Land titles registers are critical for preventing fraud, providing certainty, and simplifying land transactions. All of these are vital elements of commerce, as explained in Hernando de Soto’s book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. (First published by Basic Books in 2000.)

The best system is the Torrens title system of land registration. First implemented in 1858 by Sir Robert Torrens in South Australia, Torrens title has been adopted throughout Australia, New Zealand, Malaysia, seven of ten Canadian provinces, Singapore, Hong Kong, and Iowa, and partially adopted in Minnesota, Massachusetts, Colorado, Georgia, Hawaii, New York, North Carolina, Ohio, and Washington. Torrens title is distinguished by two features in particular: first, the transfer of legal ownership or the creation of an encumbrance in relation to a parcel of land is effected by the act of registration itself; and second, the veracity of the register is guaranteed by the state. Without this guarantee, those buying, selling, mortgaging, or leasing land lack certainty—and commerce thrives on certainty.

Claims for compensation are minimal under Torrens title, because the system reduces fraud; a fraudster can forge a mortgage and impersonate the owner, but he cannot stop the lender from searching the title to identify the attorney for the owner on the last registered deal and calling that person to verify.

The following are the optimal features for Torrens title:

  • Title searches should be free of charge over the Internet.
  • Legal title to any estate, including mortgages, should only pass upon actual registration.
  • There should be no certificate of title or duplicate certificate of title (these are hangovers from pre-computer days).
  • Registration should occur instantly (so that funds advanced are protected upon settlement).
  • Registration should confer immediate indefeasibility. (Regardless of provenance, any innocent party taking registered title should immediately acquire guaranteed title.)
  • The recording of equitable interests should be prohibited, but warnings of alleged equitable interests (caveats) should be allowed without requiring the consent of the registered owner. The caveats’ existence should not prevent the registration of further dealings.
  • There should be a speedy system for hearing applications for the removal of caveats within the lists of a superior court.
  • All legal entities (individuals or corporations) must be identified on title by reference to their identifying numbers in the corresponding entity registers (Individuals Register, Foreign Nationals Register, and Company Register), and these entries should link to the counterpart entries in those databases.
  • No consent should be required from prior ranking lenders for the registration of subsequent mortgages. Covenants against subsequent charges should be prohibited.
  • All transfers, leases, mortgage instruments, plans, surveys, caveats, and other dealings on the register should be downloadable in pdf format free of charge by anyone searching the register.
  • Dealings that refer to instruments extraneous to the register should not acquire indefeasibility to the extent that those extraneous instruments are impugned.•Strata title (the registration of separate parcels on a single block of land) should be allowed so that condominiums and other subdivided buildings can have individual titles.
  • Registered dealings should be prioritized over unregistered dealings regardless of notice.
  • Each parcel of land should have a unique identifier, being the street address.
  • Describing a property in letterheads, marketing materials, or other commercial documents as having a different address to its registered Torrens title address should be prohibited.
  • The record for each parcel of land should include a survey. The state should compensate for losses caused by errors in the survey. Developers and owners altering or creating buildings should be required to pay for fresh surveys that show buildings’ external boundaries. All boundary points on the survey should be referenced against GPS coordinates.
  • All adjoining properties should be shown on the survey with links to their own records.
  • The true consideration for all dealings should be recorded.

When implementing a Torrens system, reformers should expect fierce resistance from the legal profession. This has been the experience in every jurisdiction where Torrens title has been introduced. This is because lawyers seek to preserve antiquated, expensive, and uncertain systems so they can continue collecting the resultant expensive legal fees.

This article is an extract from the book ‘Principles of Good Government’ by Matthew Bransgrove