Registering Property Using information to curb corruption - Doing Business

 
Doing Business 2018

Registering
Property
Using information to curb corruption

Transparency is a key element of the quality of land administration systems.                   ƒƒ Transparency of information provided
Transparency eliminates asymmetrical information between users and officials                      by land administration systems can
with respect to services provided by the land administration, thereby increasing                  reduce transaction costs and facilitate
the efficiency of the real estate market. Transparent systems also strengthen                     investment in immovable property.
public confidence in governments and facilitate substantial reductions in the cost
                                                                                               ƒƒ In economies where information
of doing business.
                                                                                                  on fee schedules and documentary
                                                                                                  requirements is easily available,
                                                                                                  the process of completing property
In 2013 Transparency International              As a component of its registering
                                                                                                  transfers tends to be more efficient.
reported that one in five users of land         property indicator set, Doing Business
services globally claimed to have paid a        has measured the transparency of land          ƒƒ Since 2013, 25 economies have
bribe for services such as registering a        administration systems for the past four          become more transparent by launching
land title or obtaining updated property        years.3 This research has focused on              websites, publishing fee schedules,
ownership information. The prevalence           whether information concerning the own-           setting time limits and implementing
of bribery in the land sector creates           ership and physical location of a property        specific complaint mechanisms.
a substantial informal cost for those           is public, whether essential information
trying to register or transfer land. For        on the property transfer process is made       ƒƒ In 51 economies, the only way to
                                                                                                  obtain information about documentary
those unable to afford illegal payments,        accessible, if there is an independent
                                                                                                  requirements for property registration
it can also reduce access to land admin-        and specific complaint mechanism to
                                                                                                  is by having an in-person interaction
istration services, hindering property          respond to issues raised by land registry
                                                                                                  with a public official.
registration and increasing land tenure         users and whether statistics on property
informality. In addition to bribes, cor-        transfers in the largest business city of an   ƒƒ Property-specific and independent
ruption can take the form of land record        economy are published.4                           complaint mechanisms are not
fraud or alteration, land document forg-                                                          common around the globe, indicating
ery and multiple allocations of the same        Since 2013, 25 economies have improved            an area for improvement to increase
plot of land. Officials may also leverage       transparency by launching websites,               transparency.
their position to benefit from parties          publishing fee schedules, setting time
with an interest in acquiring, disposing        limits and implementing specific com-          ƒƒ A transparent land administration
of and developing land.1                        plaint mechanisms. Senegal introduced             system reduces opportunities for
                                                a comprehensive website for its land              corruption.
Integral components of a transparent            administration system, which includes a
and efficient land administration system        list of procedures, required documents,
include easy access to clear and credible       service standards and official fees to
information on property ownership, open         complete any property transaction.5
public access to information on proce-          Similarly, Qatar and Guyana have
dures and fees for public services as well as   increased transparency in their land
active public dissemination of regulations      administration systems by expanding
affecting land rights. These measures can       web-based land administration portals
reduce corruption and increase account-         to include dedicated and comprehensive
ability of land administration authorities.2    sections on the services provided.6, 7
52   DOING BUSINESS 2018

