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Gatwala Commercial Hub , Faisalabad is Punjab’s biggest and Pakistan’s second largest mixed use, real estate project. It has a covered area of over 3.1 million sq. ft.

This mega project, designed and developed by Shah Nawaz Associates, is located, at the junction of Canal Expressway and Lahore Sheikhupura Road. The road in front of the GCH project, has an average traffic count of 30 vehicles per minute. become, the city’s next mega center for trade, commerce, industries as well as residential projects.

 

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Land Registration System in Pakistan: History and Challenges

Introduction

Land Registration System is devised for comprehensive record-keeping of the documents related to ownership, possession, and other property rights. The methods provide formal records for evidence of title, facilitate transactions, and prevent unlawful disposal of land. To understand the land registration system, it is vital to comprehend the meaning of land concerning the property. According to the law, ‘Immovable Property’ means land, buildings, benefits arising from the land, things attached to the earth, and things permanently fastened to anything connected to the planet. Moreover, land and property are used interchangeably in Pakistan. After the promulgation of the 18th Amendment in 2010, the property became a provincial subject, which means it is regulated by the provinces instead of the Federal Government. Apart from provincial regulations, the Land Registration System is bifurcated into rural and urban systems. The law is primarily based on the colonial Deeds Registration System, which records the ‘sale deed’ as an instrument of title. This reiterates the importance of due diligence in real estate transactions because the system does not provide the title ownership or interest in the property. The absence of a centralised land register and database leads to financial crimes. It creates room for malpractices by third parties, i.e., brokers and sham agents, leading to a ‘capital trap’ for the uninformed investor.

This article by the Iqbal Institute of Policy Study will discuss the Land Registration System of Pakistan in detail. The article will focus on the land administration framework, the history of the land registration system, and the challenges the present system faces.

 

Land Administration Framework

The manual process of Registration of land [property] contains six steps and a time of 2 months. The rate of stamp duty is also a high cost to consider in the registration of deeds, which varies across provinces. For example, stamp duty for registration of deeds costs 5% of the total property value in Punjab. The process starts with hiring a lawyer to draft the transaction Instrument on stamp paper. The said document is presented to the Land Registrar for verification. The owner is required to submit the copy to the Board of Revenue, or the patwari, to enter the record of mutation in the Record of Rights (Jamabandi). The patwari issues an excerpt of the Record of Rights, proving ownership. However, the province of Punjab has revolutionised its land registration system through the digitisation of land records. The Punjab Land Records Management and Information Systems (LRMIS)  scanned 10 million pages of old documents digitized around 55 million landowners’ records, making it 98% of all documents. They made all rural land title information available online for landowners.

Digitisation of land records has made the land registration process efficient and cost-effective. However, investors’ issues related to verification and inspection of property persist to date. With the recent trends of digitisation in the real estate sector, Digital Property Verification System is the best way to facilitate the Land Registration System of Pakistan. It will create awareness amongst the people and ensure quick access to information to the investors. A Digital Database will eliminate the influence of third parties, i.e., brokers and patwaris. It will ensure transparency in real estate transactions and reduce the incidents of malpractices. The simplified processes of verification and inspection of property through digitisation will eradicate the prevalent practice of bribery.

 

History of Land Registration System

The Land Registration System of Pakistan has colonial origins and is based upon the British Deeds Registration System. The basic purpose of this system was to make a depository or storehouse, to record registered instruments. This system was adequate for the pre-industrial world, where land was primarily used for agricultural purposes. The British adopted this system in the subcontinent to levy taxes through the revenue department. However, as the interests in land expanded, the need for a more structured method of land registration became evident. For example, the Deeds Registration System does not provide a record of the title of the land. Instead, it gives the title of the registered deed. Thus, the complete details and evidence of land rights are practically inaccessible for due diligence purposes. This has resulted in the increasing backlog of land-related disputes in the courts of Pakistan.  It is estimated that around 1 million land cases are pending before the courts nationwide. Significant causes of land disputes are inaccurate and forged land records, incorrect boundary descriptions by the patwaris that create overlapping claims, and multiple registrations to the same land by different parties.

Moreover, England abandoned the Deeds Registration System in 2002, bypassing the Land Regis­tration Act, based on the Torrens System.   The new system records the titles of land and facilitates investors. For example, an investor can access the digital register and search for ownership details to navigate the title of the land. Similarly, the Government of Pakistan has made significant progress by the digitisation of Land Records on a provincial level. However, the tedious process of conveying property and the absence of a digital database for property verification make it challenging to enter into safe and secure transactions.

 

Challenges

The Land Registration System of Pakistan is archaic and inefficient. One of the main challenges investors face is the time-consuming registration process. The system gives immense power to patwaris (Junior Revenue Officers) for demarcation of boundaries of land parcels, conflict resolution, land surveys, and in some cases, register land ownership, transactions, and mutations of records. A patwari has custody of original land records in 17 individual registers. Therefore, bribery and corruption are prevalent, which leads to malpractices in real estate transactions. Inexperienced investors’ lack of access to information leads to sham transactions, resulting in ‘capital traps.’ A famous statement by Lord Acton perfectly describes the monopoly of patwaris: “Power corrupts, and absolute power corrupts absolutely.”

The Deeds Registration System has given absolute and concentrated power to patwaris. Brokers and property dealers exploit the other loopholes in the system. The comprehensive list of documents required to affirm the legality of the land or real estate project makes the procedure time-consuming. This increases the additional costs of obtaining documents for the particular investment opportunity. Due to an unregulated real estate market and inexperienced investors, the “capital trap” has become a significant issue in real estate transactions. The overhaul of the current registration framework and awareness of property rights are crucial for eradicating unethical corporate practices. Digital Verification System is the only alternative to know about the true character of the land and to restore investors’ confidence in the real estate market.

 

Conclusion

Pakistan needs an overhaul of the Land Registration System. The traditional Deeds Registration System is archaic and inefficient. The biggest drawback of the present system is the lack of a centralised land register or database which enlists proper procedures for the public. Digitisation has disrupted the real estate industry through fast-paced technologies like proptech, contech, and fintech. Pakistan has also digitised the land records at the provincial level, but the root cause of majority property disputes is the non-availability of the title record.

In contrast, the Deeds Registration System records the title of the registration instrument, i.e., sale deed. Moreover, Patwaris have a lot of concentrated power, which leads to malpractices and corruption. Pakistan needs a digital system for property verification to ensure safe and secure transactions. This will provide quick access to information for the public and inexperienced investors and dilute the power of patwaris. Furthermore, the Deeds Registration System has colonial origins, established to levy tax on property. The evolving trends in the real estate industry have made this system highly ineffective for present-day Pakistan.

 

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