Effective Property Rights SystemsSecured Transactions Frameworks

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• Effective Property Rights Systems/Secured
  Transactions Frameworks

Thinking Out Loud by Jolyne Sanjak, USAID/LAC
Notes Prepared for Round Table on Secured
Transactions 20 October 2003
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• This powerpoint was prepared by Jolyne Sanjak,
  economic growth specialist for USAID, Bureau for
  Latin America and the Caribbean. It is informal
  and meant as discussion notes. The material
  presented and views herein do not necessarily
  reflect those of USAID.

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Enabling Environment for Trade, Investment and
Finance
Poverty Reduction and Sustainable Development
Rural and urban tenure security
Secured Lending
Land-based enterprise development -- farms,
tourism, extractive industries
Contracts
Building Effective Property Rights
Systems Inmoveable Assets .Moveable Assets
Conflict reduction
Securitization
Environmental stewardship
Real Estate Industry
OTHER taxation, planning...
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This definition is used by USAID in
implementation of the 1998 and 2001 Summit of
the Americas Property Registration Mandates

• Property Rights Systems
• refers to the laws defining land tenure
  including ownership of real property as well as
  the assignment of rights through contracts forms
  of ownership of moveable property and of
  enterprise the institutions that record (both
  physical and legal attributes), authenticate and
  enforce such rights and, all the complementary
  laws which affect the ability of one to exercise
  transactions with property rights.

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Property Markets
Financial Markets (Primary )
Buyers
Borrowers
Legal, Institutional and Informational
Infrastructure title,cadastre, property
registry, property law secured transactions
law, pledge records,insurance products
Sellers
Lenders
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Secured TransactionsA Glimpse of Relevant USAID
Interventions

• Legal and Institutional Reform
• commercial law, contracts enforcement, pledge
  law, moveable asset registries, banking law
• emerging markets Moldova, Albania, Georgia,
  Poland, Macedonia, Asia region ...
• Building Effective Property Rights Systems
• land titling/regularization, cadastre, registry
  modernization,
• land conflict resolution, legal and regulatory
  reform
• privatization, CBNRM, access to land markets,
  property taxation
• ag/rural development, housing finance/slum
  upgrading,environment, conflict, indigenous
  peoples economic infrastructure ...
• LAC, Africa, ANE and EE (Moldova, Albania,
  Georgia)
• Innovative Approaches to Rural Finance

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• To think about cross-thematic relations
• Albania vs Macedonia - Honduras
• To think forward and to think about connectors
• El Salvador
• Peru
• Mexico
• Costa Rica
• Nicaragua

Map the Short-Term Approach with the Long-Run
Vision
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Perspectives to Consider

• Faster-track fixes e.g., pledge filing
  systems, are important.
• However,
• are not a full substitute for modernization and
  regularization of the real property registry
  system
• should be compatible
• may be affected by status quo of registry

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Perspectives to Consider

• Model secured transactions law is critically
  important, however
• limited impact due to ineffective property law
  and information systems?
• jeapordized by disputes, corruption, high
  transactions costs eminating from the same?

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Perspectives to Consider

• Moveable assets are very important And, so are
  inmoveable assets.
• In the Americas, adopting and enforcing the OAS
  model law on secured transactions AND improving
  the regime of laws and regulations that govern
  real property rights systems (from title to
  market) are needed -- both from long-run view of
  financial markets development and from lens of
  growth with equity (poverty reduction)
• While our interventions have been prioritized
  differently according to context and related
  strategyNot an either-or set of issues
  secured transactions refers to both.

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Summit of the Americas and Property
Registration

• 1998 Santiago Summit
• Poverty Reduction
• Streamline, decentralize and modernize processes
  for titling and registration
• link with improved cadastre
• dispute resolution
• indigenous tenure security

• 2001 Quebec Summit
• Growth with Equity
• strengthen and deepen progress
• give more emphasis to regularization
• give emphasis to establishing title-to-market
  links especially via improved legal framework

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A Special Summit Initiative
Making Property Rights More Meaningful Linking
into Secured Transactions Framework

• Implement reforms to create a coherent body of
  property law
• Laws and regulations that affect transfer of
  property, operation of the registry, property as
  collateral and related rights and
  responsibilities of borrowers and lenders ...
• Guided by principles enforceability, efficiency,
  transparency, comprehensiveness, and equity

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A Special Summit Initiative

• would complement and reinforce the OAS model law
  on secured transactions and de facto call for
  its adoption and implementation
• could be informed by cross-consultation among
  those working on agenda of property rights
  systems and those working on secured
  transactions

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• The "Joint Ministerial Statement" formulated
  from the Second Western Hemisphere Finance
  Ministers Meeting (part of the Summit of the
  Americas process),
• under the rubric of Securing Long-Term
  Progress, speaks of the need for bettering
  property rights systems to allow financial market
  development
• "Property rights and secured lending
• In order to broaden access to finance, reforms
  are needed to facilitate or allow the use of a
  variety of types of property as collateral in
  financial transactions, including real property
  and moveable tangible and intangible assets. This
  includes clear and secure property rights
  improved systems for titling and registering real
  property (especially important to enable small
  property owners access to financing) and improved
  systems for recording and enforcing security
  interests." P3

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Why Now?
CAFTA/FTAA An accelaration of opportunities to
miss Secured transactions framework is key for
finance and investment that enables benefits from
free trade and reforms are shaping up
Property Systems Reform is now going and in a
right direction a platform for broad impact is
being installed
adopting and enforcing an improved legal
framework is a key and common ingredient ...