                                                                   The documentary requirements for land                 transfer of ownership—should be clearly
     ACCESS TO INFORMATION                                         registration should also be made available            specified, including the timeframes for
     DURING DUE DILIGENCE                                          to the public. Parties involved in a property         their completion. This allows the public
                                                                   transaction can streamline their interac-             to know beforehand what level of service
     Information on the property, the parties                      tions with the agency in charge of prop-              they can expect to receive, how much
     and the transfer process is fundamental                       erty registration if they know beforehand             it will cost and how long it will take.
     for a property transaction to occur.                          what documents they will be required                  Moreover, by providing clear public guide-
     Buyers and sellers will only be able to                       to submit. This greatly reduces the risk              lines, governments set the standard for
     make informed decisions when this infor-                      of unforeseen delays or obstacles to                  accountability of services offered by their
     mation is widely available, either at a low                   submitting a property transfer—including              land administration systems. Land registry
     cost or free of charge. The parties should                    the incidence of informal payments.                   services that lack established timeframes
     know the costs, required documents and                        When the list of required documents                   for completion can foster corruption in the
     the expected duration of the transfer pro-                    is public and complete, for example,                  form of bribes. An official might purposely
     cess before the transaction takes place.                      the likelihood that the parties would be              delay registration, for example, to encour-
     Although these conditions are necessary                       requested to come back with additional                age clients to make facilitation payments
     for a sound land administration, whether                      documents is reduced, expediting the                  to accelerate the process. Furthermore, in
     an agency can deliver its services with                       registration process.                                 the absence of enforced time limits, land
     efficiency and accountability depends on                                                                            registry users are unable to monitor the
     other variables such as the capacity and                      Transparency of documentary require-                  status of their transactions.
     reliability of its infrastructure.                            ments may also simplify a transaction by
                                                                   potentially reducing the need to resort               Service standards at land registries are
     Around the world, 158 economies publish                       to third-party professionals to prepare a             rare. Land registry users are not aware
     fee schedules for services offered at the                     property transfer application (figure 6.1). In        of any specific time limits promulgated
     land registry. If a fee schedule is public,                   51 economies, the only way to obtain infor-           by law in 122 economies covered by
     it is also likely to be available online. In                  mation about documentary requirements                 Doing Business. In addition, economies
     131 economies, this information can be                        for property registration is by having an             that do not establish service standards,
     accessed through a dedicated website.                         in-person interaction with a public official.         such as specific time limits, tend to com-
     Although the use of online platforms is                       In Zambia, for example, where the list of             plete property transfers less efficiently
     common in high-income economies—                              required documents is not publicly avail-             (figure 6.2).
     where 80% publish fees on websites—                           able, a lawyer is hired to complete most of
     only a third of low-income economies have                     the property transfer steps for a commer-             The Land Revenues Office charter,
     such portals. One example is Zimbabwe.                        cial warehouse, costing an entrepreneur an            published in June 2013 by Nepal’s
     In 2016, the economy launched an official                     additional 2.5% of the property value.                Department of Land Reform and
     website that includes a list of documents                                                                           Management, provides a good example
     and fees required to complete a land                          To promote full transparency, in addi-                of how to set effective time limits. The
     transaction, as well as a specific time                       tion to document and fee schedules, all               charter contains a comprehensive list of
     frame for delivering legally-binding docu-                    services provided by land registries—such             services provided by the Land Revenue
     ments proving property ownership.                             as title search, ownership certificate or             Office, the list of documents needed to

     FIGURE 6.1        Transparency in land systems can bring efficiency gains
         Average cost to transfer property (% of property value)                              Average time to transfer property (days)
         8                                                                                    100
         7
                                                                                               80
         6
         5                                                                                     60
         4
         3                                                                                     40

         2
                                                                                               20
         1
         0                                                                                      0
                  Documentary requirements         Documentary requirements                              Documentary requirements        Documentary requirements
                    not publicly available             publicly available                                  not publicly available            publicly available

      Source: Doing Business database.
REGISTERING PROPERTY          53

FIGURE 6.2 Economies that publish effective time limits tend to be more efficient in                                 kept in the land registry. In those econo-
completing property transfers                                                                                        mies, parties must hire an authorized pro-
                                                                                                                     fessional to obtain ownership information,
       Average time to complete property transfer (days)
                                                                                                                     making the process more burdensome.
       70
                                                                                                                     In both cases, the agency in charge of
       60                                                                                                            registering immovable property can reject
                                                                                                                     applications to access and retrieve owner-
       50
                                                                                                                     ship information on a discretionary basis.
       40                                                                                                            Public access should be embedded in land
       30
                                                                                                                     administration systems.

