Legal Effects of Registration of Ownership in Immovable Property

Abstract

The principle of publicity is one of the fundamental principles of property law: property rights should be made public in order to inform third parties about the existence of the property right and its holder and thereby to foster legal certainty and efficiency. The publicity of ownership in immovable property is achieved through registration of ownership in the public register. However, the problem arises because of the unavoidable discrepancies between the data contained in the public register and the factual situation. Different states choose different models to solve the practical problems arising out of the aforementioned discrepancies. On the one hand, Lithuania belongs to the group of states that implement the so-called declaratory system of registration, i.e. the transfer of ownership is based on an agreement or other legal grounds and the registration is not mandatory but provides the transfer with a third-party effect. This can be seen as a proof of priority of a factual situation over the registered data. On the other hand, Lithuanian laws provide the data of the register with some positive reliance, i.e. third parties are not only protected from claims arising out of unregistered rights (negative reliance), but they can also rely on the transcripts in the register. This is especially true in the case of bona fide transferee of immovable property which with some minor exceptions acquires ownership even from a non-owner, if the latter honestly relied on the data of the register.
This regulatory framework is further adopted and transformed by the case law of the Lithuanian courts. The analysis of the latter shows that courts are inclined to rely more on the factual situation and easily deny the meaning of the registered rights. In various ways, the concept of the bona fide transferee is restricted and there are instances of positive duties ascribed to them. Besides, the existing case law demonstrates equivocal attitude towards the legal effects of registered data. Such tendencies of case law may hinder the rule of positive reliance and cause greater legal uncertainty.