PROPERTY TITLE REGISTRATION SYSTEM FOR KARNATAKA

05.05.2010 INDEX

INTRODUCTION The proposal and initiatives in India for guaranteeing Land Title Purpose and scope of this study Structure of the Paper THE EXISTING STRUCTURE OF LAW AND THE ISSUES Indian Law and the concept of Title Personal Laws and issues of Title The issues and problems in the present structure CONCLUSIVE TITLE CONCEPT AND EXPERIENCES Torrens System of Conclusive Title Various approaches of providing Conclusive Title Experiences in India towards Conclusive Title PROPOSAL OF TITLE REGISTRATIONS SYSTEM Changes re uired in the Legal !ramewor" Land Title #egistry for $arnata"a

THE EXISTING STRUCTURE OF LAW AND THE ISSUES

There are various laws and legislations that deal with the issues relating to property% which further are managed and administered by various offices% officers of the State and departments of the &overnment of both State and the Center' It is also the reiterated fact that the existing legal system in India does not provide for registration of title over property% rather it is the registration of deeds or instruments of sale' These two facts relating to the system of Law have been responsible for the existing situation of land title management in India% which is complicated and ambiguous% and absence of any guarantee in title over property'

I()I*( L*+ *() T,E C-(CEPT -! TITLE The land records maintained by the state governments are primarily for revenue purposes' These records hence contain details re uired for the purposes of determining revenue% li"e the nature of land% name of the person in possession% etc' In urban areas a .register of assessment of land and buildings/ is maintained% which too describes the nature of the property and the amount of revenue0 tax collected over it' It is hence not a record of ownership% nor that of title' The ownership over a property and the title are only presumptive in nature and is not conclusive' Title to land is only incidental and arises out of the presumption that the person paying the tax0 revenue for the property is the owner' *s the entries in the land records are liable to be challenged% the #evenue Laws of the State lay down that no suit shall lie against the state government or any other officer of the state government in respect of any of the entries made in the records'

Thus% there is no Law% process or fixed understanding of .conclusive title/ in India% and title is presumed through investigating into multiple records and complex facts and issues' #egistration of documents and land records 1nder the #egistration *ct% which pertains to registering documents% it is laid down that while accepting a document for registration% the registering authority need not concern itself about the validity of the document' This leads to the position that a registered deed in itself does not prove title% but it is a mere recording of a transaction' The title over property hence is presumptive and not a state guarantee of title' This registering of the document does not prove that the parties to the transaction were legally entitled to carry out the transaction and therefore it does not prove validity of the transaction' It is thus the sole responsibility of the person entering into further transaction over the property to investigate the soundness of title to the property' *lso% it is in the best interest of the owners that they "eep all the documents and records pertaining to their property intact and updated as it is basing on these documents that the title is presumed by the court of law' !urther to this position in Law% the practical aspect in preparing and maintaining land records has not been in good condition' 2ost of the land records are not updated3 they contain old% misleading and incorrect information' *s per the #egistration *ct only Sale )eeds are compulsorily registered% and even they do not get promptly intimated at the record maintenance authority' Property is transferred without conse uential mutation in the records% due to which the land records never reflect the reality about the property or its owner' The land records hence are not only not up4to4date% in many cases they are not available at all' This is one of the ma5or reasons for multiple litigations concerning title of property' Civil litigation relating to property disputes forms a ma5or part of the pending civil cases in the country' The #egistration *ct prescribes as to which are the documents that are to be compulsorily registered' In accordance to that Law% all gifts% sales and any instrument which creates or extinguishes any right or title in an immovable property of a value of more than one hundred

rupees are compulsorily registrable' ,owever this is only registration of deeds or documents and not the title' The purpose of this registration is to collect revenue and not maintenance of records' This *ct% further ma"es registration of +ills optional% similarly% lease agreement% lease deed of less than a year% agreement of sale% power of attorney% development agreement also need not be registered' ,ence these transactions are most often not recorded in any official records'

)epartments 6 authorities involved in the process of maintaining land records )epartment of #egistration and Stamps #evenue )epartment% that "eeps record for tax related purposes )epartment of Survey and Settlement The )evelopment authorities% li"e the 7)* City municipal Corporation% that maintains the Katha of the property% and information relating to possession These departments and authorities maintain the information register when such information is brought into their notice% and they in themselves do not provide any concluding proof of ownership 2odes of ac uisition of ownership of property8 7y transfer under different modes of conveyance li"e% sale% exchange% gift% and actionable claim 7y adverse possession under various circumstances and conditions Through other modes of dedication and accretion 1nder personal laws% through inheritance% succession 1nder Land *c uisition *ct

