republic of yemen urban land policy and administration policy...

Document of

THE WORLD BANK

Report No. 32558-YE

REPUBLIC OF YEMEN

URBAN LAND POLICY AND ADMINISTRATION

POLICY NOTE

June 10, 2005 Finance, Private Sector and Infrastructure Group Middle East and North Africa

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Currency Equivalents (Exchange Rate Effective May 30, 2005)

Currency Unit = YR (Yemeni Rial)

YR 1 = US$ 0.01 US$ 1 = YR 183.15

Abbreviations and Acronyms

BOOT Build Own Operate Transfer BOT Build Operate Transfer CIF Cleaning and Improvement Fund COM Council of M inisters CSA Country Social Assessment GIA General Investment Authority GLC Governorate Local Council HJC Higher Judicial Council LR Land Registry LRL Land Registration Law LPTF Land Policy Task Force LRE Land and Real Estate MOA Ministry of Agriculture MOIT Ministry of Industry and Trade MOJ Ministry of Justice MOLA Ministry of Legal Affairs MOPIC Ministry of Planning and International Cooperation MOPWH Ministry of Public Works and Highways MoU Memorandum of Understanding PCDP Port Cities Development Program PDRY People’s Democratic Republic of Yemen PID Parcel Identification Document PRSP Poverty Reduction Strategy Paper ROW Right-of-way SALR Survey Authority and Land Registry SDL State Developable Lands SLRE State Lands and Real Estate SLREA State Lands and Real Estate Authority TMDFPP Taiz Municipal Development and Flood Protection Project TSC Titling Settlement Committee UWSSP Urban Water Supply and Sanitation Project

Arabic Terms

Akd Bay’a Sale contract Akd Ijar Leasehold contract Akd Intifaa Right of use/usufruct contract Akd majan Land grant (majan means free) Akd Tamlik Freehold contract Akel Al Hara Local community leader in charge of civil affairs within the neighborhood Amin Notary Public in charge of conveyancing activities in Northern and Western

Governorates Amlak al dawla/hokoomi State ownership Arady Bour Neglected or abandoned/uncultivated agricultural lands Arady Mokhassassa State Developable lands, defined as “lands that have been planned or

prepared and serviced in view of distribution” (i.e. the urban expansion zones)

Arady Mowat Dead or non-valorized lands Arady Salba Buildable lands (literary solid/flat land) Awqaf Trust/Religious Endowments Basira Contract/deed for immovable property transaction Daribet mabi’aat al aa’kariya Property transfer tax Farz/Ifraz Apportionment, undertaken through Istimaret Farz (apportionment form) Hajz Literally, a set aside; form of initial land allocation Hiyaza Adverse possession Ihya’a Valorization Ish’aar Tanfiz Literally, notice of implementation; form of initial land allocation Ish-haar Publicity Iskat Documentation of specific site on detailed plans Istimaret Mawqee Site (receipt) form Istimaret Taghier Hodoud Change of site boundaries form, used to document changes in land in view

of regularizing the situation (usually annexation of public domain, but sometimes receipt of smaller than contracted State land parcel)

Istimaret Idafet Messaha Addition of area form, used to regularize situations of annexation of public domain

Lagnet Tathmin Valuation committee Lebna Measurement unit equals 44.45 square meters Ma’amour Tasjeel Registrar Mahdar Tahdid Awaly Literally, notice of site definition; form of initial land allocation Mahdar Tasslim/Istilam Literally, notice of site handover; form of initial land allocation (also called

Mahdar Tasslim/Istilam Awaly, i.e. initial site handover) Marahek Public rainfall paths: mountains and slopes which receive and drain rainfall Meswadah Draft contract/basira Mulk horr Private ownership Orfi/Aaraf Customary norms Rasm Ma’zouniya Transfer authorization fee charged on all subsequent transfers of State lands Rossoum Khadamat Service delivery fees Rossoum Moagala Expedited fees (for service delivery) Sandouk Al Khadamat Services Fund Sejel ainee Parcel-based deed registration (system) or parcel-based deed register Sejel akary Land Registry Sejel al Manteqah Area register Sejel Kayd al Melkiyah Register of (ownership) contracts Sejel shakhsee Person-based deed registration (system) or person-based deed register Semsar Real Estate broker Shari’a Islamic Law Shufaa Right of preemption Taadil Modification (of master/detailed plans after their approval)

