In real property transactions, avoiding being duped requires more than just the commonly known ways of “detecting fake titles”. Cunning land fraud syndicates have long moved beyond to render these ineffective.
This multi-part educational series aims to provide easy-to-understand techniques in title analysis.
The war against fake titles
When CREBA declared a war against fake titles some 16 years ago, it launched a massive information campaign to augment what little public information was available in terms of the anatomy of a spurious, fraudulent or defective title.
Since then, banks and real estate industry players have become more savvy – taking their “due diligence” title examination processes to higher levels.
This, combined with the subsequent significant successes achieved by the computerization projects of the Land Registration Authority (LRA) and the Department of Environment and Natural Resources (DENR), apparently served to reduce – to some extent – the incidence and gravity of land fraud.
However, the evil persists to victimize the less informed.
Complacency is not an option
While the LRA has succeeded in converting paper land titles into digital images, the conversion process did NOT include verification of the titles for authenticity or regularity – understandably so, as this would have taken decades.
Thus, all the dubious titles that have previously found their way into the records of the Registries of Deeds have been loaded as images into LRA’s digital database. In short, one may say that the existence of a title in that database is no guarantee of legitimacy.
Furthermore, despite the computerization, human intervention still plays a large part in the surveys and titling processes. This serves to undercut the technological gains – by leaving loopholes for land fraud syndicates and their accomplices in government offices to exploit.
Title fraud syndicates
Sometime in October last year, the Senators reportedly called on the Department of Justice to dismantle a title syndicate allegedly operating within the LRA.
What many apparently do not know is that the more sophisticated syndicates do not limit their operations to the LRA or Registries of Deeds, as these offices are NOT the only ones involved in titling. They are just the last stop in a long process.
For instance, the Department of Environment and Natural Resources (DENR) approves land surveys – which are the bases for issuing certificates of titles – and issues various types of patents. The Department of Agrarian Reform (DAR) issues emancipation patents or certificates of land award to agrarian reform beneficiaries. The National Commission for Indigenous Peoples (NCIP) issues ancestral domain titles.
The outputs of these agencies are then registered with the Registry of Deeds as required by law, and subsequently passed on to the LRA.
When the property is highly valuable, the syndicates would spare no expense to get the personnel of all the offices involved in its titling to collaborate with them, in a bid to create a title history that appears legitimate.
Buying undeveloped real property – documents you should examine
When buying raw or undeveloped or underdeveloped land, the buyer should analyze the CONTENTS – not just the form – of the ORIGINALS of essential documents, to determine regularity and consistency with each other.
Inconsistencies among the documents should be cause for suspicion; and a seller who does not have those documents in his possession, or refuses to allow inspection by the buyer, may not be in good faith.
- Original Owner’s Duplicate of the certificate of title, and/or the LRA-issued digital copy of the official Registry Copy, in the name of the seller.
- Copy of the immediately preceding title that was canceled or replaced by the seller’s title. If the cancelation was made within the last decade, that document should be the LRA-issued digital copy.
- Approved Survey Plan (ASP). This is essential to determine whether the property actually exists on the ground.
- Deed of Conveyance (Deed of Sale, or some other conveyance document). This is essential to determine whether the seller acquired the property legitimately.
- Tax Declaration and latest official receipt of the real property tax payment.
- Special Power of Attorney (SPA), if the buyer is dealing with the seller’s agent. This is necessary to determine whether the agent has the proper authority. The agent’s valid ID must have the same details as those contained in the SPA.
- Vicinity Map in proper scale. This will serve as navigation aid when the buyer decides to inspect the property. It should contain the coordinates of at least the first corner of the property, and should preferably have a satellite image or road map as background.
When made available, analyzing these documents would not take much time nor cost money on the buyer’s part.
What of "verification" or "traceback"?
If the analysis of the documents reveals material inconsistencies, but the buyer is still extremely interested, he may proceed to official records verification. This will determine whether those inconsistencies are simply due to innocent mistake, or are more insidious.
To be reliable, the buyer himself, or his trusted representative, should undertake the verification; he should NOT rely on allegedly verified records furnished by the seller.
Official verification requires expense, and takes more time given the bureaucracy in the government offices involved.
The more valuable the property, the deeper the records drill down necessary.
Usually, the older the mother or original title (OCT) from which the current title is supposedly derived, the more time and effort it would take to verify – particularly when the property ostensibly has been involved in several transactions over the years.
The value of the property should be a major consideration in the decision to resort to this process.
That said, verification – one that is comprehensive and exhaustive – is essential when the property is involved in a case or proceeding attacking the validity of the title.
One should bear in mind, however, that verification would be quite pointless if one does not know how to analyze the form, content and significance of the records obtained in the process.
Up next: RED FLAGS
The author, Ms. BOOTS AM BRIOLA, is currently CREBA’s Consultant on Advocacy, Land Titles and Geo-IT matters. She is former Managing Director of CREBA Land Services & Title Warranty Corporation (CREBALAND). Among others, she spearheaded the comprehensive verification and analysis of titling and survey records of properties worth billions of pesos.