1. LAND REGISTRIES AND FRAUD PREVENTION Prof. Nicolás Nogueroles Peiró Secretary General of IPRA-CINDER Washington, 24 th March 2015 2015 Annual World Bank Conference and Land and Poverty Conference

2. 2 de 13 1. Introduction 2. Setting up land registries against fraud 3. The new technologies as an instrument against fraud 4. Fraud from a purchase made before the construction of the building 5. Identity fraud and power of attorney 6. The double sale. The classic fraud 7. Money laundering. Land and Business Registries 8. Land registration and tax fraud 9. Conclusions

3. 3 de 13 1. INTRODUCTION Land Registration has always been linked to fraud prevention Fraud prevention is a cornerstone Promoting secure transactions and avoiding fraud are inseparably joined Against fraud a bad registry is better than none at all.

4. 4 de 13 2.1 Absolute fraud prevention is unattainable a)be rendered more difficult b)detection more probable 2.2 Imperfect information a)about the owner -----------------------------------  double sale b)about the rights or encumbrances ------------  free of charges 2.3 Setting up the systems England. First Report Law of Real Property 1829. Eight different frauds could be avoided France. De Courdemanche 1821 imperfect registry. 38 cases of possible fraud Australia. R. Torrens 1857. Duplicate method of certificates to avoid fraud. Same property mortgaged to 14 different persons (Downs). 2. SETTING UP LAND REGISTRIES AGAINST FRAUD

5. 5 de 13 Some debates have lost importance (real/personal folio) Great help to avoid or minimize frauds (identity) The “registration gap” solved. Black period disappears 3. THE NEW TECHNOLOGIES AS AN INSTRUMENT AGAINST FRAUD

6. 6 de 13 4. FRAUD FROM A PURCHASE MADE BEFORE THE CONTRUCTION OF THE BUILDING (I) 4.1 Situation: Building is a project and Land Registry does not reflect anything 4.2. Risks: absolute control of this situation a) set up a condominium b) mortgage credit and distribute it c) spend the money but not on the construction 4.3. Problem: the builder is unable to finish the promised flats. Economic Crisis, Bankruptcy

7. 7 de 13 4. FRAUD FROM A PURCHASE MADE BEFORE THE CONTRUCTION OF THE BUILDING (II) 4.4. Remedies. a) Insurance. 1.This obligation has been considered essential. The contract can be annulled 2.What quantities are guaranteed? 3.Can the insurance company be sued without sueing the builder? Autonomous guarantee 4.Is it possible to limit the guarantee of the amounts? 5.Personal liability of the builders if they don´t contract the insurance policy. b) Land Registry Reflect the situation in the Land Registry 1.It is not a real right 2.The builder is the owner 3.High costs of administering

8. 8 de 13 5. IDENTITY FRAUD AND POWER OF ATTORNEY Need of information of the registry before signing a deed. In some systems it is compulsory. 5.1 Fraud identity. Same problem everywhere. a)Problem previous to registration b)New technologies the best aid to reduce identity fraud c)Forged deed a challenge to the protection given by the registry 5.2 Power of attorney a)Registration of power of attorney compulsory b)Control of powers of attorney c)New technologies can help to notify the owner

9. 9 de 13 6. THE DOUBLE SALE. THE CLASSIC FRAUD 6.1 Decisive role of the Land registry in solving this issue 6.2 One of the reasons to set up a Land Registration system. 6.3Two ways of solving the issue: a)using a priority principle b)using an accuracy principle fraud 6.4 Good faith becomes a central issue to avoid using the Land Registry to commit a fraud

10. 10 de 13 7. MONEY LAUNDERING. LAND AND BUSINESS REGISTRIES Money laundering is channeled through real estate purchases and using company structures (off shore) a) Business Registries 1.All transfers of shares or participations should be reflected in the business registry (France, Germany,Italy). 2.Electronic legalization of companies books at the end of the financial year 3.Providing information to the authorities b) Land Registry 1.Creation of specialized centers to analyze the information coming from the Land Registry 2. Specific cases listed to be informed to the authorities (price sale exceeds €300.000 in cash paid without mortgage)

11. 11 de 13 Land Registry as a tool to enforce taxes. Two alternatives: a)closing the access to the Land registry b)providing information to the tax authorities. Property Tax as an overriding interest. 8. LAND REGISTRATION AND TAX FRAUD

12. 12 de 13 IPRA-CINDER Congress 1.Interconnection through a secure channel between those who draft deeds and the Land Registries using new technologies 2.Online verification of documents presented 3.Instant alerts via email or cellphone. 4.Blocking the entries related to certain properties requested by the owner The legal technology of the 19th century adapted to the present thanks to the new technologies. 9. CONCLUSION

13. THANK YOU VERY MUCH FOR YOUR ATTENTION