-wnership and other rights and interests over property are ac uired through many modes and are also governed through multiple Laws and practices' To bring all and any sort of .transfer/ of

property or change in right and title under one Law% under a single governing body would be the foremost tas" as well as challenge' 2ost importantly each community is governed under different personal laws which% in more than few categories of transfer are excluded from the formal entry into land records' It becomes pertinent to loo" into the salient features of the personal laws and the issues they pose'

PE#S-(*L L*+S *() ISS1ES -! TITLE 1nder the Indian Law% an important and common mode through which property is ac uired is through personal laws' Property comes into the possession of the inheritor0 successor upon the death of an ancestor% which is "nown as ac uisition of property through inheritance or succession' The ac uisitions thus made are governed by the personal laws of the deceased' Inheritance% further% may be of two "inds% testate or intestate' In situations where the deceased leaves a +ill% such inheritance is called testate and intestate is where the deceased does not leave a will and the inheritance is carried out as per the personal laws' Thus% the respective personal laws% the practices around them% the law relating to +ills and further the practices of getting these transactions recorded% all play a role in the maintenance of records' It is also the fact that most of these transfer of properties through inheritance and succession are not recorded anywhere% nor are such deeds of conveyance registered' This has been a ma5or factor leading to disputes and reason for litigation3 most of the litigation within families relating to property is due to inefficient land4record maintenance' *s most of the ac uisition of properties made under a +ill% or through partition% or intestate succession are not registered% nor recorded in the land records0 registry% the title remains ambiguous' *mbiguous land records and uncertain titles lead to familial disputes% complications through further transfers% and prolonged litigation' ,ere we loo" into some important features of the personal laws that lead to the present complex situation with regard to title of property'

Inheritance and succession under ,indu law8 i' ,indu Law recogni9es the importance of customs which form a ma5or source of the law itself' ,ence% any age old custom which has been followed by a community is recogni9ed as Law' The two ma5or schools of thin"ing are the Mitakshara and the Dayabagha. ii' iii' iv' ,indu Law recogni9es the concept of a ,indu 1ndivided !amily :or ,indu ;oint !amily< and every child born in the family becomes a coparcener in the property of the family' The law also recogni9es .ancestral property/ which becomes the right of every coparcener b y birth' * child who was in the womb at the time of the death of an intestate and who is subse uently born alive shall have the same right to inherit to the intestate as if he or she had been born before the death of the intestate' v' The essence of the coparcenary property is community of interest and unity of possession between all the members of the family' This arrangement is not disturbed on the death of any coparcener as others any continue by survivorship' vi' The ,indu Law recogni9es both ;oint family Property and Separate Property% which are distinguished basing on more than one factor% and hence become complex to interpret and decide most of the times' Each of these forms of property creates different forms of rights in inheritors and thus often leads to disputes relating to title' vii' #ules of succession are different to a ,indu male and a female3 the property of a ,indu female is her absolute property and here there is no .ancestral property/' The general rules of succession of a ,indu female are very different than that of a ,indu male' viii' ,owever% through the ,indu Succession :*mendment< *ct =>>?% a female ,indu has been made an e ual coparcener in the property as her male counterpart' Thus% the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son' ix' *doption and Laws relating to it has its effects on the title to the property vested in the person adopted% property of the adoptee/s adopting parents and adoptee/s natural parents' -ne has to be careful while interpreting the facts and circumstances of a case wherein adoption has ta"en place and the title of related property is in dispute'

x'

The ,indu 2inority and &uardianship *ct% @A?B protects the rights of the minors in the property of the minors' It also gives the sole right to the natural guardians of a ,indu minor% to the possession of the minor/s separate and absolute property' *s per this law% any disposal of immovable property by a natural guardian in contravention to the Law is .voidable/ at the instance of the minor or any person claiming under him'

xi'

*part from these% the property can be devolved through acts of gift% release and partition which are also governed by the personal laws'

