To buy land one needs to be pro-active

The land registration system in Sri Lanka consists of many loopholes which are yet to be adjusted. In a previous conversation with eminent property rights lawyer Kirthimala Gunasekara, she spoke about the different legal systems under which property issues were concerned. After receiving many responses for the previous article, the Dailymirror decided to once again sit with Kirthimala herself and discuss a few more raging issues concerning property rights including fraudulent transactions, regaining ownership and the new insurance scheme.   

QLet’s talk about fraudulent transactions which take place. What immediate and necessary steps should the legitimate owner take?  
When an owner has a deed which is duly lodged in the registry the presumption is that the law will protect his ownership. Unfortunately it is not so, because the misuse and abuse of signatures in the form of signature forgery has become extremely pervasive to deliver forged invalid deeds to land registries. Suddenly you may find that someone else is the owner of your house or land and you may need legal remedies. The remedies depend on the law that governs the land - there is a law that was introduced in 1998 where owners do not have ready access to court.  

But in the case of regaining ownership under the old law [deed system] a deed alone is not sufficient as the fraudulent claimant will also have a notarized deed. The CID has frequently warned the general public, that its investigations in to land fraud have often failed as owners are not able to substantiate their ownership with the required documents.  

Under both systems it is in the best interest of land buyers to retain copies of identification documents of those who claimed they were the owners with their addresses if possible with a photograph at the time of signing the deed which will include all parties. Inadequacy of the law with regard to owner identification gives a great advantage to fraudsters.  

QWhat would be the remedy ?  
As a remedy you need to gather all relevant documents such as deeds mortgages, tenancy agreements, insurance policies specifically the extracts from the land registry referred to as ‘paththiruppu’. Collect the bills you had paid for electricity, water and your certificates of ownership registration in the relevant organization such as the Local authority, Electricity Board, Water Board. If you have not registered your name, it is not too late to do so.   

Without waiting for an emergency such as a fraud always retain all the certified copies of documents with the deed, specifically the extracts or the paththirippu since they are often damaged or lost  

Q In the case of regaining ownership under the 1998 law what procedures should be followed?  
Let me explain the law with an illustration, it would be easier for a lay person to follow :  
*Perera was the owner of a land and he leaves it to Bandula to be looked after. In turn Bandula forges a conveyance and transfers the land to David and absconds.  

 
Under the old system –David’s conveyance was void and a void interest was ineffective to pass ownership. Therefore Perera could apply to court to regain the ownership. David’s remedy would lie against Bandula - given that he has absconded and David would invariably be out of pocket.   
The law of 1998 however considers David’s ownership as an ‘indefeasible ownership’. He is the registered owner and will be an innocent victim,who was not aware of the fraud committed by Bandula. David, according to the law will not be out of pocket. The law will not allow the court to remove his ownership from the register.   

Perera’s remedy would lie against the Assurance Fund maintained by the Government to pay compensation for the loss of rights or against Bandula. If possession had not passed to David and David was a party to the fraud law it may grant a remote chance for Perera to recover the land.   
However the law has not been tested in our courts yet. The judiciaries of the neighbouring countries which had implemented the law before us had made interesting inroads into the law.  

Q Tell us about the new insurance scheme  
The new scheme is a statutory scheme which came in to operation in 1998. The Assurance Fund as it is termed is managed by the Registrar under the supervision of the Central Bank.   

The new law introduced rests on three principles such as - The mirror principle :A land register is supposed to reflect the correct legal owner,   

The curtain principle : that no further (historical) investigation of former owners beyond the register is necessary to buy land,   The insurance or guarantee principle :the state guarantees the title of a registered owner and bona fide rightful claimant who if contradicted by the register is reimbursed from the Assurance fund.  

It is surprising that the new scheme has not attracted the attention of those in the insurance business. In other nations innovative methods have come up to facilitate the simplest residential closing to the most complex commercial real estate transactions, providing unmatched expertise and exceptional customer service to the public.   

QWill the law resolve the problems? And how does it affect the buying and selling of land?  
The Bim Saviya law is internationally referred to as the ‘Torrens law’ practised in developed countries. Bim Saviya or Title Registration is the local name given.Looking at the legacy of achievements of the developed countries we cannot be too optimistic that it will be like Harry Potters wand that could cure the problems we had accumulated for the past 100 years. These countries protect their land rights with laws that firmly entrench the rule of law where it is not frequent to find signatures forged and owners displaced   

They also maintain a uniform law for all citizens unlike in Sri Lanka where different ethnic groups own land with separate laws,where it is necessary to find out the gender of the owner before buying land.  
These revolutionary changes were recommended by the World Bank after assessing and reporting on the weaknesses of land title in Sri Lanka in 1998. It is appropriate here to mention that when the World Bank recommended the change to the property law in the 1960’s it was the studied opinion of an erudite Member of our Supreme Court Dr A.R.B. Amerasinghe that the said ‘ land title reform’ was a crying need in Sri Lanka. ‘Land title reform and the process of stabilising ownership of land is for us to mould and develop’ said Dr A.R.B. Amerasinghe in the 1960s  

He made a valiant attempts to preserve Sri Lanka’s land law and the Deed system rather than introduce laws from afar. His methods are described in his book on Title Insurance.  

QWhat special steps can be recommended to the Government in order to prevent fraud?  
Emeritus Professor Suri Ratnapala Professor of Law discusses the new law, land fraud and the impact it has on our economy. In an article written recently he mentions - I know a Supreme Court judge who was a victim of fraud where the land was stolen by forgery !   

I need not mention more as this is the real situation today where even lawyers are unable to protect their lands. Hence the legendary Sri Lankan institution of the ‘Hora Oppu’ or fake deeds still exists and everyone knows someone who has been a victim of a ‘Hora Oppu’.   

He says that the system that operates for land documents invites fraud as the law has no competence to verify authenticity of registerable documents.    I may add that it is not difficult to execute Hora Oppu as there is a free ranging discretion available under the law with regard to signatures. Signature on deeds can be affixed in any manner, legibly or illegibly or a signature not even remotely related to the individual who is the owner.The CID has often complained that the names and addresses given in fraudulent land deeds invariably have false addresses and they cannot trace the parties.   

While the legal system relating to the identification of owners still floats in the realm of uncertainty for land transactions, other Government sectors have established measures to identify and preserve the identification or archive the identity of owners.   

For example a bank account could never be opened in the way a deed worth Rs 50 Million is executed. The banks have to abide by the modern KYC rules, requires, Billing Proof relating to electricity or water to check the addresses. They require knowing the source of funds, while a deed can be registered without knowing the source of funds. The Electricity Board requires the Gramasevaka Certificate in addition to the owner’s deed to register the name of the owner. Notarized photographs are required to obtain a passport and presently they have advanced to online photographs taken at the Passport office.   

Despite the fact that there are third parties to protect the contracting parties, land fraud has become a global threat to property rights.Nations have progressed to bio-metric solutions. Government can easily introduce the systems as ICT is very popular in Sri Lanka. Closer to our country a model called “Bhoomi Project [India] , e-Tanah in Malaysia operates where the land registry confirms the identity prior to transactions using thumb impressions in addition to signatures.   

In conclusion may I say that in these very tenuous and fragile circumstances where fraud is amazingly pervasive, if the laws remain unamended, it would be very dangerous to transfer ownership of Government lands to locals and allow foreigners to buy land .