       20                                                                                                            Among the economies covered by Doing
       10                                                                                                            Business, more than 70% of upper-middle
                                                                                                                     -income and high-income economies
        0
                                                                                                                     make information on property ownership
                  Economies without service standards           Economies with service standards
                                                                                                                     available to the public, whether for a nomi-
                                                                                                                     nal fee or free of charge. By contrast, only
 Source: Doing Business database.                                                                                    50% of low-income economies open their
                                                                                                                     records on land ownership to the public.
complete each service, the applicable                      its owners or creditors—helps to elimi-                   Globally, information about land owner-
fees and the effective deadline within                     nate uncertainty over property rights                     ship is restricted to intermediaries and
which the agency commits to deliver spe-                   or obligations that may encumber the                      interested parties in 31% of economies.
cific services. Similarly, the government                  property. In the absence of any public                    In 27 out of 190 economies—including
of Thailand established a one-day service                  records or any related rights to a prop-                  Chile, Poland and the United States—this
standard to register property transac-                     erty, the transaction costs can become                    information is freely available (figure 6.3).
tions. To comply with this commitment,                     overwhelming, risking that ownership
the number of staff is determined based                    becomes untraceable.                                      Because cadastral maps do not usually
on the average number of transactions,                                                                               contain any personal information about
preventing delays.8                                        In 127 of the 190 economies covered by                    the property owner, privacy concerns do
                                                           Doing Business, the information recorded                  not typically impact mapping agencies.
                                                           by the land registry is openly available to               However, the number of economies
ACCESS TO INFORMATION                                      the public. In the remaining economies,                   offering open access to maps is similar to
DURING A PROPERTY                                          mainly because of privacy concerns, only                  the ones with open ownership informa-
TRANSACTION                                                owners or third parties who prove legiti-                 tion.10 Overall, among the economies
                                                           mate interest can access the information                  covered by Doing Business, 33% do not
Land administration is defined by the
United Nations Economic Commission
                                                           FIGURE 6.3 Citizens in low-income economies have limited access to land
for Europe (UNECE) as “the processes of
                                                           ownership information
determining, recording and disseminat-
ing information about the ownership,                          Share of economies by type of access to land records (%)
value and use of land when implementing                       60

land management policies.”9 One of the                        50
major roles of a land registry is to make
                                                              40
land transactions public. By doing so,
it safeguards the interests of all parties                    30

involved in sales or leases.                                  20

                                                              10
When parties engage in a prop-
erty transaction, it is essential that                         0
                                                                        Anyone who pays         Freely accessible         Only intermediaries      Records not publicly
they obtain legally reliable information                                   official fee             to public            and interested parties         available

regarding the actual property involved                              Low income             Lower middle income               Upper middle income             High income
in the transaction. The availability of
information on the property—as well as                      Source: Doing Business database.
54   DOING BUSINESS 2018