Taahod Shira’/Ijar Commitment by squatter to buy/lease the land (part of the legalization process)

Tadlees Non-authenticity Takadom Prescription Takhssiss Literally, earmarking of the site; form of initial land allocation Takrir Salama Faniya Site inspection clearance report declaring a site technically fit for

inhabitation Tasjeel Registration Tawssiq Authentication Tazweer Forgery Ulema Religious scholars Waqf Trust/endowment Wathiqa Official document, i.e. basira Zakat Religious tax

Vice President: Christiaan Poortman Country Director: Emmanuel Mbi Country Manager: Mustapha Rouis Sector Director: Hossein Razavi Sector Manager: Hedi Larbi Task Team Leader: Stephen Karam

Acknowledgements

Preparation of this Policy Note was carried out by a team consisting of Stephen Karam (Task Team Leader, Sr. Urban Economist), Sameh Wahba (Urban Specialist), John Bruce (Sr. Legal Counsel), and Bijan Azad (Consultant, Land Administration Specialist). The team was ably assisted by Susan Hassan Hameed, who helped organize and prepare for the Urban Land Policy and Administration Workshop, and Elena Gagieva, who provided editorial and formatting support for the production of the Policy Note. Field Survey and Research was carried out by Najib Maktari, and case studies were prepared by Hafez Fadel, whose comments and feedback on the field survey research greatly enhanced the team’s understanding of the special dynamics of land policy and administration issues in Yemen. The team would like to recognize the very significant leadership role of the Deputy Prime Minister and Minister of Planning and International Cooperation (MOPIC), H.E. Ahmed Sofan, who was the keynote speaker at the February 2005 Workshop and who provided guidance and shared his development vision regarding the significance of land as a constraint to investment in Yemen. Dr. Mohammed Sabbry provided critical insights and coordination support prior to and subsequent to the Workshop and has maintained effective follow-up to the by facilitating the work of the Yemen Urban Land Policy Task Force (LPTF). The team would especially like to express its debt of gratitude to the many government, private sector and civil society members of the LPTF who graciously provided their time, documentation, data, and expert feedback and guidance in the process of preparing this Policy Note, in particula r Representatives of Parliament, the Survey Authority and Land Registry (SALR), the State Land and Real Estate Authority (SLREA), the Ministry of Justice (MOJ) and Judiciary, the Federation of the Chambers of Commerce and Industry, and the Notary Publics (Amins). Without such ownership and genuine commitment to this work, the team would not have been able to complete this Policy Note. Peer Reviewers, including Omar Razzaz (Country Manager, MNCLB), Gershon Feder (Research Manager, DECRG) and Robin Rajack (Land Administration Specialist, TUDUR), provided valuable and timely feedback and comments to strengthen the Policy Note. Gaiv Tata (Yemen Country Program Coordinator) chaired the Review Meeting and provided follow up guidance to the team. The Policy Note was issued under the guidance of MNSIF Sector Management, including Hedi Larbi (Sector Manager, Urban and Transport) and Hossein Razavi (Sector Director).

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Table of Contents

TABLE OF CONTENTS ..................................................................................................................................................... II LIST OF TABLES ................................................................................................................................................................. V LIST OF FIGURES .............................................................................................................................................................VI EXECUTIVE SUMMARY ..............................................................................................................................................VII SECTION 1. INTRODUCTION .......................................................................................................................................1

1.1 BACKGROUND............................................................................................................................................................ 1 1.2 OBJECTIVES................................................................................................................................................................ 1 1.3 GOVERNMENT COMMITMENT.................................................................................................................................. 2 1.4 STUDY METHODOLOGY AND STAKEHOLDER ENGAGEMENT.............................................................................. 3 1.5 LIMITATIONS.............................................................................................................................................................. 3 1.6 CONTENTS.................................................................................................................................................................. 4

