INTRODUCTION
It is widely held that for a country to progress, that is to improve its economy, its living standards and its national well-being, it needs some method of recording what parcels of land exist in the country, or region, and who owns it.
Further, to encourage foreign or even local investment in real estate, there needs to be some form of title to evidence the various interests permitted in that land, and to give some measure of security to the owner of that interest. This in turn is recognized as an incentive for more economical use and maintenance of a property, and hence better land-use planning. Secure title is more likely to attract overseas investment in real estate and thus generate more employment and wealth for the local inhabitants.
Another important advantage of a land registration system is in the ability for it to be used as a base for the application of an equitable tax levy, according to people's ability to pay. That same system can act as a preventive measure against people avoiding their rightful obligation to their society.
It is also commonly held that there are two main systems of land registration in the world. The one named after its founder and introduced in South Australia
In India
In this project, I have tried to bring forth the inadequacies in the present system and what steps are necessary to revivify the system so as to minimize any chance of defective title so as to assure indefeasibility of title.
1. Registration system in India
The Indian registration system is based on the archaic Deeds Registration System (DRS) that was the first system of land registration. Registration under this system does not create an interest over the property in any way, but only provides notification to all future- takers of the land that such dealing existed.
History of the DRS:
Until the 19th century, many efforts to set up a general system of registration throughout England New South Wales Tasmania
The Deed Registration system is therefore a system whereby an interest or estate which is expressly created for instrument is capable of being registered ad gaining priority if the interest or the estate holder desires it is not necessary that the instrument actually notes a specific transaction; the instrument may effect a conveyance or it may simply note an interest importantly. Registration under this system does not create an interest or alter the instrument in any way but rather provides notification of the effect of the instrument and confers priority upon the holder against other specified holders.
2. DRS in India
In India
Registration is done after the parties execute the document. The agreement should be registered with the Sub-Registrar of Assurance under the provisions of the Indian Registration Act, 1908 within four months from the date of execution of the document. However, if due to any unavoidable circumstances, the document is not registered within the time limit, and then the document can be registered only on making an application to the Sub-Registrar of Assurance within a further period not exceeding four months and on payment of appropriate fine.
The following sections of the Indian Registration Act, 1908, mainly govern the registration system in India
Ø Sec.17 of the Act deals with the documents that are compulsory to be registered.
Ø Sec.18 deals with those types of properties whose registration is optional, i.e., it depends on the will of party whether to get the deed registered or not.
Ø Sec.34 states the enquiries that are to be made by the registration official prior to the registration of a deed.
Ø Sec. 35: This section lays down the procedure which is to be followed by the registering officer while registering and dismissing an application of registration. This section lays down the conditions when can a deed presented for registration, be registered and when can it be rejected.
Ø Sec.51 enumerates on the various types of books that are to be maintained by the officials in Registration office.
Ø Sec. 52 deals with obligations and duties of the officials. The officials who are engaged in the registering of the deed are under certain statutory obligations, which are to be satisfied by them, prior to and after the registration of a deed. Only after fulfilling these formalities, the registration is deemed to be completed. These obligations or duties of the registering officers are mentioned in Sec.52. This section also deals with the duty of registering officers regarding maintaining and authentication of records.
The procedure:
The transfer which is to be made through a deed is first of all, written on the stamp-papers of prescribed value. Thereafter, the executant puts his signature and two attesting witnesses attest the execution. The document which is now duly executed and attested is presented before the Sub- Registrar or Registering officer having appropriate jurisdiction. The Sub-Registrar, after taking the statements of the executants and the identifying witnesses and also the thumb impression of executants on appropriate register admits the deed for registration. The registration-fee prescribed under the law is also charged. The document is then recorded in the prescribed register. After these formalities, the Sub-Registrar certifies on the back of the deed that the document has been duly registered on the date and time mentioned by him. After affixing the office seal, the deed is returned to the parties concerned. It may be noted that the deed is deemed to be registered not on the date on which it was admitted for registration. It is deemed to be duly registered on the date and at a time which is mentioned by the Sub-Registrar under his certificate. It is also to be noted that registration must have been completed in all respects strictly according to the provisions of the Act. However, once a document has been duly registered, the Registering Officer has no authority to modify or delete any entries made in any of the books of record relating to validity of that document. Therefore, on a subsequent date he cannot delete or modify any entry made in the encumbrance certificate except where it relates to a specific error.
3. Lacunae in the DRS:
Improper Registration:
Section 17 of the Act provides for optional registration. An unregistered document will not affect the property comprised in it, nor be received as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part-performance under the Transfer of Property Act or as collateral), unless it has been registered. Thus the doctrine of part performance dealt with under Section 53 A of the Transfer of Property Act and the provision of Section 49 of the Registration Act (which provide that an unregistered document cannot be admissible as evidence in a court of law except as secondary evidence under the Indian Evidence Act)
Together protect the buyer in possession of an unregistered sale deed and cannot be dispossessed.
