SL Likely to Introduce Electronic Registration for Land Registries
Posted on September 15th, 2018

Kirthimala Gunasekera Courtesy The Daily Mirror

This article refers to the article published in the Daily Mirror titled ‘Govt. to introduce online property registration service’ published on April 11, 2018. (http://www.dailymirror.lk/148557/Govt-to-introduce-online-property-registration-service)

According to this newspaper article, the government is introducing an online property registration service with the aim of moving up the Ease of Doing Business Index of the World Bank in 2019.

This is a very important and necessary step for Sri Lanka. However, we must not ignore the fact that the integrity of the electronic register depends on the validity of thousands of notarized documents that are lodged daily at the registry to alter data of the e-Registry; the ownership details of existing owners [ transfers, mortgages, leases etc]

It need not be mentioned that all such notarised documents must be free of forgery or fraud. In Sri Lanka land fraud is extremely pervasive. Therefore we need to be more receptive to the place we occupy in the Global Fraud Index – [G F I].

This is a very important and necessary step for Sri Lanka. However, we must not ignore the fact that the integrity of the electronic register depends on the validity of thousands of notarized documents that are lodged daily at the registry to alter data of the e-Registry; the ownership details of existing owners [ transfers, mortgages, leases etc] 

The e-Register operates with a new law that does not permit landowners easy access to court if their ownership is affected by fraud or forgery.

The law which was practised in developing countries for over 150 years known as title registration has been introduced to Sri Lanka to operate with the electronic register. All landowners must be receptive to the operation of Act 21 of 1998, which introduced this law under Bim Saviya/ Title registration. The main principle under the law is that it does not permit judicial intervention to adjudicate matters relating to fraudulent transactions entered in the E register .

For example Arjuna was the registered owner of a plot of land . His signature was forged by a fraudster and land was sold to David. David’s name gets registered as the new owner in the e- register. Arjuna has no right to access court to get relief. [Section 33 of Act 21 of 1998. ]

It is undeniable that Title registration Act 21 of 1998 [Bim Saviya] law inherently and necessarily includes a risk — the risk is that the title can be defeated by a fraudulent transaction which once registered gains priority and eliminates the previous registered owner. The person defrauded is left to seek financial compensation from an Assurance Fund .

The e-Register is considered a conclusive register, works on the principle of indefeasibility of title. This saves a person who is buying and mortgaging land the trouble and expense of searching the register to investigate the history of an owner’s title. The downfall for Sri Lanka is to let the electronic conveyancing process to be implemented by those who have no formal legal training of the deed and the title registration systems. The World Bank mentioned in their report No. ICR0000190 Implementation completion and results Report of March 22, 2007. Report said —-that ‘The Project failed to deal with titling of land parcels where there was uncertainty about existing rights.’. Report expressed the need for research.

Daily news staff writer in New York, in the USA demonstrates the speed of registering forged documents in the e-Register. (http://www.nydailynews.com/news/money/90-minutes-daily-news-steal-empire-state-building-article-1.353477 )

The story written by William Sherman a Daily news staff writer in New York shows how an important building such as the Empire State Building can be stolen in 90 minutes with a sale document with forged signatures via the e-Register.

The Daily News NY prepared a bogus sale documents to transfer the Empire State Building by forging the signatures of the owner of the Empire State Land Associates and transferred the property to Nelots Properties LLC. (Nelots is stolen” spelled backwards).

The land registry overlooked the identity of the notary and the witnesses and registered the deed . This was laughable as the notary’s name was given as the famous bank robber Willie Sutton, the original King Kong” star Fay Wray was given as a witness.

The sale was registered in 90 minutes, a speed that is expected from the Electronic register. By this experimental transaction the Daily News demonstrated the weakness of the law relating to identification and verification of owners.

Who bears the loss for title theft under title registration system and electronic register?

The US system had not changed to title registration. Therefore, the register was rectified and the owners name, Empire State Land Associates was entered back into the register.

If this took place in Sri Lanka under the Act 21 of 1998, the owner would have no right to access court and Nelots Properties LLC could remain the owner.

In such a scenario, the true owner of Empire State Land Associates may receive compensation to the value decided accordingly from an Assurance Fund. The Assurance Fund is a Statutory Assurance Fund which provides a new scheme for landowners to obtain monetary compensation for the loss of land rights. All lands are insured without a premium under this system.

Judicial errors in interpreting law under title registration/ Electronic register

The Judiciaries of developing countries that recently introduced the law are trying to cope with law on Title registration, Sri Lanka has not had this experience yet . The first judgment relating to rights under the electronic register was delivered by the judiciary of Malaysia where a fraudulent deed was registered displacing the true owner. The Judge of the Federal Court of Malaysia had to deal with the restrictions placed on the Judiciary in a the classic case in Adorna Properties Sdn Bhd v Boonsom Boonyanit[2001] 2CLJ 133 Azrin Hafiz / Sept 2012 – Jan 2013.