SECTION 2. ADMINISTRATION OF LAND TENURE SECURITY: LAND REG ISTRATION AND LAND DISPUTE RESOLUTION ...........................................................................................................................5

2.1 INTRODUCTION.......................................................................................................................................................... 5 2.1.1 Integrated Framework for Study of Land Registration.........................................................................6 2.1.2 Definitions and Overview of Common Approaches to Administering Land Tenure Security....................................................................................................................................................................9

2.2 BACKGROUND ON HISTORICAL LEGACY OF LAND REGISTRATION IN YEMEN .............................................. 11 2.3 LAND REGISTRATION AND LAND DISPUTE RESOLUTION: EXISTING SITUATION, ISSUES, PROBLEMS AND POTENTIAL REMEDIES.......................................................................................................................................... 14

2.3.1 Land and Some Related Economic Indicators......................................................................................15 2.3.2 Deed Registration at the Land Registry: Existing situation...............................................................16 2.3.3 Different Modes of Registering Land: Analysis of Survey Data and Key Issues............................21 2.3.4 Value of Registration to Government: Fiscal Aspects of Land Transfer .........................................25 2.3.5 Land Dispute Patterns at the Courts......................................................................................................27 2.3.6 Summary of Key Issues and Potential Remedies..................................................................................34

2.4 ISSUES FROM INSTITUTIONAL AND ADMINISTRATIVE PERSPECTIVES............................................................. 35 2.4.1 Amin and Conveyance of Land Transactions.......................................................................................37

2.4.2 SURVEY AUTHORITY AND LAND REGISTRY .................................................................................................... 40 2.4.3 THE COURTS......................................................................................................................................................... 43 2.4.4 THE MINISTRY OF JUSTICE ................................................................................................................................. 45 2.5 PRACTICAL IMPLICATIONS OF WEAK REGISTRATION LAW AND CUSTOMS...................................................... 46

2.5.1 Customs Governing Conduct of Conveyance.......................................................................................46 2.5.2 Authentication Law—Amin versus the Courts......................................................................................47 2.5.3 Land Registration Law: Issues & Remedies .........................................................................................50

2.6 LAND REGISTRATION AND LAND DISPUTE RESOLUTION: SUMMARY OF KEY ISSUES AND RECOMMENDATIONS..................................................................................................................................................... 53

2.6.1 Key Issues ...................................................................................................................................................53 2.6.2 Key Recommendations..............................................................................................................................56

SECTION 3. REFORMING THE LEGAL FRAMEWORK FOR LAND REGISTRATION .......................59 3.1 BACKGROUND: THE LEGAL FRAMEWORK FOR LAND REGISTRATION IN YEMEN ......................................... 59 3.2 THE CURRENT LAW AND PROPOSED DRAFT LEGISLATION.............................................................................. 60 3.3 KEY ISSUES FOR YEMEN......................................................................................................................................... 61

3.3.1 Institutional Authority and Responsibilities..........................................................................................61 3.3.2 Financial Sustainability ...........................................................................................................................62 3.3.3 Good Process and the Reliability of Registrations: Amins and Courts...........................................64 3.3.4 The Legal Effect of Registration.............................................................................................................66

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3.3.5 The Handling of Mistakes and Corrections..........................................................................................67 3.3.6 Openings for Private Sector/Civil Society Participation....................................................................68 3.3.7 Settling Disputes in the Titling Context.................................................................................................68 3.3.8 Coordinating Two Modes of Registration.............................................................................................69

3.4 SUMMARY OF KEY RECOMMENDATIONS............................................................................................................. 70 SECTION 4. STATE LAND MANAGEMENT IN YEMEN: PROBLEMS, ISSUES AND RECOMMENDATIONS ....................................................................................................................................................72

4.1 INTRODUCTION........................................................................................................................................................ 72 4.2 DEFINITIONS............................................................................................................................................................. 72 4.3 KEY PROBLEMS AND ISSUES OF STATE LAND MANAGEMENT :........................................................................ 72

