may go to Properties Arrangements > Purchasing property together > Division of assets following a divorce .

5. I am living with my partner in a flat which we bought together. I want to break up with him/her. I want to know if my interest in the flat is protected by legislations in Hong Kong.

Parties to co-habitation who are not married are not subject to the Matrimonial Proceedings and Property Ordinance. Their claims to any property bought by them are generally in accordance with their respective contributions to the purchase price of the property. Sometimes non-monetary contributions are also taken into account.

For more details, please refer to Q1 and Q2 above, and Properties Arrangements > Purchasing property together > Other scenarios .

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