The above are the fundamental and general rules of succession under the ,indu personal laws which also are the most important norms through which the ownership of a property is investigated and title is presumed' *dditionally% as the #egistration *ct is the Law that deals with registration of documents% all the personal laws would be read along with the #egistration *ct to determine the absolute title to a property% while investigating the title to a property' Provisions of the #egistration *ct ma"e gift% sale and any instrument which creates or extinguishes any right or title in an immovable property of a value of more than one hundred rupees as compulsorily registrable' ,owever% the *ct ma"es registration of +ills optional' #egistration of oral partition is also not compulsory' 2ost of the property that devolves through inheritance or succession is also not registered or recorded anywhere' Inheritance and Succession under 2uslim Law8 i' 2uslim Law is governed under two mail schools of thought% the Sunni Law or the ,anafi School% and the Shia Law or the *thna Isshari School3 and they vary in the principle of representation' -ne such ma5or variant is that% in Sunni law the expectant right of heir apparent cannot pass by succession to his heir not can it pass by be uest to a legatee under his +ill% whereas under the Shia law it does pass by succession ii' There is no distinction between movable and immovable property or between ancestral and self4ac uired property

iii'

The right of an heir comes into existence for the first time on the death of the ancestor and he is not entitled until then to any interest in the property to which he would succeed as an heir if he survived the ancestor

iv'

The heirs can claim their share in the property after payment of all statutory liabilities have been made and the debts and valid legacies and death bed gifts paid out of the property'

v'

* daughter and son/s daughters have right to share in the property' -nly in situations where the daughter is excluded from inheritance by custom or by statute% the daughter is rendered non4existent and shares of shares of other heirs calculated as they would be in the default of the daughter

vi'

Shares are determined at death of the party because of vested inheritance' If the heir dies before distribution the share of inheritance which has vested in him will pass to such persona as are his heirs at the time of his death

vii'

Life estate may be created by wa"f3 wa"f being a Cpermanent dedication by a person professing the 2ussalman faith of any property for any purpose recogni9ed by the 2ussalman law as religious% pious or charitableD'

viii' ix' x'

*n heir cannot renounce his right to inherit In Shia law% a childless widow does not possess a right of share in her deceased husband/s landed property' The property may also be be ueathed through a +ill by the testator% though only on @0E rd of the share of his property after payment of the funeral expenses and the debts' ,owever% the other norms that govern the +ill under 2uslim law are that% the +ill may be made wither verbally or in writing% and that the be uest made in the +ill to an heir is not valid unless the other heirs consent to the be uest after the death of the testator'

xi'

!urther% the Law recogni9es transfer of property through gifts :,iba<% through which a 2uslim may dispose a part or the whole of his property to anyone% even a heir% and no restrictions have been placed on the donor/s power to gift% unli"e as in the case of the +ill' The gift may be made orally as well' The interpretation of 2uslim law also says that the gift under 2uslim law% which is ,iba is different from the &ift as under the Transfer of Property *ct'

Provisions of the #egistration *ct do not apply to gifts made under the 2uslim Law and hence the orally made gifts under 2uslim law are valid and legal' 2ost of the property that devolves through inheritance or succession is also not registered or recorded anywhere' Inheritance and Succession under the Indian Succession *ct% @A=? F Christians and Parsis i' ii' iii' The Indian Succession law does not distinguish properties as 5oint family% ancestral and self ac uired The heirs are recogni9ed as lineal descendents and the "indred3 in the absence of both% the widow of the deceased succeeds to the whole of the property of the deceased' In case the deceased as left any lineal descendants% the widow is entitled to @0Erd share and the lineal descendants to =0Erd share in the property' If the deceased has left no lineal descendants but only "indred then the widow is entitled to G the share in the property and the other G is shared among the "indred' If the deceased has left no widow% his property shall go to his lineal descendants to those who are of "indred to him% not being the lineal descendants% and if he has left none who are "indred to him it shall go to the &overnment' iv' The husband surviving his wife has the same rights in respect of her property% if she dies interstate as a widow has in respect of her husband/s property if he dies intestate' The personal law under the Indian Succession *ct is simple and uncomplicated as compared to the personal laws of the ,indus and the 2uslims' ,owever% here too any property that devolves through +ills% or any inherited property is not registered or recorded in most instances

T,E ISS1ES *() P#-7LE2S I( T,E P#ESE(T ST#1CT1#E The present structure of land record maintenance and the presumptive title system pose varied problems and issues which further lead to deeper socio4economic complexities' There is a immediate need to moderni9e the system and introduce a reliable title registration system'

The issues that the existing system poses and the reasons that lead to such issues could be listed as8 The age old principle of presumptive title based on which our land record management system stands% the registration of documents as opposed to title registration have been responsible for a unnecessarily complex% costly% time consuming and un5ust system of property management' *mbiguous Title8 )ue to multiple records and complex investigative methods of Title% there is no clear Title over properties )isputes and litigation8 an ambiguous title system further leads to long drawn disputes which then end up in multiple litigation' It is well deliberated fact that ma5ority of the civil litigation arise or are "ept pending due to inefficient property record maintenance system' -ften the disputes over property ownership lead to crimes' 7urden on property mar"et and financial sector8 investment in properties and lands have become highly ris"y and tedious% which also acts as a disincentive in investing in the property ,igher and multiple chances to circumvent the law% meddle with records% create dubious and false documents of .title/ The economically poor individuals and communities are the worst hit as the land records do not guarantee their title over property and eventually they stand high chances of loosing the battle for title

