Effect of unlawful alienation of Home Ownership Scheme flat

(Overturned by the CFA). The Housing Ordinance provides that unlawful alienations are void. Where a person other than the purchaser provides all or part of the purchase price and a resulting trust arises, the resulting trust is an unlawful alienation (unless the proper procedure for alienation is followed) and so void.

In Cheung Shu Yin v Yip So Wan ([2011] HKEC 841, CA) an elderly couple bought a Home Ownership Scheme flat  in Fanling. Their daughter-in-law provided much of the purchase price and so was entitled to a beneficial interest under a resulting trust. The steps required for alienation by an owner under the Home Ownership Scheme had not been followed. The Court of Appeal held that this resulting trust was void since the creation of the resulting trust was an alienation, the necessary approval for an alienation had not been obtained and the Housing Ordinance provided that unlawful ‘alienations’ are void.

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