4.3.1 Legal Ambiguities Surrounding State Lands and Ensuing Conflicts over Ownership:.................73 4.3.2 Lack of Comprehensive and Precise Inventory of State Land:..........................................................76 4.3.3 Inability to Preserve State Land Against Encroachment and Speculation:....................................78 4.3.4 Lack of Land Use Planning and Strategies for Sustainable Allocation of Land:...........................84 4.3.5 Absence of Consolidated Institutional Framework for Allocating State Land:..............................87 4.3.6 Lack of Systematic and Transparent Methods and Procedures for Disposing of State Land.......................................................................................................................................................................94 4.3.7 Lack of Systematic and Transparent Methods for Valuing State Land............................................97 4.3.8 Lack of Strategy to Leverage State Lands.............................................................................................99 4.3.9 The Implications of Poor State Land Management on Economic Development and Growth: the Cases of Mukalla and Aden..................................................................................................... 100 4.3.10 Implications of Poor State Land Management on Service Delivery: the Case of Taiz ............ 106

4.4 STATE LAND MANAGEMENT IN YEMEN: RECOMMENDATIONS AND ONGOING EFFORTS..........................106 4.4.1 State Lands Clearly Defined by Law and Conflict-Free in Strategic Pilot Locations............... 107 4.4.2 Comprehensive and Centralized Inventory of State-Owned Lands............................................... 109 4.4.3 Improved Mechanisms for the Preservation of State Lands Against Encroachment and Speculation........................................................................................................................................................ 109 4.4.4 Land Use Planning and Growth Management.................................................................................. 112 4.4.5 Standardized and Transparent State Land Disposition Methods and Procedures..................... 113 4.4.6 Consolidated Institutional Framework for the Disposition of State Lands with Clear Division of Roles and Responsibilities.......................................................................................................... 116 4.4.7 Standardized and Transparent Land Valuation Methods and Application of Market Pricing................................................................................................................................................................ 118 4.4.8 Policy Framework for Management and Strategic Utilization of State Lands............................ 118 4.4.9 Revision of the Legal Framework Governing State Lands and Real Estate................................ 119 4.4.10 Priority Actions..................................................................................................................................... 121

SECTION 5. SUMMARY OF KEY FINDINGS AND RECOMMENDATIONS .......................................... 122 5.1 ADMINISTRATION OF LAND TENURE SECURITY (LAND REGISTRATION AND LAND DISPUTE RESOLUTION)................................................................................................................................................................122

5.1.1 Key Issues ................................................................................................................................................ 122 5.1.2 Key Recommendations........................................................................................................................... 125

5.2 REFORMING THE LEGAL FRAMEWORK FOR LAND REGISTRATION................................................................127 5.3 STATE LAND MANAGEMENT ...............................................................................................................................129

5.3.1 Key Issues ................................................................................................................................................ 129 5.3.2 Key Recommendations........................................................................................................................... 131

ANNEXES ........................................................................................................................................................................... 134 ANNEX 1. SURVEY QUESTIONNAIRE.........................................................................................................................135 ANNEX 2. LAND REGISTRATION SURVEY RESULTS...............................................................................................139 ANNEX 3. REGISTRATION AND SURVEYING FEE SCHEDULE IN YEMEN................................................................143 ANNEX 4. BREAKDOWN OF APPEALS AND PRIMARY COURT CASES, IBB GOVERNORATE, APRIL 2000-MARCH 2001 ................................................................................................................................................................144 ANNEX 5. REVENUES FROM LAND AND REAL ESTATE REGISTRATION, SURVEYING AND TAXATION OF PROPERTY TRANSFERS................................................................................................................................................148

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ANNEX 6. ADDITIONAL DETAILED COMMENTS ON THE MOLA DRAFT ..............................................................151 ANNEX 7. PROCESS AND PROBLEMS OF LAND ACQUISITION FOR INVESTMENT AND NON-INVESTMENT/RESIDENTIAL USE IN HODEIDAH CITY...............................................................................................156 ANNEX 8. PROCESS AND PROBLEMS OF LAND ACQUISITION FOR INVESTMENT AND NON-INVESTMENT/RESIDENTIAL USE IN MUKALLA CITY...............................................................................................160

