Banking Law and Practice

CHAPTER 6

Mortgage of Land

Learning objectives

After studying this chapter, you should be able to:

1 Describe the basic concepts of land ownership, property, and mortgages in Hong Kong

2 List the key provisions of the Conveyancing and Property Ordinance and the Land Registration Ordinance affecting mortgages

3 Identify the formalities and procedures for creation of mortgages in Hong Kong

4 List the fundamental rules for determining priorities between competing interests affecting land

5 Identify the rights, powers, and remedies of the parties to a mortgage

Introduction

Land is generally regarded as the most secure form of security for banking facilities. In Hong Kong, mortgages are the most popular type of security. Banking facilities secured by mortgage over land have played a key role in both commercial activities and promotion of home ownership. It is therefore critical for banks to understand the law and practice relating to mortgages. This chapter explains the basic legal concepts and relevant statutes, and examines recent legal developments affecting mortgages.

Land in Hong Kong

Before discussing the legal issues around mortgages, it is important that bankers have a foundation of knowledge about land law in Hong Kong. In the legal sense, ‘land’ holds a much wider meaning than in everyday speech. The general rule is that whatever is attached to the soil becomes part of land. In other words, the term “land” includes the soil, the buildings, and the chattels.

The term also encompasses ...