Part V of the Land Registration Act sets out how registered land changes hands. It is short, and it contains two rules that surprise people who have bought land elsewhere.
Section 42(1) to (3) — the instrument
- Where land is intended to be transferred, the proprietor shall execute a transfer in the approved form.
- The consideration shall be specified in the transfer.
- Where the consideration is not money, the approved form shall be amended to state concisely the nature of the consideration.
Section 42(4) — misstating the consideration is an offence
A person who executes a transfer of land which does not specify the correct consideration for that transfer is guilty of an offence. Penalty: a fine not exceeding K200.00.
The fine is nominal, but the provision matters for a different reason. Understating the price on a transfer — usually to reduce stamp duty — is a criminal offence under this section and creates a document that misstates the transaction. It also produces a mismatch between the contract and the registered instrument that can be very awkward later, in a dispute, on a resale, or before the Internal Revenue Commission.
Sections 42(5) and (6) — lodgement and the new title
A transfer shall be lodged for registration as a single original document.
Subject to sections 13 and 162, on completion of registration the Registrar shall:
- (a) where the transfer relates to the whole of the land in a certificate of title — issue to the transferee the duplicate certificate of title lodged with the transfer; and
- (b) where it relates to part only — re-issue to the transferor the duplicate certificate cancelled as to the part transferred, and issue a new certificate of title in the transferee’s name for the part transferred.
Section 44 — no lien for unpaid purchase money
No transferor of land has an equitable lien on the land by reason of the non-payment of the purchase money or part of it.
In many systems an unpaid seller retains an equitable lien over the land as security for the price. Section 44 abolishes that in Papua New Guinea. Once you have executed the transfer and it is registered, you have no security over the land for unpaid purchase money — only a personal claim against the buyer.
The practical discipline: do not hand over an executed transfer and the duplicate title before you are paid. Settle simultaneously, or take a registered mortgage back over the land for any unpaid balance.
Section 45 — the transferee is not affected by notice
Subject to section 28, and notwithstanding any rule of law or equity to the contrary, a transferee — whether voluntary or not — is not, except in case of fraud, affected by actual or constructive notice of a registrable claim, right, title or interest other than those notified or protected by entry in the Register.
This is the curtain principle in operation, and it works with section 33. Knowing that someone else claims an unregistered interest does not, by itself, make you take subject to it. Only fraud does — and mere notice is not fraud.
The corollary for anyone holding an unregistered interest is blunt: protect it by a caveat, or register it. Telling the buyer about it is not enough.
Section 45(2) preserves rights and remedies given to creditors by other legislation.
Section 43 — the short-form right of carriage-way
In a transfer of freehold land, the words “together with a right of carriage-way over the road delineated and coloured brown on the said map”, or words to similar effect, have the same effect as if the full words in Part I of Schedule 2 were set out.
Note that freehold in Papua New Guinea is confined to citizens by section 56 of the Constitution and the Land (Ownership of Freeholds) Act (Chapter 359); most transfers in practice are of State leases.
The step outside this Act
A transfer of a State lease is a controlled dealing under Part XVII of the Land Act 1996. It is void and of no effect without the Minister’s approval — and approval must be withheld unless rent is paid to date and the improvement conditions have been performed.
The instrument must also be presented for endorsement and a copy lodged within 28 days of execution, on pain of a fine up to K5,000.
A transfer checklist
- Search the title and read every encumbrance on the folio.
- Inspect the land — short tenancies of three years or less bind you unregistered, under section 33(1)(f).
- Check rates and statutory charges — section 33(1)(i).
- Check the Land Act position — rent, improvement conditions, any notice to show cause.
- Obtain Ministerial approval before completing, and make the contract conditional on it.
- State the true consideration in the transfer.
- Settle simultaneously — remember section 44 leaves an unpaid seller with no lien.
- Lodge promptly, as a single original document, and within the 28-day Land Act period.
- Consider a caveat between contract and registration to protect the buyer’s interest.
Sources
- Land Registration Act (Chapter 191) — ss 13, 28, 33, 42–45, 162; Schedule 2; Part V
- Land Act 1996 — ss 127–129
- Land (Ownership of Freeholds) Act (Chapter 359)
- Mudge v Secretary for Lands [1985] PGSC 13; [1985] PNGLR 387
- Papua Club Inc v Nasaum Holdings Ltd [2004] PGNC 178; N2603
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.