By Louis Charlebois
ABSTRACT
Substantial error exists in the title-administrative advice that is being given by this industry to countries in transition. This is causing unnecessary difficulty for these countries as well as rendering international expenditure on their systems ineffectual. Some of the errors are detailed. The errors can be corrected and hopefully a common, valid approach adopted.
INTRODUCTION
As we approach the year 2000, we have the opportunity to assist the economic development and improve the accommodation available in many countries world wide. An efficient land registration system creates wealth, by providing the circumstances permitting the injection throughout the economy of thousands of small loans secured by mortgage. The legal cadastre doubles as a fiscal cadastre, enabling an efficient land tax. Security of title enables the investor to exploit his investment because he can continue to access his property through the term of his investment and beyond. Without that assurance, he cannot make an investment premised on the secure improvement of real property. If we get this right, it is difficult to imagine any other non-logistical administrative improvement that can so profoundly and permanently improve the real standard of living of impoverished nations.
A. FOUR INTITAL POINTS. IN MY VIEW:
B. WHAT HAS BEEN SAID
I refer to, "Draft Land Administration Guidelines With Special Reference to Countries in Transition" (Messrs.. Hrebek F., Gojceta B., Remetey-Fulopp G., Brouwer J., Onsrud H, Pamfil V., Widmark J., and Dale P.
The text contains, in my view, some errors:
the text shows deed registry and title registration as equivalent technologies.
Title registration developed in the last century specifically to remedy the inadequacies of deed registry and does so successfully. The significant disadvantage, in a computer environment, of a deed registry is that the record for each parcel consists of a varying number of unranked documents. In order to determine the particulars of title, the deeds must be evaluated by an expert. There is a cost penalty both in terms of title insurance and lawyer's fees. Remote search is difficult and costly because each deed in the chain of title must be evaluated every time. The computer cannot search to provide a clear statement of the particulars of title. In a title system, there is one ranked document - the title. The computer can immediately use that information as key to the function of subsystems, such as a tax cadastre. Remote search delivers the statement of the key document. Expert evaluation is not required.
registration is shown as functioning without a legal cadastre.
This may be because a perception of the system used in the registries of the United Kingdom is that the registrar does not have his own legal cadastre and must use a physical (non legal) geographical reference, the Ordnance Survey. My understanding is that in England and Wales, each registered parcel is outlined against an Ordnance survey map background. These parcel plans are now being digitized. When that has proceeded further, it will be possible for the Registrar to display collated plans of registered parcels.
The registrar must control his own legal cadastre, otherwise he cannot describe the extent of title. With that control, and with the use of some other legal devices referred to later in this text, the registrars in the UK can extend their registration seamlessly across the jurisdiction (sweeping in). The cadastres of the UK can never be completed without changes in values and approach. The task is not difficult, but it must be approached from the perspective of completing the cadastre.
the starting point is shown as passing land reform legislation.
Land reform law must be kept separate from registration law, except to require the registration system to record land reform determinations. The starting point is the creation of a computer cadastre, or parts of it. The only connection between land reform and land registration is that land registration provides a place to record the outcome of land reform. Land registration follows its own logic, land reform is highly politicized. If the two are linked, a politically motivated delay in land reform can unnecessarily delay progress in registration.
the text requires state title insurance for title registration.
Title insurance is no more closely associated with title registration than car insurance is with car manufacture. If Ford or General Motors began offering car insurance, you might be wary. That is because the person who creates the risk should not be the person who underwrites the risk and who determines whether a claimant has been successful. I recall a conversation with a registrar who acknowledged that he does not allow historical searches on his title system. When I enquired, he stated that he guaranties the title and he doesn't want anyone discovering by historical search of title that he has made an error. I made the rather obvious point that his task should be to facilitate the customer's determination that he had suffered a loss, enabling him to claim compensation, rather than obstructing him. The registrar completely agreed with my comment, but I don't think he has changed his practice.
Title insurance can be provided because there is an insurable risk, but title insurance should not be provided by the registrar, who should simply be responsible for his own errors. Mandatory title insurance can be established using private sector policies and would be similar to some automobile insurance solutions.
There is no mention of provisional or immature titles and parcel boundaries.
In a third world environment, particulars of title may be difficult to determine because, unlike Western Europe, where land records have been meticulously maintained for centuries, few reliable records may be available. One must then create a title record from the best sources available and assume that if anyone is aware of an error, it will be brought to the attention of the registrar to enable correction of the record. You do the best you can from the evidence available. The same approach can be taken to parcel boundaries where there is a low level of survey control. Such a title can carry a warning on its face that it is provisional or immature as to title particulars, or boundary, or both. If a survey is subsequently provided, the provisional status as to boundary can be removed. After the passage of an appropriate period of time, the provisional status of the title text can be removed. During the provisional status of that title and boundary, there can be no question of considering it to be guaranteed.
