Unpaid management fees: can the DMC create a charge over a defaulting owner’s share?

In Beacon Heights (Management) Ltd v Leung Ping-Hung, Antonio ([1995] 1 HKLR 181) the Deed of Mutual Covenant provided that the undivided shares of an owner “shall stand charged” with any sums due from the owner under the DMC. The question was whether this created an equitable charge despite the lack of a signed, written instrument complying with section 5(1) of the Conveyancing and Property Ordinance. It was held that there must be a written charge (the DMC does not create the charge automatically) but the need for the owner’s signature can be dispensed with in equity (see the clarification in Wise Wave Investments Ltd v TKF Services Ltd (paras. 45 – 58)). The charge has to be registered.

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