     make information on land boundaries           (figure 6.4). Globally, 22 economies offer              Ombudsman, an official responsible for
     publicly available. Sweden, on the other      complaint mechanisms in their cadastre                  following up on all complaints, whose duty
     hand, has an online system allowing           or mapping agency. Doing Business data                  is to report to the lands ministry as well as
     anyone to freely access property owner-       suggest that this is one of the areas                   the client within 30 days.
     ship information and maps dating back         with the most room for improvement
     400 years.11                                  worldwide.                                              Governments can keep their stakeholders
                                                                                                           engaged by collecting and publishing sta-
                                                   An independent and specific complaint                   tistics on land transactions. Transaction
     ACCESS TO INFORMATION                         mechanism is important in the fight                     statistics benefit regulators as well as the
     AFTER COMPLETION OF A                         against corruption. A study by Transparency             real estate sector, serving as a data analy-
     PROPERTY TRANSACTION                          International conducted in Burundi, Kenya,              sis tool for policy makers to monitor the
                                                   Rwanda, Tanzania and Uganda found that                  real estate market. Currently, 122 econo-
     After property transactions are com-          about 90% of respondents that encoun-                   mies covered by Doing Business publish
     pleted, it is important to provide citizens   tered a bribery incident did not report it              statistics on land transactions. In Japan,
     with a safe environment where they            or make a complaint to any authority or                 for example, data on land transactions are
     can register complaints. Unlike courts,       official; the reasons differed from econ-               published monthly at the municipal level.
     an informal structure allows users to         omy to economy. In Kenya, most of the                   In the United Arab Emirates, numbers on
     be more forthcoming about possible            respondents indicated that they did not                 land transactions in Dubai are compiled
     abuses, relieving the courts of additional    know where to report the incident, while                daily and published on the land registry’s
     cases. In addition to allowing citizens       in Tanzania most felt that no action would              web portal.
     to contribute to a better business envi-      be taken to resolve their complaint.13
     ronment, an independent and specific          As of June 2017 it was possible to file a
     mechanism for filing complaints would         complaint online in only 19 economies                   REDUCING OPPORTUNITIES
     also help governments to track issues         covered by Doing Business. The Singapore                FOR CORRUPTION THROUGH
     and respond accordingly.12                    Land Authority recently introduced a web                TRANSPARENCY
                                                   portal to file complaints about any issues
     Such complaint mechanisms promote             related to their services. The Swedish                  Transparency in a land administration
     three desired outcomes. First, the rights     Land and Cadastral Authority introduced                 system provides a defense against
     of citizens are safeguarded against any       a new mechanism for filing complaints                   bribes intended to expedite the process
     sub-standard service—whether by mis-          regarding errors identified on maps of land             of registering property, changing a title,
     take or fault—provided by the land reg-       plots.14 Similarly, Guatemala and Vanuatu               acquiring information on land or pro-
     istry. Consequently, citizens can expect      have successfully implemented alternative               cessing cadastral surveys. Corruption in
     the land registry to provide services in      offline solutions. In Guatemala, an agency              land administration can result in fraudu-
     accordance with the applicable rules and      within the public ministry investigates                 lent land transfers, undermine public
     service guidelines. Second, citizens can      claims related to the land registry. In                 confidence in existing land rights while
     have more confidence in a land tenure         2014 Vanuatu appointed the first Land’s                 reducing investment and formal land
     governance system where information
     is transparent and the officials providing
     land transfer services are held account-      FIGURE 6.4 Most economies do not provide an independent and specific complaint
     able for their actions. Third, candid feed-   mechanism for land registry issues
     back can help improve the administrative
                                                      Share of economies with land registry complaint mechanism (%)
     tasks performed by the land registry,            25
     resulting in a higher quality of service.
                                                       20
     Only 24 economies measured by Doing
                                                       15
     Business have established complaint
     mechanisms that improve the overall               10
     quality of land registries; half of these
                                                        5
     (12) are OECD high-income economies
     or East Asia and the Pacific economies.            0
     Such complaint mechanisms are not in                      East Asia    OECD high Latin America Europe & Sub-Saharan Middle East South Asia
                                                               & Pacific     income    & Caribbean Central Asia Africa  & North Africa
     place in any of the economies of South
     Asia or the Middle East and North Africa
                                                    Source: Doing Business database.
REGISTERING PROPERTY               55

registration.15 Such corrupt behaviors          FIGURE 6.5 A more transparent land administration system is associated with a
spur inefficient land ownership, with           lower incidence of bribery at the land registry
land being owned by those most able to
                                                     Reported incidence of bribery at land registry (%)
participate in corrupt activities.16
                                                     30