CONCLUSIVE TITLE CONCEPT AND EXPERIENCE

The other system of title recognition as opposed to the presumptive title as existing in India% is the system of Conclusive Title' This is a system wherein the title to a property is unassailable and conclusive proof of ownership of property% and it provides indefeasible registered interest over the property' The most famous% recogni9ed and adopted form of Conclusive Title is the Torrens System which was first introduced in *ustralia' The Torrens System of Conclusive Title The Torrens system provides a state guarantee of registered interests and an assurance fund to compensate owners whose interests are defeated due to any reason% even due to an error made at the Land Titles -ffice' 1nder this system% except in cases of actual fraud on the part of the person registering% such registration guarantees an indefeasible title against everyone else' The well4"nown four principle of Torrens system are8 a' There is a single agency that maintains land records b' The .2irror/ principle8 the property records should mirror ground reality3 that they should be completely transparent and reflect the actual facts c' The .Curtain/ principle8 the record of a title should immediately guarantee conclusive ownership over the property and investigating into the history of ownership records shall be redundant d' This shall provide a title guarantee and insurance for indemnifying the property holder against any loss arising due to inaccuracies This system operates on the principle of .title by registration/ rather than on .registration of title/' The Land #egister is the important and central document in the Torrens system3 and the title gets

transferred through entry in the #egister and not through transfer deed' The transfer and subse uent change of ownership may happen through any of the various modes3 sale% death of the registered owner% court order or any other mode% which would also me mentioned in the #egister' The #egister would also record any interests that would effect or limit the right of the registered owner% such as mortgage' In this system the State guarantees the accuracy of the #egister' Various approaches of providing conclusive title The other well "nown method of protecting the interests of a title holder is through Title Insurance system% which is practiced in the 1nited States of *merica' ,ere the title holder insures his title through an insurance policy and the insurance company indemnifies the title holder against any loss that may arise' Various countries have adapted different "inds of land record system providing a conclusive title' Australia: It was in *ustralia that Torrens system originated to simplify the English system that was found to be complex and time consuming' The main features that were then introduced were F certainty of title to land and simplification of conveyancing relating to land' The State guarantees the validity of title to land once it is registered and provides certainty to the land title to the person who registers' Since @AHE% the system of land title registration has been computeri9ed% which gives immediate access to the register' Canada: )ifferent provinces of Canada practice different laws of title investigation and certification% and in ma5ority of the provinces Torrens System is followed' Li"e% in 7ritish Columbia where Torrens system is followed since @HI>% the system provides for the issue of an absolute certificate when the registrar is satisfied of the establishment of title' *n assurance fund for the indefeasible title also exists' -ntario too follows Torrens System of land records and in @AI@% -ntario law #eform Commission made a remar" in its #eport saying that the land title system :registration of titles< is superior to registry system :registration of deeds<' In Juebec however% !rench system of registration of deeds is followed% which subse uently got effected also by the &erman system of land records% which considers the entry in appropriate register as the only admissible evidence to title of land' United Kingdom: Though primarily follows registration of deeds% title registration system was introduced in @HB=' The title registration however was introduced on a voluntary basis provided

the applicant produced the proof of mar"etable title% proof of determination of boundaries and disclosure of interest in the land through registered document' *fter much amendment and evolution% the present law confers on registration a conclusive title to land on the registered holder of land' ,owever% this is guarded under the norms of the land thus different than the principle envisaged under the Torrens system' In 1'$ the comprehensive legislation guards the title to real property in England' Substantive law of real property is ali"e in both registered and unregistered conveyancing' The law however confers on registration conclusive title to land on the registered land holder' France: Transactions in land are registrable but non4registration does not render transactions invalid between the parties' The transaction between the parties is complete as soon as there is an agreement3 there is priority to registration when it comes to the aspect of title as regards the interest of the third parties in it3 updating the title status and location of the defects shall be done by the parties0 individuals themselves Germany: Law of land is covered under the Civil Code3 however registration of title was made compulsory in @HI=' !rom @A>> onwards% the entry of transfer in the appropriate register alone was considered as the sole admissible evidence to title to land' United States of America: Privati9ation of land records is the primary feature of land registration law in the 1S*% which provides for what is "nows as .Title Insurance/' There are both local companies% which maintain records pertaining to one state and the multi4state companies which do business across many states' The registers of title are maintained by these companies and these registers or .title plants/% as they are called% are up4dated by the expert staff of the company on a day4to4day basis by carrying out regular inspection of the official records' The prospective land owners bear the costs' ,owever% some states in the 1nited States% li"e the state of Illinois follow Torrens System of land records Experiences in India in moving towards conclusive title Since the time of the !irst !ive Kear Plan in India% the importance of a good land records system has been discussed' Time and again% the Planning Commission and the (ational Commission on *griculture have been urging the need to implementation of land reforms policy decisions to have a better property records system'