The net effect has been that a large number of property transactions have been accomplished without proper registration. Further other instruments such as Agreement to Sell, General Power of Attorney and Will have been indiscriminately used to effect change of ownership.
High Stamp Duty:
There is a direct link between Registration Act and Stamp Act. Stamp duty needs to be paid on all documents which are registered and the rate varies from state to state. With stamp duty rates of 13 per cent in Delhi , 14.5 per cent in Uttar Pradesh and 12.5 per cent in Haryana , India Singapore or Europe is in the range of 1-2 percent. Even the National Housing and Habitat Policy, 1998, recommended a stamp duty rate of 2-3 percent. Most of the methods to avoid registration are basically to avoid payment of high stamp duty.
Fallout of high stamp duty rates is the understatement of the proceeds of a sale. This is also linked to payment of income tax and capital gains tax. When registration has not been affected, a transfer is not deemed to have taken place and hence capital gains tax can be totally avoided. Thus, the present provisions in various laws and their poor implementation have led to a situation where there is considerable financial loss to the exchequer on account of understatement of sale proceeds, non-registration and consequent non-payment of stamp duty and avoidance of capital gains tax.
Time consuming:
A manual search through thousands of pages of records of over twelve years is an extremely laborious, time-consuming and expensive task with a high risk of oversight. Moreover as the records are written manually in an illegible, unprofessional manner, anybody having to search through such massive records could miss out on essential data.
The records are also prone to tampering. It is not uncommon for the selling party to tear- off relevant pages from the records and thus hiding any claims in the property from the purchasers. The pages also tend to deteriorate with time resulting in risks to the accuracy and availability of information.
Limited powers of Registrar:
The Indian Registration Act confers very few powers on a Registrar making him toothless. He has no powers for verification of the title and is bound to entertain every applicant and grant them registration. It was held in the K. Eshaque[1] case that even when the registrar knows that the title of land is bad he has no powers to refuse its registration. Thus there is absolutely no check over fraudulent attempts of registration.
So, in totality, we can see that there is lack of indefeasibility of title and state guarantee as the state has kept very limited responsibilities upon itself and so, in case of fraudulent claims and transfers, the individual alone will be responsible and accountable.
4. TORRENS SYSTEM OF REGISTRATION
The Torrens System of Land Registration used by Alberta Saskatchewan , Manitoba , British Columbia , Northwest Territories , some areas of Ontario , State of Iowa , South Dakota etc
A brief history:
The Torrens System originates from the shipping registry. The Torrens system was developed by Sir Robert Richard Torrens (1814-1884), an Australian customs officer and reformer of Australian land laws, who observed that the title registration and the title history of ocean-going vessels were orderly, accurate and complete, while real estate titles and ownership histories were in chaos. Very simply, Torrens adapted the shipping registry methods to land registry. He subsequently became a Registrar of Deeds. Sir Torrens was looking for five qualities: reliability, simplicity, low cost, speed and suitability. In the system Torrens introduced, no claim of title or claim against a title is valid unless written and duly registered. The purpose of the system is to simplify the transfer of real estate. It is a system for registration of land under which, upon the landowner’s application, the court may, after appropriate proceedings, direct the issuance of a certificate of title. In the “Torrens system” the certificate of title is the title.
The procedure:
A tract index of all the details about a title is kept on a register page. Government staff in the Land Titles Offices examines and register the documents on this page. A copy of register page, called certification of title is then given to the owner creating title. On subsequent voluntary transfer, a certificate of title plus the vendor’s deed has to be produced. Then, a new register page with obsolete entries removed will be opened. The government then guarantees the accuracy of the title and as a result, anyone who suffers a loss due to an error on the title or even as a result of a fraudulent transaction is entitled to compensation from the government. The liability associated with this potential compensation is funded through the collection of assurance fees.
The Torren’s system is based upon three principles:
Curtain principle: Current certificate of Title contain all the information about the title, therefore, historical search to verify the title is unnecessary Therefore, a curtain is drawn on a particular date and all transactions which took place prior to the date of drawing curtain will become irrelevant.
Mirror principle: The title record prepared and maintained, accurately and completely reflect the situation of ownership and enjoyment, as they exist in the filed.
Insurance principle: An insurance indemnity fund is established to compensate those who lose interest because of error of the registering officials.
5. DRS v. TORREN’S:
- It would be more convenient and a relatively quick process.