Furthermore, corruption and abuse of                 25

power can hinder the development of the              20
real estate market. It can have adverse              15
consequences on the business climate
                                                     10
and economic activities by increasing the
costs of doing business, thus undermin-               5
ing private sector confidence. High costs,            0
together with inefficient procedures                            0–0.9            1–1.9          2–2.9            3–3.9          4–4.9              5–6
                                                                                   Score on transparency of information index (0–6)
discourage people from registering land
transactions, steering them instead into         Sources: Doing Business database; Transparency International data (https://www.transparency.org/gcb2013).
                                                 Note: The analysis is based on data collected for the 95 economies covered in 2013/14 by both Doing Business
the informal land market. Corruption             and Transparency International’s Global Corruption Barometer 2013. The relationship is significant at the 1% level
in land management can have a direct             after controlling for income per capita.

negative impact on business operations.
                                                confidence in them. Having well-defined                      12. The registering property indicator set only
                                                                                                                 considers dispute resolution mechanisms that
To be successfully deployed, full-fledged       rules and standards—in addition to a safe
                                                                                                                 (i) have been designed specifically to cover
land reforms are time-consuming, costly,        environment to censure wrongdoing—is                             the services provided by the agency in charge
demanding an immense effort from gov-           essential to ensure quality and efficiency                       of land registration and (ii) are managed by
                                                                                                                 a body that is independent from the agency
ernments and stakeholders. But a trans-         in the administration of land tenure rights.
                                                                                                                 in charge. These requirements are essential
parent land administration system—one                                                                            in constituting an efficient, fair and legitimate
in which all land-related information is                                                                         governance system over land tenure rights.
                                                                                                             13. Transparency International 2014.
publicly available, all procedures regarding    NOTES                                                        14. For more on Sweden’s mechanism for filing
property transactions are clearly docu-                                                                          complaints regarding errors identified on maps
mented and information on fees for public       This case study was written by Yuriy Valentinovich               of land plots, see http://www.sla.gov.sg/.
                                                Avramov, Albert Nogués i Comas, Laura Diniz,                 15. Transparency International 2013.
services is easy to access—minimizes
                                                Brendan Meighan, Esperanza Pastor Nunes and                  16. Søreide and Williams 2014.
the opportunities for informal payments         Geyi Zheng.                                                  17. Peisakhin 2012; Rose-Ackerman 2004.
and abuses of the system. Indeed, cross-        1.  Kakai 2012; Obala and Mattingly 2014.
country data show that the greater the          2.  Zakout, Wehrmann and Törhönen 2006.
quality and transparency of a land admin-       3.  For more information on the transparency of
                                                    information index, see the data notes available
istration system, the lower the incidence           at http://www.doingbusiness.org.
of bribery at the land registry (figure 6.5).   4. In 11 economies with a population of more
                                                    than 100 million as of 2013, Doing Business
                                                    also collects data for the second largest
                                                    business city.
CONCLUSION                                      5. For more on Senegal’s land administration
                                                    system, see http://www.impotsetdomaines
                                                    .gouv.sn/fr/demarches-affaires-domaniales
Transparency is one of the most impor-              -cadastres.
tant tools for combating corruption—it is       6. For more on Qatar’s web portal, see https://
the basic pillar of enhancing the quality           sak.gov.qa/.
                                                7. For more on Guyana’s efforts to increase
of land administration.17 Moreover, rather          transparency in land administration, see
than serving as a complementary tool,               http://minbusiness.gov.gy/doing-business/3
transparency should be considered as                -how-to-get-property/.
                                                8. Zakout, Wehrmann and Törhönen 2006.
a key component when designing land             9. UNECE 1996.
policies. It is crucial that citizens have      10. According to Doing Business data, 129
complete access to official land informa-           economies provide for open access to maps
                                                    recorded at the agency in charge of surveying
tion, regulations and applicable fees. By           privately held land plots, while 127 economies
establishing mechanisms that shield                 provide for open access to ownership
citizens from informal payments or other            information recorded at the land registry.
                                                11. For more information on Sweden’s mapping,
abuses, governments not only strengthen             cadastral and land registration authority, see
institutions but also increase the public’s         http://www.lantmateriet.se.
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