Serious problems for business if land titles are forged

By Kirtimala Gunasekera, Attorney at Law

Forgery of deeds and malpractices are taking place in land registries in Sri Lanka. A new breed of criminals is raising their heads forging signatures and transferring lands without the knowledge of owners; they even threaten the owners who resort to legal action to safeguard their rights.

The business community will not be able to survive if land titles are subject to forgery. The banking sector will have its problems. They will not be able to recover the funds given on loans for security on land. Mortgage fraud is a big problem even in the prosperous nations. However they are vigilant and the bankers’ associations especially in the US have taken a lot of precautions and the subject is under much discussion.

Newspapers very often report this subject but there has not been any response from those who are responsible to remedy the situation. If land owners are to look after their lands and there is no guarantee that the deeds duly stamped would be kept in safe custody in the land registry, land owners would have to study registration procedures and would have to have knowledge of their documents to empower themselves. At least the owners will have to have a receipt for the stamp duty paid by them and a copy of the deed which bears the stamp duty.

The copy of the deed which bears stamp duty is called a Duplicate, different to the original deed which only bears a one rupee stamp which an owner retains.

Those who execute deeds in the future will have to obtain these documents from their lawyers. Those who have already written deeds will have to check the land registry to see whether these documents and extracts are available. This warning is serious as in many forgery cases the documents are reported missing to the detriment of the true owner. Unfortunately this subject is always left to the legal profession in Sri Lanka. Discussing the subject with the private sector economists and the staff of the land registries in developed nations, I realized that this is an erroneous thought pattern. The business community in these countries are conscious of the fact that entrepreneurship cannot exist without secure land rights and therefore they make the maximum effort to maintain private property rights.

Land registries here were perfect institutions which maintained the deeds and the registers for a long period of time. With a heavy load of title deeds to be registered very little change with regard to space and staff was promoted. Land registries cannot stand still, they have to be dynamic institutions, daily monitoring and changing their rules and regulations and being receptive to changes that take place to avoid malpractices.

Land owners pay a fee to the land registry to maintain the documents and the deeds in other countries. Unfortunately in our country all the heavy stamp duty is absorbed by Pradeshiya Sabbas. The land registrar has to perform the important task of preserving the land rights and deeds free of charge.

Necessary changes however have not taken place due to the passive nature of the general public and the slow untrained performance of the land registries which have hardly changed for the past 50 years to accommodate a large volume of work. The extra legal methods that have been established are unfortunately used by everyone to expedite matters. Bribes now exceed legal fees for forged documents. All those interested in private land rights and entrepreneurship should be able to find out from the land registry:

• Why the deeds are reported lost, even to investigating officers of the CID.
• Why the stamps are removed and resold to be pasted on forged deeds.
• Why payments have to be made other than those legally due to expedite matters.
• Why the deeds of Notaries are not bound and kept in volumes as this is a statutory requirement.
• Why the land registries which functioned in perfect order for over 50 years suddenly turned into systems where the CID seems helpless.
• Why the punishment required under the statutes for non submission of duly stamped deeds by notaries are presently not observed by the land registries.

The Land Registrars have their difficulties with regard to storage of documents and other administrative procedures with the transfer of untrained staff.

There should be an effort to initiate a dialogue to solve the problems as the laws available are sufficient even at this stage to remedy the situation. It is amazing that not a single organization has given any attention to discuss the situation. Whilst the corruption levels are so high the new Land Act has come into operation where the previous title will not be available to detect the ownership. Under this Act only the final title document will be available. Thus one could imagine the situation of the land rights in the future.

When a country has a well established system of land rights, it is perceived that the country is prosperous. In such countries they lobby for limited government, private entrepreneurship and self help procedures, therefore intellectual monitoring of the administration has brought benefits to the people. They have formed Associations of Land Registrars, think tanks and initiated monthly publications describing the registration principles relating to land from the land registries. The universities have introduced a subject called Land Registry Law. Bankers associations conduct programmes for officers to avoid mortgage fraud. I could list out many more. Prosperous nations are always ready to promote ideas to protect private property rights to encourage entrepreneurship which they consider the secret of development.