HOW ELITE INVESTMENT SUBVERTS LAND TENURE
(c) Gill Maguire 1998 - aka "maggiemay" - link if you wish but notify by e-mail on home page
Why do elite groups subvert land registration systems?
Elites subvert land registration systems mainly in order to avoid tax including capital gains tax, hide land
and assets from the divorce courts, avoid paying rates on unsold subdivision titles or escape consequences of bankruptcies.
The main way that elite groups avoid these costs is to manipulate the transfer of title. This enables
them to both own property and appear not to own it. It is this use of ambiguity of title which
allows wealthy groups to avoid tax.
The reason for this is that wealthy individuals can claim to buy property which they are not actually buying and
can appear to sell property while retaining control of the property.
How do elite groups retain control of property while appearing to sell the property?
They usually achieve this by getting a nominee or nominees to purchase the property, sometimes providing the finance and then manipulating the land title registries so that the purchasers title is "spoiled". They
need to do this because their is a danger of title passing to the nominee purchaser if the registration is not spoiled in
some way. Under Torrens title statutes the individual registered on the folio of the land owns the land and trusts are not recognized. There would be a real danger of the nominee
absconding with the property if the transfer were not spoiled.
This is because of the ability of the Torrens registration system to create "immediate property" in much the same way
as an insurance policy creates instant property.
The problem is that in order to spoil the registration of the phony purchaser, the lawyers acting for the wealthy individual will
have to engage in a process which interferes with the integrity of the register.
One of the easiest ways to "spoil" the title of the purchaser is to incorrectly enter the data, for example if the property
is being purchased by a husband and wife as tenants in common, it is an easy matter to fail to correctly register one of the
pair. In many cases it is the woman tenant in common who is left off the register. In some cases the software used is incapable of
registering the second tenant.
Another way in which to spoil a purchaser's title is to misspell the names on the certificate of title or to register an undisclosed easement across the plan so as to effect a change in the size of the property. Another way is to keep the
underlying title in the name of the former proprietor "alive" when it is supposed to have been cancelled.
These processes result in a spoiled title as the Registrar will not effect a transfer from a purchaser if the names of the
tenants are incomplete or incorrect or if the size of the property to be transferred is different to the size of the plan to the
present holding.
The idea that the Lands registry would allow this sort of behaviour is unbelievable, why aren't these problems picked up?
Obviously any effective registration system would have ways of picking up these simple errors and requiring the transferees to correct
the transfer. However in most areas where powerful vested interests dominate property transfer, there will be sufficient loopholes in the
land registration process to enable the transfers to be constrained in this way.
Another problem is that as lawyers are involved in conveying this land there is a form of mutual censorship among lawyers which means that these problems
are not addressed. The fact that local economies depend on the property industry to some extent also means that there is a code of silence about any problem
with title.
But wealthy people often do things like this and it doesn't affect me!
While most of us would tend to be accepting of the foibles of the rich and famous and not be unduly concerned about their tax evasion, there is reason to
be concerned if their activities leave loopholes in the register which diminish the integrity of the land titles registers. Knowing individuals can use these
loopholes to subdivide property without paying rates and land tax on the subdivided property. This means there is a massive increase in the amount of subdivided
land and increase in speculative investment in house building, this devalues the value of our properties and leads to speculative "bubbles" on land which affects
the entire economy. Fraud increases as dodgy titles are able to pass through the register leading to innocent purchasers being defrauded.
Problems occur for example when the wealthy individual investor wishes to sell off part of his property and retain the underlying title as a further constraint on the
nominee who is pretending to buy the property or to someone who is not aware of the dysfunction in the system.
When this happens there is a need for a process called filing fraud to occur.
If for example an individual wants to retain control of an underlying land
title and sell off an overt title to a nominee, he can
do this if he subdivides his existing title 3456/1 to produce 2 titles 2345/1
and 2345/2. However the plan while lodged is not the
registered plan .
He can sell off one of the false titles, usually 2345/2 to a nominee. He is
then faced with the problem of retaining the underlying title 3456/1.
In some cases this is achieved by a clerical worker taking a photocopy of
the original title 3456/1 and then stamping this photocopy "cancelled" and
filing the cancelled photocopy.
The original uncancelled 3456/1 is then filed where only the vendor can
retrieve it.
This leaves the nominee-purchaser with the unstable registration 2345/2
and
also a "ghost title" 2345/1 which is
usually blank as it isn't meant to be used.
The nominee is never able to register his title or titles as the plan
registered within the Lands, Titles Office is always different to the plan
on the nominee's title. The covert owner
always retains his interest as his registration on 3456/1 is the first in
time.
I still don't believe you, this sounds bizarre, give me an
example?
This process of loopholes in the lands titles processing system can be seen
on these land titles at Riverside, Tasmania, the title numbers have been
changed for privacy reasons.
There is no suggestion of any fraud or wrong doing
occurring as a result of actions of any of the people or corporations
connected
in any way to these titles.
The author is merely showing that loopholes exist which could allow fraud
to occur and which subvert the integrity of the
register.
The loopholes in the system are systemic and do not necessarily indicate
fraud but rather indicate that fraud is possible while these loopholes exist.
A bank holds this edition of this title 2345/67 which at 15th of September,
1994 when the bank searched the title, had not been
cancelled.
The existence of this uncancelled edition of this title does not seem so
extraordinary until it is considered that a computerized edition of the
title 66666/1 for the same land was issued on the 1st of March, 1994 some
5 months
before the bank searched the title on 15th September, 1994.
%20it%20becomes%20apparent%20that%20the%20title%20registration%2066666/1%20was%20lodged%20in%201992%20some%20two%20years%20before%20the%20title%20%20was%20first%20issued%20by%20the%20Lands,%20Titles%20Office.<BR><BR><IMG%20SRC=)
These loopholes in filing could mean that at many times in the processing
of land
titles there is the potential for two versions of the original folio in
existence at the one time. Under certain circumstances this could lead to the
same property being mortgaged twice or even sold twice.
Mortgagees, while they may not be aware of the problem, may tend to turn a
blind eye to the filing fraud of elite groups as these groups tend to have
most money invested in dysfunctional land tenure. There is no benefit for
mortgagees in
ensuring that registration on land is firm as this would mean that their
wealthiest customers would lose the benefits and advantages which go with
dysfunctional land tenure.
Another cause for concern in this situation is that many individuals and
groups who are the leaders of society become drawn into conveyancing in
the
hidden land tenure system. This occurs because these are the groups in
society who have high incomes, few tax breaks and little time to supervise
their own investments. These
groups such as health professionals, politicians and other high earners are
the most susceptible to investment schemes based on the hidden land tenure
system.
This raises questions of the
potential compromise of health professionals for instance in the case of
individual practicioners having their savings tied up in schemes which rely
on dysfunctional land tenure. What
will happen for instance, if attempts are made to impose an effective
registration system which could effectively place their property at risk if
they are depending on nominee purchasers to avoid tax for example?
What should I do about this?
E-mail the Commonwealth Government asking for a Royal Commission into dysfunctional land tenure in Australia with special reference to tax evasion by elite groups, encouragement of property crime and harassment of incorrectly registered proprietors.
Comments to the Prime Minister, Mr John Howard at PM'S COMMENT PAGE
For further information on trusts on land in Australia see Tax Commissioner Michael Carmody's excellent speech at
TAX OFFICE LINK
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