Protecting land owners from land fraud

Keerthimala Gunasekera Attorney-at-Law

With the end of the crippling three decade war, Sri Lanka embarks on two new fronts in its war on land fraudsters and its war on ideas to prevent land fraud. In many developing countries land fraud is becoming a major threat to land ownership; the increasing incidence of white collar crimes, the theft of identity cards and the substitution of legitimate documents with forged documents has resulted in landowners being physically dispossessed of their land and their names replaced in the land registers by the fraudsters.

Sri Lanka has taken a revolutionary steps to arrive at the threshold of the ‘electronic transaction era’ when in 1998 the Land Titles Act (Bim Saviya) was passed and when 2006the Electronic Transaction Act was passed. These two laws represent the greatest upheaval in property law; the centuries old methods of transacting land and exercising property rights will change; to support a modern private sector led economy.

Boundary disputes

The Electronic Transactions Act 19 of 2006 has given legal recognition to electronic documents, transactions and electronic records.

The Act presently excludes land transactions, however it is only a matter of time, and the Act will be extended to follow the global trend to recognize electronic land transactions. The Information and Communication Technology Agency (ICTA) has been set up by the government to be the avant-garde in Sri Lanka’s entry in to the revolutionary global information sector. With the passing of the two Acts, the infrastructure necessary to transport Sri Lanka’s land transactions to the electronic age is in place. In the past couple of years the UDA has introduced the application of the Global Information System (GIS) and the Global Positioning System (GPS) to a concept described as Spatial Planning.

Act 21 of 1998 referred to as (Bim Saviya introduces the Cadastral Planning method, which will outline and describe the boundaries of plots of land digitally, with fixed extents to be registered in the electronic registers. Strategic objective is to establish permanent fixed boundary system for lands after a systematic resurvey of all the lands in Sri Lanka.

This will eradicate prescriptive claims squatter problems and boundary disputes. The law of prescription under the Prescription Ordinance and the Law of Partition under the Partition Act will not be applicable, as the Survey Department will undertake to demarcate and maintain the boundaries of properties of all the private owners.

It is estimated that when the Cadastral mapping system is complete, there would be about 8.5 million land parcels in the entirety of Sri Lanka, surveyed and registered in the electronic media.

The benefits of the new mapping system are manifold. The landowners will have permanent boundaries, will not be plagued by boundary issues, encroachment and the costs of resurveying required for bank loans will be something of the past. It is envisaged that obtaining bank loans will be less cumbersome and each plot of land will have an electronic document of ownership. Ownership cannot be annulled and will be indefeasible.

Electronic media to expand the legal work

Electronic media will permit professionals to reach land registries of other jurisdictions. In India the lawyers are trained in a way that enables them to adapt to USA and UK law.

Large firms are outsourcing the mundane work to India. The younger generation of conveyancing lawyers will have great opportunities with the new methods that are introduced; they will be able to extend their professional services to work outsourced by other nations.

On discussing these revolutionary changes, question could be asked, whether these changes would mark the end of land fraud? “Of course not! This is only the beginning of a whole new world of legal territory and a challenge to the legal fraternity; fraudsters have kept abreast of the technological advances in the rest of the world and will use new ruses. In Sri Lanka it is a challenge to the entire law enforcement agencies; the legal profession has a major part to play and like ‘night follows day, research and new legislation are imperative’.

Fictitious sale of the Empire State Building in USA to demonstrate the need for new rules to fight land fraud

Land transactions which are commonly referred to as sale, gift, lease, mortgage, agreements to sell etc are contracts that cannot be entered into without the assistance of third parties. Third parties include the professionals engaged in land transactions and the registering officials in land registries which are maintained by the government.

This makes buying and selling land unique in comparison to buying and selling any other tangible or intangible item. Despite the fact that there are third parties to protect the contracting parties, land fraud has become a global threat to property rights.

Rules governing the system aren’t sufficient to ward off the modern crime says the professional bodies and this was recently demonstrated in USA, by filing fictitious paper work to sell the Empire State building for $2 Billion.

A leading newspaper group took up the challenge and conveyed the property of the Empire State Building in USA to a company called Nelots Properties - ‘stolen’ spelt backwards. Bogus documents were forwarded to the land registry which had a fake name for the notary, signed as Willie Sutton (an infamous bank robber). The deed was registered in 90 minutes in the electronic register. Of course they rectified the ownership after demonstrating the lacunae in the process.

New rule to prevent fraud introduced by Bim Saviya (Section 44 of the Act 21 of 1998)

Much of the success of prosperous nations is attributable to the co-operation and co-ordination between the practical and academic world in providing the rules to maintain property rights.

Professionals and academic research scholars have recommended for solicitors and notaries to guarantee the identity of owners and to obtain their correct signatures on documents. The law has been introduced to Sri Lanka in 1998 under Section 44 of Act 21 of 1998 (Bim Saviya). Search of land title has transposed into a search of identification and verification of signatures under the above Act.

Strangely, while legal debates swirl around electronic signatures, a manual signature has no legal definition in our country and is accepted whether legible, illegible or even if the signature may not even remotely relate to the individual named.

Identification and verification of sellers, buyers and all third parties is recommended to be made with at least three identification documents such as ID cards, driving licence, photo ID’s at the time of signing documents and passports. The practice would be to retain the evidence of proof of identification with notaries for a minimum period of ten years.

Apart from the responsibility of notaries, purchasers of land need to be vigilant and search for the identification of owners, especially if property transactions are executed by Powers of Attorney (POA) holders in the absence of owners. The Tamil Nadu Registration Department has a revised procedure, in respect of registration of POA for property dealings, makes it mandatory for power agents to affix their photographs, signatures and left thumb impressions along with proof of identity at the office of the jurisdictional sub registrar. The photograph of the power agent should be attested by the principal (property owner or one who gives the (POA).

Biometric identification

In Sri Lanka there is, in some quarters a ‘social - mind - block’ that finger printing is a regression to the colonial times when ‘illiterates’ were required to provide their fingerprints. This misconceived notion belies the fact that the entire spectrum of biometric science is used positively in the developed world to keep abreast of the electronic revolution taking place around us; in the case of finger printing, electronic land registries around the world obtain finger prints and there are special ink pads introduced to Sri Lanka where finger prints could be obtained without staining the fingers.

This science is being increasingly used all over the world to safeguard the interests of property buyers and to curb fraudulent property transactions. The science of biometrics incorporates fingerprints, hand geometry, face recognition, voice recognition, iris recognition, high-resolution camera photography and a host of other physiological traits to make positive identification of individuals. Indeed it is making its presence felt even in personal computers.

Biometrics systems-which once cost tens of thousands of dollars to install-were originally used only by large corporations and the government. But now less expensive systems-costing as little as a few hundred dollars per desktop.

As a result, analysts believe that the usage of biometrics will grow over the next few years, so that the technology will become prevalent on the Internet as well as in businesses. Before long, biometric scanning devices may be bundled into every new PC sold.

For centuries Notaries and Lawyer Notaries of Sri Lanka have been the vanguard for maintaining and stabilizing property rights. It is not a surprise therefore that the country will depend on them to eradicate land fraud by waging war on ideas to sustain the Rule of Law essential to prevent land fraud.