By Dr Lawrence A Joseph
Whenever banks, credit unions and other financial institutions give consideration to making loans to individuals, they always ensure that these individuals possess adequate security. Real property such as land and buildings are often accepted by these financial institutions as security.
However, in the event that borrowers cannot pay back their loans, institutions may only be able to be adequately compensated if borrowers have good title to mortgaged properties.
For example, if there is any prior mortgage on any property in question, then whoever is the mortgagee of that prior mortgage would have priority over the proceeds of any sale of that property. If a court judgment has been obtained against the owner of a particular property, then that judgment would have priority over any subsequent mortgage. Court judgments remain alive for a period of 12 years and they do not necessarily have to relate to an issue concerning the property in question.
Financial institutions therefore generally undertake the necessary research to ensure that the purported owner or owners of properties do have good title to properties which they advance as security. In fact one of the major drawbacks concerning the inability of persons to obtain loans from financial institutions, is the fact that these persons cannot show that they have good title to their properties.
Certain existing situations conspire to make it very difficult if not impossible for persons to show good title. These situations need to be addressed in order to resolve some of these issues. It is posited that when once it becomes easier for persons to obtain loans in order to build homes or set up businesses, more economic activity would be created which would inevitably give rise to more opportunities for employment and economic growth.
Attorneys for financial institutions engage their research clerks to do the necessary research at the Deeds and Land Registry. Research clerks review all documentation pertaining to the particular property over a period of 60 years. Once the title to the property runs smoothly over this period and there are no mortgages or other encumbrances relating to the property or the owner or owners of the property, then the property is considered to have a good root of title. The financial institution to which an application is made for a loan would then have a good basis for granting a loan.
One question which needs to be asked is: Is it really necessary for a research clerk to look back over a period of 60 years in order to determine if there is good title in a property? This 60 year period is not provided for in any legislation, however over the years this period was adopted as a common law principle. At the moment, with the dilapidated state of the books which are used for recording deeds at the Deeds and Land registry, research clerks encounter serious problems, especially when they have to go back over 60 years.
In many instances, records for certain years are not reliable. It is therefore suggested that the necessary legislation be passed in order to shorten the period of research to be done in order to establish good title. Consultations with experienced clerks at the registry suggest that a period of 40 years seems to be reasonable.
It is also suggested that legislation may also be used to establish how persons claiming land by statutory declaration may obtain good title to land. There are many instances where persons have been living on properties which have been handed down to them through many generations and at the moment they cannot establish a good root of title. This situation prevails on the islands of Carriacou and Petite Martinique, and to a large extent on mainland Grenada.
Legislation therefore would be able to resolve the present difficulties which potential borrowers face when they make applications for loans. Once these difficulties are removed or minimised, then it would be a step in the right direction for economic development and growth.