Forcing a third world jurisdiction to take on an unquantifiable insurance risk is scary - especially when it isn't necessary.
no option is presented for private sector participation.
On the models I have seen, the task of creating a national title cadastral and hopefully GIS system is remarkably lucrative. As an economically inelastic, compulsory monopoly a system can generate surprising profits. It is worth noting that the Registry for Northern Ireland is writing specifications for a private finance initiative. Prior to establishing the present Teranet in Ontario, while seeking a private sector joint venture partner, the Government of Ontario advised interested parties that it had projected a net profit to the joint venture of $1 billion in ten years. I am not aware of any public statement revising that estimate. I have seen financial models of a number of jurisdictions. The only one that did not show a profit was the Yukon, resulting from a large territory with a sparse population. The ‘Draft Land Administration Guidelines With Special Reference to Countries in Transition' text represents the process of developing a computerized land registration system as a money loser.
Condominium is not offered as an option.
It should be. It provides significant advances in ownership, cost and management and is easy to start in a new jurisdiction. Unfortunately, it does not exist in the United Kingdom.
Read together, the ‘Draft Land Administration Guidelines With Special Reference to Countries in Transition', recommendations would frighten any reasonable third world administration, unnecessarily, in my view. It should be replaced by a more appropriate statement.
I refer now to "Modern Cadastres and Cadastral Innovations" recorded from a seminar held during the Annual Meeting of Commission 7, Cadastre and Rural Land Management of FIG. Under the heading "Basic Principles of the Main Cadastral Systems of the World" and the sub-heading ‘Land Registration’, at p8:
"Concerning the effect of a land registration system, especially a title registration, three principles are sometimes upheld, namely the mirror principle, which means that the register is supposed to reflect the correct legal situation; the curtain principle, which means that no further (historical) investigation beyond the register is necessary except overriding interests; and the insurance or guarantee principle, which means that the state guarantees that what is registered is true for third parties in good faith and that a bona fide rightful claimant who is contradicted by the register is reimbursed from an insurance fund of the state.’
"Around the world, there are different categories of title registration systems, which do have the same principles but differ mainly in procedures:
"This classification is rather arbitrary, but it is largely geographical and tends to reflect differences in land law rather than differences in registration principles.
"The cartographic/mapping /surveying aspect differs between the 3 groups i.e. the English group makes use of large scale ordnance survey maps, the German group of parcel-based cadastral maps, and the Torrens group makes use in principle of incidental survey plans.
"A better attempt to categorize title registration systems on more realistic points would be:
Comment:
C. IMPLEMENTATION
Product definition and planning
This is not an appropriate paper to list the stories of projects that have started and failed or simply stalled because the intended product of the system was not defined, nor the path to achieve it clearly drawn. However tempting it may appear, it is not appropriate for the hardware vendor, the software vendor, the systems integrator or the banker to sell a system to a jurisdiction where the registrar ( and the assets that support him) has not defined the product and the way there, or has defined an inappropriate product. Nothing should happen until that is achieved. All of the technical and financial support available should be directed to that end. It is no more feasible to build a land registration system without complete planning prior to commencement than it is to build a major building without an architect's plan. A key part of the planning is the legislative support that will give the product value by making it the original record admissible in court as evidence and will also enable the gathering of data for its implementation. This should not be left to inspiration to be anticipated between commencement and completion of the project. It is probable that, in the event of the establishment of working examples in some jurisdictions, the task of product specification and planning will become easier.
The parcel map
Before the title record can be built, the parcel map must be created. Although a large jurisdiction would be broken down into parts, it is important to create the parcel record for the entire jurisdiction as quickly as possible. The parcel map precedes the creation of the title record because the parcel gives the title its unique identifier. Parcel map sections should be integrated as quickly as possible because an integrated parcel map for the jurisdiction allows the registration of any title transaction or parcel subdivision wherever it occurs. This achieves a level of de facto computerization, where any land transaction is recorded on the computer record, giving the public the impression that the task is complete. This should be capable of achievement at an early date. Because this will also be the political perspective, de facto computerization as early as possible is an important goal for the maintenance of public and political support. It has a second, equally valid reward. It maximizes the income of the computer register. From that point on, all fees charged for the recording of land transactions will be credited to the account of the computer register.
Public sector land must be brought into the system as soon as possible, probably as a result of legislated direction. Although the level of transactions on public sector property will not generate much revenue, it is important for the purpose of extending the system to cover all land in the jurisdiction.