BIBLIO GRAPHY.............................................................................................................................................................. 167

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List of Tables

Table 2.1 Survey Responses to whether Land is a Problem in Doing Business in Yemen.............5 Table 2.2 Prevailing Prices of Residential Land and Real Estate by Location in Sana’a, 2004 ....16 Table 2.3 All Registered basiras/Contracts with the Survey Authority and Land Registry Using the sejel shakhsee System, 1977-1999 ....................................................................................17 Table 2.4 All Registered Properties with the Survey Authority and Land Registry Using the sejel ainee System, 2000-2004 ......................................................................................................18 Table 2.5 Registered basiras in Sana’a Municipality Using Sejel shakhsee System, 1977-1999..19 Table 2.6 Registered Parcels/basiras in Sana’a Municipality Using Sejel ainee System, 2000-2004 ....................................................................................................................................19 Table 2.7 Registered Land Areas in Sana’a Municipality Using Sejel ainee System, 2000- 200420 Table 2.8 Registered Parcels/basiras in Taiz, 2001-2003 .........................................................20 Table 2.9 Revenues from Land and Real Estate Transfer Fees in Yemen and in Sana’a, 1977- 2004 ....................................................................................................................................26 Table 2.10 Appeals Court Statistics, Taiz Governorate, March 2001-February 2002 (1422 Hijri)............................................................................................................................................27 Table 2.11 Number of Registered Amins in Yemen, 12/2004 ...................................................38 Table 4.1 Preliminary Results of State Land and Real Estate Assets Documentation in Hadramout, 2002-06/2003.....................................................................................................78 Table 4.2 State-Owned Lands in Sana’a and Taiz Registered at the Land Registry, 2000- 2004 .79 Table 4.3 All Registered State-Owned Lands at the SALR under the sejel shakhsee System, 1977-1999 ....................................................................................................................................80 Table 4.4 All Registered State-Owned Lands with the SALR Using the sejel ainee System, 2000-2004 ....................................................................................................................................80 Table 4.5 Squatter Settlements in Hodeidah City, 2003 ...........................................................81 Table 4.6 All Contracts for State-Owned Land Issued in Mukalla City, 1982-2003 ...................91 Table 4.7 State Land Distributed for Non-Investment Uses in Aden, 1990-1999 .......................92 Table 4.8 State Land Distributed for Investment Uses in Aden, 1990-1999 ...............................92 Table 4.9 State Land Distributed for Investment and Non-Investment Uses in Aden, 2000-2005 93 Table 4.10 State Land Distributed as Freehold to Individuals in Hodeidah City, 1995-2004 .......93 Table 4.11 State Land Distributed to Housing Associations in Hodeidah City, 1995-2004 .........94 Table 4.12 Licensed Investment Projects in Hadramout and Mukalla City by Sector and Status, 1992-2002.......................................................................................................................... 101 Table 4.13 Licensed Investment Projects in Mukalla City by Current Status, 1992-2002 ......... 102 Table 4.14 Reasons for Non-Implemented Investment Projects in Mukalla City, 1992-2002.... 102 Table 4.15 Status of All Lands Allocated for Investment Projects in Aden 1990-2002, by Contract Type .................................................................................................................................. 103 Table 4.16 Status of All Lands Allocated for Investment Projects in Aden 1990-2002, by Project Type/Land Use................................................................................................................... 104 Table 4.17 Causes of Undeveloped Investment Sites and Problem Projects, Aden, 1990-2002 . 105 Table 4.18. Comparison of State-Qwned Land Allocation Methods........................................ 115

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List of Figures

Figure 2.1 Integrated Framework for Examining Urban Land Registration Issues .......................7 Figure 2.2 Key Problems Affecting Urban Land Registration ....................................................9 Figure 2.3 Different Stages/Modes of Administration of Property Rights to Land in Yemen......14 Figure 2.4 Completing Land Transaction Registration Modes..................................................22 Figure 2.5 Institutional and Organizational Framework for the Land Tenure Security Administration System..........................................................................................................36 Figure 2.6 Key Institutional Stakeholders’ Involvement in the Formal Land Registration Process............................................................................................................................................37 Figure 2.7 Prevailing Convenyance Process in Northern and Western Governorates..................39 Figure 2.8 Land Transaction Registration Process at the Land Registry....................................42 Figure 4.1 Existing Institutional Framework for Allocating State Lands ...................................90 Figure 4.2 Proposed Institutional Framework for Allocating State Lands................................ 117

