Sale and Purchase of Property
(Real Estate)
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IX. Deed of Mutual Covenant and Owners' Corporation

A Deed of Mutual Covenant (“DMC”) is a document containing terms that are binding on all flat owners of a multi-unit or multi-storey building. Once a DMC is signed by the owner of a flat and the developer, it binds all the subsequent owners. It basically sets out rules for the management and regulation of the building. A detailed DMC can run to over a hundred pages. Terms in a DMC may include, for example:

  • residential flats cannot be used for commercial activities;
  • definition of the common areas of the building;
  • restrictions on the flat owners (e.g. no keeping of cats and dogs);
  • how to appoint a building manager (or building management company);
  • how to set up an Owners' Corporation;
  • how to make resolutions on matters concerning maintenance or renovation;
  • who should specify the management fees, and how.

No matter how a DMC is drafted, no provision may contravene the Building Management Ordinance (Cap. 344 of the Laws of Hong Kong).

  1. What are the functions of the Owners' Corporation and the building manager?
  2. How to set up an Owners' Corporation?