GEO

New draft law initiated by the government contains risks of private property infringement

15 February, 2016

 

On 21 December 2015 the Parliamentary Bureau accepted for discussion a draft law On Public Registry, initiated by the Government of Georgia to make amendments to the respective law. According to the explanatory note of the draft law, the goal of the amendment is to create a full cadastral and property database of the real estate under the state ownership and to promote development of real estate market. Transparency International (TI) Georgia thinks that there is a need for a significant reform in regards to land registration, however, we believe the initiative of the Government contains serious risks of infringement of private property rights, damaging development of real estate market and investment environment.

What does the draft law encompass

All lands that are not registered to any person in the public registry will be registered as state property. Along with registration as state property, the NNLE National Agency of State Property will be authorized to request a ban on disposal or transfer of the property to a third party. If such a ban is imposed, interested parties can within one year period request cancellation of the government ownership and registration of their ownership over the land. After expiration of the one year period, the National Agency of State Property has the authority over the land, including a right to transfer ownership rights to a third party.

What are the main problems in regards to land registration today

Most of the agricultural land outside of the urban areas are not appropriately registered. Despite lack of precise statistical data, only approximately 20% of all agricultural land is registered (initial registration). At least 1.2-1.4 million agricultural land slots are not registered.

Low activity in land registration can be caused by a lack of financial resources needed for registration procedures (on average 300 GEL per hectare), by a lack of appropriate documents, or incorrect registration and/or inaccurate documentation, by a lack of information about the importance of registration of property and its cadastral characteristics.

What are the risks of approving the draft law in its current form

We think that approval of the draft law in its current form can create following risks:

  • Land under private ownership can be registered as state property. It is quite common today that the Public Registry cannot locate a registered land. The main reason for this, is that big part of land was registered in 1990es and in the beginning of 2000es without appropriate cadastral data. Unfortunately, the draft law does not include protection mechanisms for owners of such lands.
  • People with inaccurate registration documents will lose possibility to register the land. There are cases when a person owns a land, however cannot register it due to a flaw in the registration documents, lack or such documents or due to the fact that the documents have been lost or destroyed. The draft law does not envision simplified procedures for such cases. Therefore, after the one year period such persons will lose any rights to the land that they have effectively owned and have been cultivating for many years.
  • People who have appropriate documents may not be able to register their property within one year. Expenses associated with a registration of an agricultural land (such as surveys, retrieval of archival document and etc.) are around GEL 300 per hectare of the land, creating serious obstacles to many citizens. Also it is not known what type informational campaign will be put in place to make sure that the interested parties are appropriately informed about the new regulation and don’t miss the one year deadline.
  • Number of court disputes involving cadastral border overlaps and similar issues will increase. Currently, an owner of property and a private company conducting measurement surveys are responsible for accuracy of drawings. Taking into account the existing practices and the reality that most of the lands are registered without precise cadastral information, there is a high probability that the number of court disputes involving property disputes, as well as administrative disputes due to border overlaps will increase significantly.
  • Conditions of real estate market and investment environment will worsen. In case of adoption of the draft law, there are risks that the state will allocate some land areas that could later be claimed by individuals. In such cases court disputes between the current and the previous owners will be unavoidable, preventing effective usage of the land.
  • It is not clearly defined in which cases the state will request a ban on disposal of land. The draft law says that the Agency is authorized but not obliged to request a ban on disposal or transfer of the land registered as state property. Therefore, such a ban completely depends on views and opinions of the Agency. There is a risk that a significant portion of land will be registered without a request of a ban on disposal, while property right limited by the state will be an exception, rather than a rule. 
  • Wilfully occupied lands will be significantly harder to register as a private property. According to the draft law, a wilfully occupied land area can also be registered as a state property, if it meets qualifications of registration as a private property. Taking into account the lengthy procedure for registration of wilfully occupied lands, an interested party may not be able to ensure registration within the one year period. 

What should be done/recommendations

The state should start implementation of the already approved strategy of land registration. Specifically, there already exists Strategy of Land Registration and Refinement of Cadastral Data in the Pilot Areas, approved by the order N106 of the Minister of Justice, issued on 29 October 2015. It is unclear to us why the state supports two contradicting approaches. Unlike the initiated draft law, the strategy takes into account solutions to the existing problems with the land registration and offers more uniform vision, balancing public and private interests:

  • The strategy envisions offering land mapping surveys and registration procedures for free in the pilot areas. The existing voluntary, individual and costly procedures will be replaced with a systemic and obligatory registration program.
  • A possibility for simplified procedure for property registration in cases of agreements with incomplete documents or improper procedures is taken into account in a way that balances interests of all interested parties.
  • The strategy also envisions alternative mechanisms of dispute settlement in cases of disagreements regarding land area borders, as well as, implementation of reforms to improve surveys and mapping of lands and licensing of the industry. This will decrease number of disputes regarding overlapping borders and other issues to a minimum.
  • Information campaign, as well as alternative methods of mediation for simple and effective settlement of disputes and other complex approaches, are envisioned during the implementation of the strategy.

We believe, that if this strategy and activities envisioned in it are implemented correctly, a complete registration and cadastral database will emerge and the land reform which started in 1990es will finally be completed. It is noteworthy that the Public Registry has also already prepared a draft law On Systemic Registration of Land Rights and Refinement of Cadastral Database. Therefore, it is unclear why the already planned reform was substituted with the amendments to the law On Public Registry.

According to the Minister of Justice Tea Tsulukiani, the initiated draft law is a part of the land reform and along with it several incentivizing norms will be initiated in the Parliament. However if the government was planning on initiating other amendments to the legislation, it is not clear why it didn’t address the Parliament with a legislative package and why it was asking for expedited review of the initiated draft law.

Transparency International Georgia calls on the Government of Georgia to recall the initiated draft law that contains serious risks of unduly limitations to interests of individuals and not to seek fast and shallow solutions to the problem. We hope, the Government of Georgia will pursue the land reform through the consistent methods defined in the strategy, ensuring creation of a complete registration and cadastral database.  

 

Author: TI Georgia