It is important to minimise front end costs. Consequently, in a developing jurisdiction where there is a low level of survey control, the cadastre must be created with the greatest accuracy available. If necessary, photogrammetry and GPS or drawing a line on a computer screen between known co-ordinates can permit parcels to be recorded, which, over time, can be corrected when survey becomes more prevalent.
Once the parcel map is sufficiently established to record all new transactions occurring in the jurisdiction, the mere recording of new transactions will not bring all parcels into the system, because some parcels with their associated titles will remain dormant. Therefore the transaction trigger must be supplemented by an area search. This means that all parcels and titles within a defined area must be brought within the system using any means of information available, including interviewing or mailing out to occupants, conveyancers and surveyors and, of course, local authorities. Unless the area search concept is implemented, it will not be possible to bring all of the land within a jurisdiction under registration. Without that, rights, either dominant or servient attached to the land still outside the system, will remain unknown. This implies as well that a registered parcel may be encumbered by a right which benefits an unregistered parcel without that fact being recorded - a clearly undesirable uncertainty of title. It also means that a land tax subsystem will tax only land that is registered.
Compulsory Registration.
As stated earlier, from an early point in the development of the system, public authorities should be required to register their land, as an important step in providing complete coverage by registration.
As an administrative principle, no charge should be made by the registrar for the initial registration of a parcel where that registration is compulsory. Any study that I have seen shows that the increased transactions within the registration system which occur after first registration provide an increase in income to the system which more than covers the cost of first registration. The difficulty with charging for compulsory registration is that it is politically unsavoury. As a result, where a compulsory charge is made, it becomes difficult for the registrar to obtain the political approval he needs to extend compulsory registration to new areas or to cover an increased range of transactions.
It should be seen as the task of the registrar to determine which parcels will be converted and the overall rate of conversion. He must carry out the task within a budget and within the technical resources of his staff. To maintain control, however, he should not be restrained by premising the conversion of a parcel on the co-operation of the owner or of conveyancing professionals.
The effect of all this is that the system will expand mostly by the compulsory registration of provisional parcels as to the particulars of title, and, where survey control is poor, provisional as to parcel boundaries as well. Where a deed registry has been maintained, it will be possible to do a full search of the root of title to establish the veracity of the new registered title, but will be seen as far less cost efficient than the creation of a provisional title following only a limited search. The rate at which this conversion occurs is almost entirely within the control of the Registrar so that he can continue to balance revenue against expenditure.
The traditional method of first registration involving a full search of all records resulting in the immediate creation of a mature title must continue to be available at a price and on request.
D. CONCLUSION
Using a combination of these techniques appropriate to the requirements of the jurisdiction, a title cadastral system can be built up with relative ease and the parcel record will, whatever its starting point, increase in precision as more precise data is made available.
When one compares the difficulty of establishing the cadastral - title record with other data sets that will be included in a GIS, it becomes apparent that other data can require much more work to compile. Terrain, or surface use, or mineralization, for example. But because of public demand for data concerning ownership and extent of title, that system should sit centrally in an overall GIS. Because of public need and economic inelasticity, the title cadastral system is in a position to carry the cost of lower fee generating GIS data sets, effectively subsidising the cost of populating less lucrative data sets which are nevertheless essential to a useful GIS. As mentioned earlier, the best entity to provide the unique identifier for a GIS is that which will not ordinarily be further reduced in size. A point is too small simply because it does not constitute a significantly meaningful entity. A cadastral parcel is certainly important and does not reduce. If it is subdivided, it takes on an equivalent identity with a new identifier. Therefore the title cadastral system in a larger GIS is trebly meaningful: it can pay for the GIS, it is an important component in its own right and it provides the unique identifier.
A common approach to land registration would be a powerful tool worldwide in improving land administration and the economy itself throughout the developing world. If a common approach is possible and is not used, much time and expenditure will be unproductive.
I recommend a common solution.
BIBLIOGRAPHY
BIOGRAPHICAL NOTE
Louis Charlebois is a Canadian lawyer who has practised in both Canada and Australia. As Registrar General of the Northern Territory of Australia, he succeeded in computerizing the land titles office database, relying heavily on the research and assistance of the Registrar General of New South Wales and his staff. He subsequently worked as Senior Legal Officer to the Director of Land Titles, New South Wales, assisting in the computerization of the New South Wales title database. He was the lead author of Charlebois, Francis, Young "Conveyancing Service, New South Wales". Returning to Canada, he consulted to the Canadian Government on computer title and cadastre. He currently resides with his family in England, consulting under the corporate name of Geotitle Limited.