Buy land, but be careful not to get ‘landed’ | Daily News

Buy land, but be careful not to get ‘landed’

Supreme Court complex
Supreme Court complex

There is an array of shenanigans that property sellers engage in sometimes, but it’s the buyers that are adversely affected. Some buyers may be totally unaware of what a seller is up to, and a seller’s fraud should not adversely affect a buyer — at least whenever such can be avoided.

The law however cannot protect everyone, and sometimes it seems the diligent are better poised to be protected by the operation. The following is a classic case of a buyer who was caught unawares, but still asserted his rights.

One Sumanalatha Kodikara had by deed previously transferred her land to two parties on two separate occasions, and one of these two parties respectively sold his land to the respondent and the appellant in two separate transfers, in a case that ended up in the Supreme Court. However, only the Respondent had registered the Deed of transfer.

On appeal, the Judges of the Supreme Court at the outset set out to resolve two issues:

1. Whether Sumanalatha Kodikara and one Malcolm Jayatissa Kodikara were original co-owners of the property in question.

2. Whether the concept of prior registration would apply in respect of an undivided share in terms of Section 7 of Registration of Documents Ordinance.

The case had done time in the lower Courts, and the appellant who had purchased the land first wanted to assert her rights. Matters eventually ended up in the Apex Court of the land.

Sumanalatha Kodikara had written out one Deed to a certain Lamahewa, and thereafter the said Sumanalatha Kodikara had executed another Deed of Transfer bearing No. 1200 dated 25.02.1980 in favour of one Asela Siriwardena in respect of the same property. Later the said Asela Siriwardena had by Deed No. 9271 dated 25.08.1982 transferred the same property in favour of the appellant. Accordingly, the appellant claimed that she had thus obtained title to the said land by the aforementioned Deed as well as by prescription.

But this same Siriwardena had subsequently also transferred the very same property to the respondent, much later, in 1995.

The respondent in the case before the Supreme Court had produced a Deed of Transfer dated in the year 1962. The contents of the said Deed Indicated that two individuals had purchased the land and derived title as co-owners of the entirety of land called Delgahawatta, Delgalanda and Delgalandawatta situated at Talangama. So it was indubitable that one of the two individuals, the said Sumanalatha Kodikara was the co-owner of the land she had sold to two parties.

However, in the first instance she had sold the land along with the co-owner and in the second instance by herself.

Section 7 of the Registration of Documents Ordinance gives priority to an instrument which is registered and such an instrument would get priority over any other instrument which is not registered, although the previous document is prior considering the time the land connected to it was purchased.

In Lairis Appu v Tennakoon Kumarihamy ((1958) 61 N.L.R. 97) Sinnetamby, J., was of the view that,

“Our Registration Ordinance provides for the registration of documents and not for the registration of titles. If it had been the latter, then, from whatever source the title was derived, registration by itself would give title to the transferee. When, however, provision is made only for the registration of documents of title, the object in its simplest form, is to safeguard a purchaser from a fraud that may be committed on him by the concealment or suppression of an earlier deed by his vendor. The effect of registration is to give the transferee whatever title the vendor had prior to the execution of the earlier unregistered deeds.”

In effect, if the title is not clear, the registration does nothing about that but even so the registration gives the transferee the legal imprimatur that he had indeed bought the land, and if the title is sketchy, along with unclear title and all.

The Judges in the case under review, decided that it is therefore apparent that in a situation, where there is a conflict between a registered and an unregistered Deed, the registered Deed has to be given priority.

It is quite clear that in terms of Section 7(1) of the Registration of Documents Ordinance, an instrument becomes void if it is not duly registered, when there is an adverse claim against the said instrument by virtue of a subsequent instrument, which is duly registered.

Unfortunately for the appellant, though she had purchased the land earlier, she had to contend with the fact that now there was an adverse claim against it by the respondent. So her registered Deed becomes void by virtue of the aforesaid Ordinance.

In other words in laymen’s terms at least, it seems as if the subsequent buyer is considered the innocent party who registered the Deed and protected himself from fraud. The earlier party that had purchased the land — the appellant — had not registered the deed and was therefore in effect deemed negligent and to have lost her claim to the land vis-a-vis the adverse party.

Here is how Court addressed the issue in Judgement:

‘This appears to be a penalty a party has to pay for the non-registration of an instrument, as he has been negligent in protecting his own rights. When considering the provisions contained in Section 7(1) of the Ordinance, it also appears that the intention of the Legislature was to protect the ‘innocent’ second purchaser of the land in question. This aspect was referred to in Samaranayake v Cornelis ((1943) 44 N.L.R. 508), where it was stated that,

“The ordinance does not expressly penalize the purchaser who did not register, nor was that its object probably, for it arrived at protecting the innocent second purchaser, but the result is that the first purchaser pays the penalty.”

What was pertinent was that the appellant herself had by deed got the land transferred to her name by Asela Siriwardena who later sold the same to the respondent. Respondent’s Counsel contended that having obtained a transfer of the land from Asela Siriwardena who bought it from Sumanalatha Kodikara, the appellant cannot now dispute the flow of title from the sole owner Sumanalatha Kodikara to the respondent. Court seemed to agree, except that Court determined Sumanalatha Kodikara was not the sole owner but the co-owner of the land, and had therefore sold only half share of the undivided property.

Rather complicated if not convoluted, but does make sense, at least in a ‘legal sense.’