In @AHI% the &overnment of India through the Planning Commission appointed 2r' )' C +adhwa% a pioneer in the field as -ne4man Committee on Land records' Since then 2r' +adhwa has spearheaded the study and in @AHA this one4man Committee submitted its report on .&uaranteeing Title to Land/'

The 2inistry of 1rban )evelopment in @AA>% in its draft housing policy suggested that the state may introduce registration of title as opposed to registration of documents In @AA>% Secretary *dministration to the &overnment of India% department of rural development

proposed to set up a (ational Commission on #evitalisation of Land #evenue Computeri9ation of land records have been attempted and partly successful in Pune% 2aharashtra 1nder the (ational Land #ecords 2oderni9ation Program =>>A% of the )epartment of #ural )evelopment% &overnment of India computeri9ation of land records have been done and partly successful in $arnata"a% Tamilnadu% some parts of 1ttar Pradesh% and 2aharashtra' This has been attempted rather unsuccessfully in the State of 7ihar The State of #a5asthan and )elhi are understood to have wor"ed fairly on the issue% conducted research and formulated road4map for an effective introduction of the Title #egistration System and guaranteeing title to land3 though one is not sure as to its present status

PROPOSAL FOR A TITLE REGISTRATION SYSTEM

Introduction of a Title #egistration System would re uire fundamental changes in the structure of Law% a new legislation to govern the titling and land record maintenance system% creation of a comprehensive title registry authority% updated technological support% trained governing officials and a fundamental change in the mindset of people Changes re uired in the legal framewor"8 * State legislation to govern the title registration system' This shall introduce a system of title through registration and not registration of deeds' 2ethod of registration and record maintenance are to be prescribed through this legislation The new Law shall provide for State guarantee to Title over property and introduce a fund for indemnity for damages that may be caused The #egistration *ct shall be suitably amended to ma"e the new system and law wor"able3 all property conveyances and transactions including the ones that are optional under the present law are to be made compulsorily recorded and title is to be established and guaranteed through registration *ll and any conveyance of interest or0and title of property are to be recorded and registered' This would include registration of Power of *ttorney% Sale *greements% 2ortgages% Lease agreements% any lease deed% *ll the personal laws are also to be amended to the effect that the ownership over any property accrued through testate or intestate% inheritance0 succession% gift or any other transfer under personal law is also to be made effective only through registration' The +ills% gifts under 2uslim Law% partitions% release deeds are all to be made compulsorily registered and recorded

Land Title #egistry for $arnata"a The above suggested changes maybe brought into effect in $arnata"a% and this road map may be considered for the implementation8 * Complete cadastral survey of all the properties in both rural and urban areas is to be conducted by the Survey and Settlements )epartment in the first instance% each property to be given a uni ue identity number' The consolidation% computeri9ation and easy access to the records only would lay the path for any further action in this regard Pre4legislation dispute settlement8 This would clarify and provide the extent and number of disputed titles over properties and nature of disputes that would need to be resolved before moving further' *ll and any dispute over the right% title and interest over any property is to be resolved in each area0 talu"0 district through the help of 5udiciary0 lo" adalath 0 mediation methods' Each and every contender and possible contender of any interest in the property shall be consulted through this procedure' Special Tribunals may be set up in this regard' This is to be conducted only after wide and clear announcements and populari9ation of the purpose behind the whole exercise' These proceedings are to be made transparent% accessible% uic"% economically reasonable and simple in procedure' The new legislation introducing Title #egistration system of State &uarantee and Title #egistration *uthority to be brought into force through which Title Cards shall be issued to the clear title holders only once all the disputes with regard to the property are settled3 *ll this shall however be done within a time frame' It is proposed that the cadastral survey be completed within 4444 months% pre4legislation dispute settlement to be completed in the next 444 months Simultaneously% the local% talu"% district and state level officials are to be trained to wor" under the new system