Sri Lanka's innovative conveyancing method was created to establish land title without changes to the registration system.
A former member of the Supreme Court of Justice Dr A.R.B. Amerasinghe believed that changes to property rights require a deep local knowledge of the de facto property rights methods and their environment. He was confident that marketability did not depend on registration alone and this was the strategy behind the scheme he invented.
He comprehensively analyzed the causes of defects in land title both in the United States and in Sri Lanka on a comparative basis, discussed the subject with many title insurance professionals in the United States and thereafter proposed remedies for lands with shared interest and customary rights which elevated them to being credit worthy. It was not a case of transplanting the American solution as many have misunderstood. The name given to the scheme was Defective Title Insurance and it is very different to the well known title insurance practiced in USA.
The insurance scheme formalized the land ownership. Deeds and plans were registered under the Deed registration system under a special system of deeds referred to as Declaration deeds and as a consequence the insurance scheme unexpectedly created a functional property rights regime which gradually converted unmarketable land title to marketable title. About 200 000 parcels of land were registered under the system of insurance.
Solutions to support the Torrens system.
Dr A.R.B.Amerasinghe had the vision and the intellectual skill to invent the said conveyancing process which helped the implementation of the Torrens system. Certain ethnic groups in developing nations like Sri Lanka have statutory land rights which are shared interest, trusts and customary rights, which date back to the early 19th century. Repeal of these laws to accommodate the Torrens system may violate the fundamental rights of those who are governed by the statutes.
An insurance scheme is presently in place to resolve the above problem as the certificate issued under the Torrens system, known as the Second Class certificates for the said lands governed by statutory customary provisions, is not acceptable to banks. This may be the first time that an insurance scheme is operating to support the Torrens system.
Guarantee fund
Another major problem for developing nations is the guarantee fund that needs to be created to implement the Torrens system. The guarantee fund is an essential component of the Torrens system which the governments of developing countries will not be able to afford, it would only be a statutory provision which will not be operative due to the lack of resources.
Those of us engaged in implementing the system in Sri Lanka are now looking at the possibility of a better insurance scheme to support the Torrens fund. The following paper written by Professor of Law of the University of Monash Pamela O Connor under Double Indemnity and Title Insurance gives the insurance method to over come this problem.
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