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Executive Summary

1. An effective and efficient system for administering land tenure security, in which property rights to land are secured and enforced through functional land registration and dispute resolution systems, is a critical ingredient to enable growth. The impact of secure property rights on attracting investments, creating an enabling investment climate, facilitating access to credit and reducing the volume/backlog of land and property disputes cannot be understated. Similarly, a well-functioning State land management system is critical to ensure the efficient allocation, strategic utilization and leveraging of State land assets to attract investments/contribute to growth as well as to ensure equitable access to land by the urban poor. The objective of this Policy Note is to provide the Government of Yemen with policy recommendations to reform the existing systems for administering land tenure security, namely land registration and dispute resolution, and managing State lands, and address the obstacles affecting the proper functioning of the urban land market in Yemen. 2. Access to urban land is one of the most critical obstacles to growth in Yemen: Access to urban land (both for investment and residential use) represents one of the most critical obstacles to growth as well as to poverty alleviation in Yemen due to high risks and transaction costs resulting from unclear and unenforceable property rights. The existing systems for administering land tenure security (namely through the two pillars of land registration and dispute resolution) and managing State-owned lands are fraught with many problems. Overall, the key challenges of the urban land sector in Yemen are: (i) an ineffective land titling and transaction registration system in terms of coverage and perceived value in securing property rights; (ii) multiple entities allocating State land without coordination or jurisdiction, in addition to non-transparent and inefficient State land disposition mechanisms; (iii) an inadequate legal framework with key provisions that are missing and ambiguous clauses that lend themselves to multiple interpretations (in particular the Land Registration Law (LRL) of 1991 and the State Lands and Real Estate (SLRE) Law of 1995); and (iv) an overloaded and ill-equipped court system with limited capacity to handle land disputes, coupled with weak enforcement of judicial decisions. Key Issues and Findings: 3. Limited utilization of the land registry in Yemen: Since the establishment of the first land registry branch in Sana’a in 1977, only 240,000 transactions in privately-owned land and real estate (LRE) were recorded across Yemen. In the capital Sana’a with the highest level of registration, the capture rate of the land registry is estimated to be no more than 20% of all annual land and property transactions. In Taiz and Ibb, the land registry capture rates are an estimated 18% and 22% of all transaction deeds authenticated at the courts respectively (which implies an even smaller capture of actual transactions, since not all go through the conveyance and court authentication processes). Registration activities also appear to be largely concentrated in Sana’a City (which alone accounts for 57% of all recorded transactions in private land between 1977 and 2004) and urban areas in Taiz, Aden, Hodeidah, Ibb and Hadramout Governorates. Overall, it is estimated that no more than 5-10% of urban lands in Yemen are registered at the Land Registry. 4. Factors underlying limited land registration: The limited utilization of the land registry is attributed mainly to limited demand for registration. This is due to the lack of perceived benefits from the act of registration, at least relative to the cost. Several factors have contributed to this problem. According to the existing law, the act of registration is not legally conclusive and can thus be challenged in court, which clearly affects the credibility of the system. In addition, the legal/judicial dimension of the registration process (i.e. adjudication of property

