Vendor must show good title unless a clearly worded contractual term excuses him from this responsibility

A seller has a duty to show good title to the property to be sold unless relieved from this obligation by a very clearly worded contractual term. The facts that the buyer might have been on notice of the defect and / or that they failed to raise requisitions within the contractually stipulated time are irrelevant.

In Profit World Trading Ltd v Ho So Yung ([2011] 2 HKLRD773, CA) a buyer discovered that part of the town house it had agreed to buy had been built on common parts of the development. The seller contended that the buyer had had the plans revealing this problem for some time and was out of time for raising the requisition. The Court of Appeal held that the seller had failed to show good title and that this was an important obligation of the seller regardless of any requisitions that might or might not have been raised. The seller could only be relieved from the obligation by a very clearly worded contractual term. On appeal, the seller had accepted this but argued that as the defect related to only 5% of the area being sold the defect was de minimis. This was rejected. The 5% that would be lost would be part of a fine living room that gave the house its distinctive appeal.

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