The judge held in favour of the registered owner Adorna Properties, the company that registered the land forging the owner’s signature, displacing the rightful owner Boonsom Boonyanit from the electronic register . This came as a shock to the landowners of Malaysia and the lawyers .

The first Federal court decision is an eye opener for Sri Lanka and highlights the pitfalls faced by bona fide owners under title registration system. The decision of this case continued for 10 years, where landowners of Malaysia had to lose their land rights to fraudulent owners until it was overruled after 10 years .

International treatises introduce e-Registration and new laws [Bim Saviya]

There should be willingness by those who make the major changes to Property Law to research and introduce the ancillary laws that are essential to support the changes. Sri Lanka unfortunately had not introduced the practices and laws that are governing Solicitors, Notaries and Registries of countries which operate these systems successfully [Australia, New Zealand, UK etc]

The Information Communication Agency , Survey Department and the Land Registry had concentrate on identifying and surveying land according to high tech methods. Other nations have simultaneously adopted high tech methods to record the identity of owners of lands, to protect the integrity of the e-Register .

Land Registry in India – the finger prints being taken to verify and identify the owner before land transactions are registered

Mobile alert –Land registry sends mobile alerts to owners before registering in the e-Registry similar to bank transactions.

What can be done by land owners and purchasers to protect their land right? 

When ownership enters the computer, be cautious!
1 Obtain a title report from your notary, if extracts are damaged get them reconstructed, register the names of all the heirs if the owners are not living – this is essential as the legal checking process of ownership rights to enter the owners names to the electronic register is not administered by those with a knowledge of property law and conveyancing in Sri Lanka.

2 Retain the original deeds and the old original paper documents after the registration in the E register.

3 Obtain an extract from the land registry with the final entry after the ownership is recorded in the electronic register.

If you are buying land, the Title registration law may grant relief to protect your rights if you have the following documents, if you become a victim of fraud or forgery.

1 A sale takes place under the new system with the Notary perfecting forms which are statutory forms, deeds are not executed . Once the form is accepted by the Registrar the owner will receive a computer print out depicting the ownership in lieu of a deed. Request a copy of the form which the Notary submitted to the registry as the computer printout does not contain all the information relating to the sale of the land, such as the consideration paid, signatures of owner and buyer etc, to protect your rights against fraud.

(The Prevention of Frauds Ordinance requires all notarised documents to be in duplicate)

2 Identify the owner when purchasing land, if a fraudulent entry enters the e-Register the onus is on you to prove that maximum due diligence was used to purchase the land from the genuine owner. Take a photograph, retain identity verification documents of the owner witnesses and brokers, obtain full names, ID numbers of those who participated in your transaction, obtain their personal addresses, home addresses telephone numbers and keep a photo identity of the owner.

The e-Register is considered a conclusive register, works on the principle of indefeasibility of title. This saves a person who is buying and mortgaging land the trouble and expense of searching the register to investigate the history of an owner’s title

Some may argue that seeing and recording the owner’s ID is sufficient. This is not. Land transactions require the same bar for identifying owners which is high in the banking Insurance passport sectors. Identification checks carried out by Sri Lankan banks today comply with all the Know Your Customer Rules” prescribed by the Central Bank, which are not optional. The banks retain all the documents of identity for future reference.

3 Be present at the time of signing documents, obtain receipts for money paid .

4 Powers of Attorney: Personally contact the owner before buying land.

Committee appointed by Ministry of Justice to amend Notaries Ordinance

The committee recommended bio-metric methods and the retention of photographs at the time of signing documents by Notaries in order to identify the parties who sign as owners and witnesses. In Sri Lanka there is in some quarters a ‘social mind block’ that fingerprinting is a regression to the colonial times when ‘illiterates’ were required to provide their fingerprints. This misconceived notion prevented, the electronic revolution for identifying parties to land transactions and the amendment to the Notaries Ordinance.

3 Responses to “SL Likely to Introduce Electronic Registration for Land Registries”

  1. . Says:

    K.C.Gunasekara says;
    Have we put the cart before the horse . We have not introduced owner identification and verification methods given in the first articles ..
    Will this be an asset to those committing land fraud as they can in 5 days register the land transactions without the international owner identification laws

  2. shenali Waduge Says:

    another means to electronically manipulate people’s land & put it down to computer errors and people will have no recourse for justice as it would mean money to hire lawyers and that system is also rigged… without putting the systems in place there should be nothing new brought into an old system

  3. Christie Says:

    The current system (Bim Saviya) is full of fraud and I have seen people who have suffered under the current system.

    Golden Key and Kotalawala case is a good example. Billions of rupees were extracted by employees and other fraudster from Golden Key by selling land that did not exist at all.

    I am sure the new system will not be different whether the titles relates to land or to land that does not exists.

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