Because of my interest in blockchain technology and using it for transfer of property, I got interested in how this works in the real world.
However all societies do this very differently which is usually rooted in historical traditions and development. It is easy to take whatever system you have grown up in the country you live in for granted.
In this story I want to focus on property ownership and transfer in Norway and the US primarily, but also look at some other historical examples.
The Viking Tradition of Making Important Things Public Knowledge
In Viking times, free men would assembly each year at what is called a Thing, a sort of early form of parliament or legal assembly. Here laws would get passed and made public. Disputes between free men would be negotiated and a ruling passed. Trades and transactions would also be performed, such as transfer of ownership of property.
The point of doing all sort of important action at the Thing is that that made the whole thing public knowledge. It is hard to claim you never sold a property to someone if you have previously made the transaction public.
In Norwegian there is a term called “tinglysning,” which means making something public at the Thing. You would to do this with anything from property transactions to marriages.
This means that you can’t marry somebody who is already married or sell property you don’t own easily, because somebody would likely know this and call your bluff.
Of course in modern day Norway, free men are not meeting at public assemblies like a Thing. However the principle of “tinglysning,” still exists. However what is done instead today is that property transactions, marriages etc are recorded in a public registry. This is open to anybody for inspection. It means if you try to sell property you don’t own, it can be uncovered by the buyer by simply looking at the public registry.
“Tinglysning,” is not a requirement in Norwegian law, but strongly encouraged. Without it your legal position is much weaker. Creditors of previous owner can’t take a property you bought if it has been publicly registered that you own it through “Tinglysning.” Tinglysning basically makes things final for legal purposes.
This system from what I can gather is very similar to what is referred to as the Torrens system in the anglo-saxon world. The principle in the Torrens system also being that it is the act of registering information in a public registry that really matters.
Common Law and Deeds
In Anglo-Saxon countries historically ownership of land was transferred by performing some deed, witnessed by third parties to a transaction. It could be something like ceremonially handing over some dirt belonging to the land sold to the buyer. A key difference here compared to Viking tradition seems to be that the transfer of deeds does not need to be public, but merely have some witnesses.
Over time, performing a deed, would evolve into signing an actual deed document in the presence of witnesses.
The reason for why there needs to be some form of witness when signing documents is I believe because a handwritten signature doesn’t really prove much. It could fairly easily be forged. It is quite different from a digital signature, which is such that a document cannot be altered without invalidating the signature. In addition the signature can only be performed by someone knowing a secret. Hence a third party cannot observe somebody’s digital signature to replicate it, the way they can with a handwritten signature.
That is why a witness is important, because it means that should it ever be disputed in court that a document was indeed signed, the courts can call upon the witnesses to testify. Hence it is really the act of signing which is important here. It demonstrates a final agreement to the contract by the signer. A witness observing this act, can then testify that the signer agreed.
Originally owners of property in common law areas, would store deeds to prove ownership of property. In any legal dispute they would produce these to the court. This was awkward to maintain which is why most common law countries would introduce a public land registry, where deeds could be recorded.
However these registries seem not to be like the later Torrens system or Scandinavian system, in that they are basically dumb boxes storing copies of deeds. There is no verification process going on. The public office isn’t vouching for the legality of the claims to the title (land ownership) mentioned in the deed (paper document describing title). That means anybody selling a property might be asked to provide proof of an unbroken chain of deeds.
Ownership (title) to a piece of land might not be any good if there are some broken links in the chain. E.g. ownership transfers which looks dubious or illegal. This means that transfer of property in common law systems might be an expensive and complicated affair because you always need to be able to prove a long chain of deeds makes your ownership valid. Somebody could come out of the blue and claim the title of the property by producing a bunch of other documents.
For this reason, in the US there are insurance companies dealing with this. So you can insure yourself against having bought a property from someone who turns out to not really be the proper owner. There are also companies in the US which specialize in checking the chain of deeds.
This system means you need to add lots of private companies with extra services as well as potentially using the courts a lot more.
The Torrens system is such that the office registering a title transfer has to check that it is valid, so that a prospective buyer in the future can trust that whoever is listed as the owner is the actual owner. This is similar to the Scandinavian system. Although I believe that system is in between. You register a deed, but for legal purchases a buyer in good faith is not required to know anything beyond what is listed in the public registry. Likewise a third party can’t claim they didn’t know something about the property if that information was listed in the public registry.
This is really a work in progress. I have found it quite difficult to really tease out the nuances of the differences between various systems and their legal origin.
There is quite a lot of obscure jargon to familiarize oneself with in different languages.
I’d be happy if anybody commenting would clarify any misunderstandings I have or potentially point to good sources on these things. I like to think that reading about property laws in different societies and cultures will help to tease out the underlying common principles to all ways of handling property and property transfers.