- It would be open to the public (indeed the public were expected to "search" the title before entering into any dealing otherwise they may jeopardize their rights).
- The title would reflect all charges, encumbrances and liens that affected it.
- Registration and not the document confer title.
- Once registered, the proprietor of an interest would have an indefeasible title.
- Providing third parties dealt with the registered proprietor they too would receive an indefeasible title.
- No-one would be required to "go behind the face of the title" i.e. to enquire about the registered proprietor's authority to deal with the land.
- The creation of specialized conveyance personnel, called Land Brokers will be licensed to complete land transactions.
- State guarantee- Due to the liability upon the State to compensate the registration- holder, there is a greater duty upon the Registrar to verify the credentials of the title with due- diligence. The registrar has adequate powers to verify the title, make any enquiries thereof and to even refuse to grant the registration if he is not satisfied with the title of the property.
6. THE NEW SYSTEM:
With the introduction of the Registration and Other Related Laws (Amendment) Act, 2001, India
This Act is based on the Integrated Land Information System which has been prepared after detailed study of the existing system in our country as well as the system of maintaining of land records in a number of countries like Thailand, Canada, Australia, U.K. etc., have been done. Key features of the system are:
I.Conclusive Titles: The emphasis on land record creation and maintenance would be shifted from generating revenue to maintain a clear and conclusive record of title of all private properties in rural and urban areas covering agricultural, residential, commercial and industrial properties for giving absolute title security. Absolute title security will be achieved by creating a Register of conclusive titles. In the Title Register proposed to be prepared under ILIS, curtain and mirror principles alone will be included.
II.Title Registration: The present system of deed registration will be replaced by title registration system, wherein it would be the legal responsibility of the registrar to verify the title of the owner before allowing transaction on property. The crux of the system is, only the legal owner will be entitled to transfer the property.
III.Integration of services & creation of a single Dedicated Agency: The present system of multiple Government departments maintaining land records would be replaced by a single dedicated agency, which will create, maintain and deliver all property related services like survey, subdivision, maintenance of title records, registration of property transfers and maintaining property tax records in rural and urban areas.
IV.Digitization & Auto-updating: All records will be maintained in digital form and processes will be designed in such a way that as transactions occur, records will be updated automatically. Entire data will be maintained in a central repository and accessibility will be multi point. Therefore record will be an integrated, transparent one, which is easily accessible to everybody.
V.Self-sustaining Revenue model: It will be a self-sustaining system so as not to depend on government funding for maintenance and updating. Land information will be priced for sale and appropriate user charges regime will be introduced.
CONCLUSION
So, we can observe that by replacing the ‘Registration by title’ system to ‘Title by Registration’ and by introducing new technology to the whole system of Registration of land, we can enable proof of title and make dealings with land simple so that a legal title passes to the transferee. This system will remove the defects of the deed system by providing more secured land tenure. This process would enable the land purchasers to buy the land from the legal owner. It means, the present system of deed registration will be replaced by title registration system and the legal responsibility of the registrar to verify the title of the owner before allowing transaction on property. Thus, the emphasis would shift to maintain clear and conclusive record of title of all properties from the existing system of land record creation and maintenance. This would provide absolute title security to all rural and urban land covering agricultural, residential, commercial and industrial properties.
Titles to land have become necessary for more efficient handling of land title documents, to provide greater security of tenure for those in occupation of land, to keep pace with the greater demand for re-conveyance, for better support for mortgaging and investment, to face the steady increase in the number of private and public users who make routine enquiries about land ownership.
There is an urgent need to ensure compulsory registration of land deeds and also to computerize such records so as to create a database. The Andhra Pradesh experience is a good example to begin with where registration of sale of land/property is achieved within a month. The Tenth Plan Working Group on Information Technology for Masses has recommended computerization of land records all over the country with computerized land/property documents being available to the public at all levels, including in villages, by 2005. Through online documentation of land records, hyper links with court registries of the district or the State can be developed, so that the unwary buyer can get immediate information of any pending litigations.
The time to implement the system is sooner rather than later since the total costs involved will only continue to rise and the effects of no system or an inefficient system will increase rapidly.
BIBLIOGRAPHY
BOOKS
ü Adhikari, S., “Commentary on The Registration Act, 1908”, 1st edn. (1998), Vishal Book Centre, Nasik
ü Sinha, R.K., “Transfer of Property Act, 1882”, Central Law Agency, Allahabad
ü Hepburn, Samantha J., “Principles of Property Law”, Cavendish Publishing, Sydney, 2000.
ü Dukeminien, J, “Property”, 4th Edn., Aspen Publications , 1998.
ü Property Law-I, Text Material for VIth Trimester
ACTS
Indian Registration Act, 1908
WEBSITES REFERRED
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