The Tribune

• Fidelity boss: Prioritise land registry reform

• Will bring The Bahamas ‘into 21st century’

• Much talk, but change never acted upon

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government was yesterday urged to prioritise creating a land registry to reduce the “far too many frauds and errors” scarring real estate deals and bring The Bahamas “into the 21st century”.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business that creating a central database which registers ownership of every land parcel in this nation is “super important” to improving market transparency, the country’s ease of doing business, and ensuring households and businesses have secure title to their businesses.

Acknowledging that establishing a land registration system has been a discussion topic for decades, but never acted upon, he argued that such fundamental reform would reduce - if not eliminate - the risks and costs associated with long, paper-based title searches by attorneys to prove clients have proper ownership rights to the subject real estate.

Pointing out that “a tremendous amount of land fraud exists even today”, as unscrupulous persons exploit loopholes in the title ownership chain, the Fidelity chief urged the government to “expedite” the transition to a land registry and associated land registration system on the basis that all parties involved will derive advantages from the reforms.

“It’s super important,” Mr Bowe told this newspaper. “One, it brings us into the current age, and two, it allows for greater transparency on ownership as well as liens on particular assets

“The primary benefit is we have a system today that is open, unfortunately, to a significant amount of fraud and error. It relies on having the physical document that we know can be replicated by those who have ill intent.

“It lends itself to errors because, if you lose a document in the chain of title, and the subject property gets involved in a future transaction, the attorneys then have to do a Quieting Titles Act action and you have to hope there are no competing or rival claims,” he continued.

“We’ve been talking about a land registry or registry of assets so that there’s a central database, which one hopes is well controlled and secure, so anyone can go in and see who the registered owners are and what liens are secured against the property.

“How many times have persons sold the same property multiple times? How many times has a person pledged the same asset to secure different loans? If we had a registry we would have a central database where it would say lot 6A in a particular subdivision, who is the registered owner and how many liens are secured on it, including a first and second charge.”

Asked how often commercial banks, such as Fidelity Bank (Bahamas), had issued mortgage loans secured on real estate only to later discover title problems, Mr Bowe replied: “Unfortunately far too many times. 

“To put a percentage on it, I would say, would be a misrepresentation. Even if it was ten percent [of transactions] it shouldn’t happen. I would say the answer is too many times. You find that the shoddy workmanship has already created a title insurance industry. It shows you the consequences of not having a land registry and how often it happens. Insurance shows there’s a risk of loss.”

Carl Bethel QC, the attorney general, told Tribune Business in January that he had been asked by the Prime Minister to move ahead with legal reforms that would achieve what Mr Bowe and others have urged on multiple occasions -  the ownership “of every scrap of land” in The Bahamas being recorded on a central database accessible to all citizens and residents.

Disclosing that the Attorney General’s Office had almost finished work on the proposed Bill, he added then: “What the Government intends to do is move to a system of land registration. We have a Bill that we have been working on that is basically finished, and the Prime Minister has indicated he wants to proceed with that.

“Starting in the developed areas, and moving to the Family Islands, every scrap of land will be registered on a registry. It’s where the owner of record will be recorded in the land registry as owning that land. It will give greater security over titles with respect to land ownership. The Prime Minister has recently asked me to do that.”

Mr Bethel said all charges, such as mortgages, and claims relating to every piece of land in The Bahamas would be recorded in such a registry. However, mapping and registering every parcel of land in the Bahamas, and the different types of ownership such as commonage and generational land, would likely be a mammoth undertaking requiring decades of work.

There will also be much scepticism as to whether a land registration system will ever get off the ground. For the last Ingraham administration led similar efforts almost a decade ago to develop a three-strong package of Bills that would have overhauled the existing system.

These Bills - the Land Adjudication Bill, the Registered Land Bill and the Law of Property Bill - would also have created a land registry in the Bahamas, and given commercial and residential real estate buyers greater certainty that they had good title to their properties. However, they never made it to Parliament.

Acknowledging previous promises had failed to materialise, Mr Bowe told Tribune Business yesterday: “I started my career in 2000, and I remember a land symposium with the very capable Paul Adderley [late attorney and ex-Cabinet minister]. He spoke at that time as having spoken about it for decades. If he said that, I’m sure it’s something that’s been spoken about since the 1980s.”

He added that the current system was “almost what I would call medieval times”, as purchasers in some instances engaged in a “first past the post” system where the first person to record their ownership at the Registry of Records won the race from competing purchasers in cases where the same parcel was sold to multiple buyers.

“In this digital time we should be thinking about having property registered and all the information attached to it accessible,” Mr Bowe urged. “Title searches should become a click of a database as opposed to hours in the registry searching title documents going back centuries.

“It should be a priority because it links to the ease of doing business. It’s a very real hindrance to the ease of doing business when you are dealing with real property transactions. That should not exist in the 21st century. We’ve taken too long with some of the low hanging fruit on the ease of doing business.”

Estimating that 70 percent of the legal work associated with real estate transactions involves registry searches, the Fidelity Bank (Bahamas) chief executive said switching to a land registry/central database would save significant time and costs for the parties involved.

This, in turn, could make the Bahamian real estate market more accessible to an increased number of persons given that fees and taxes - VAT on the purchase price, realtor’s commission, legal fees and other closing costs - can often add up to a sum ranging between 10 percent to 20 percent of the actual purchase price.

Many have referred to the present system as “a lawyer’s dream”, with attorneys earning a set fee - normally equal to 2.5 percent of the purchase price - for conducting title searches and providing “opinion on titles”. Those not employed in the legal profession find it virtually impossible to navigate the system as structured and perform their own title searches.

Courts at all levels of the Bahamian judicial system have previously warned how the present system is wide open to abuse. Appeal Court justice, Stella Maureen Scott-Crane, warned in a 2016 ruling that the Bahamian court system was susceptible to being “an unwitting pawn” in the commission of land thefts/frauds.

She said the Quieting Titles Act, in particular, was effectively being employed as a tool to steal land, given that “material facts” relating to title applications were often hidden from the courts.

In contrast, a land registry would contain all information relating to a specific parcel of land in one database, including its location, dimensions, ownership interests and all encumbrances, such as mortgages and other liens/charges.

Moving to a such a system - and registering land - would remove the need for attorneys to conduct expensive, time consuming title searches that are sometimes prone to error, and move the Bahamian real estate market away from being based on “first to record” title deeds.