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rights) is accorded much less weight than the technical component (i.e. surveying). This partly explains why the act of registration is perceived with little confidence by the courts. The high costs associated with registration (especially when past land transfers have been unregistered and thus untaxed) and lengthy bureaucratic procedures further add to the problem. Finally, the procedure of authentication of transfer deeds at the courts is widely perceived by the public as an “alternative form of land registration” that provides the same added value in terms of “obtaining land tenure security.” Indeed, of 100 surveyed land buyers, 60% find court authentication and registration to be equally important procedures, and an additional 21% find authentication more important. The general public perception that authentication is an equivalent (and cheaper) form of securing property rights effectively undermines the process of deed registration. Supply-side issues also contribute to the problem, namely the inadequate quality of conveyance, and land and property registration services. In particular, there is a lack of regulation governing the conveyance process, limited regulatory oversight of the Amin (notary public) activities, inadequate registration and registry maintenance procedures, and an ill-defined legal and technical framework accompanying the transition from the former person-based to the new parcel-based deed registry system. In addition, there is a large volume of land disputes that clogs the judicial system and cases take a long time to resolve at the courts. This is compounded by weak enforcement of judicial verdicts. 5. Inefficient State land management process in Yemen: The State land management process in Yemen can be described overall as inefficient due to many problems and issues. Most importantly, a consolidated institutional framework, and systematic and transparent methods and procedures for allocating State land are absent. Multiple government entities have in the past allocated State land without coordination and often without jurisdiction. The result has been massive, chaotic distribution of State land, especially in Southern and Eastern Governorates during the 1990s. In Mukalla, the lands distributed in 1990-1999 could have accommodated twice as much as the current population. State land distribution in Aden was of a similar magnitude. Most of these lands remain undeveloped today. The lack of a comprehensive and accurate inventory of State lands greatly curtails government’s ability to manage its land assets. The legal ambiguities surrounding State Lands have also created numerous ownership conflicts with tribal and private claimants. In addition, measures to preserve State lands against encroachment and speculation are at best weak and at worst non-existent. Other problems include the lack of land use planning and strategies for sustainable allocation of land, the absence of systematic and transparent methods for valuing/pricing State-owned land, and lastly the lack of a strategic framework for leveraging State land assets. 6. Implications of the inefficient State land management process: The inefficient State land management process has had a significant downside in terms of its impact on the investment climate and on government’s ability to deliver services. In Aden and Mukalla , land-related problems were found to underlie a significant share of non-implemented or non-completed investment projects and, as such, represent a significant loss to the economy by constraining investment and job creation. In Mukalla , of all 281 investment projects licensed in the 1992-2002 period, 58% were non-implemented or aborted. According to investors, land problems turned out to be the number one cause, being the main cause of aborted investments in 47% of the cases. In Aden, 54% of all investment projects allocated a site in 1990-2002 have also never materialized. As much as 25% of the allocated sites turned out to be disputed with other public or private entit ies. Planning problems, namely subsequent land use change and absence of detailed plans, account for at least 35% of undeveloped projects.

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Key Recommendations: 7. Removing constraints to demand for land registration and reducing the volume of land disputes in the court system: Activating the demand for land registration requires addressing the key disincentives to registration and improving the quality of the service. The first issue is the need to remove the perceived “alternative forms of land registration” that undermine use of the registry and perceived added value, namely the court authentication of transfer deeds. It is proposed to merge the two procedures of authentication and registration within the Land Registry (until then or alternatively, it is proposed to add a disclaimer to the authentication stamp stating that: “authentication does not confer ownership”). The second issue is to reduce the costs associated with registration in order to incentivize the use of the registry, especially by eliminating the requirement that those seeking to register pay all accumulated transfer taxes on past unregistered transfers regardless of prior ownership. The third issue is to amend the LRL to introduce the legal conclusive effect of the act of registration. This, coupled with the appointment of persons of legal/judicial standing in charge of registration decisions (i.e. registrars), would restore the importance and perceived added value by the public and courts of the act of registration. To reduce the perceived risks, steps and time, it is also recommended to capitalize on the conveyancing role of the Amins and lawyers—as properly incentivized market-based actors—to act as a type of one-stop-shop to complete the conveyance and registration procedures on behalf of the transacting parties in return for a fee. Also needed are legal provisions detailing the conveyance process in the form of by-laws to the Authentication Law, and better monitoring and regulation of the Amin, namely by restricting their activities to their geographic jurisdictions and only transacting in registered land and property. On the supply side, there is a need to improve the registration process and registry maintenance through introducing legally unique parcel identification numbers, better indexing and cross-checking of registry information (property rights, liens, notations, etc) and developing by-laws supporting the parcel-based deed registration process that is currently used. A more efficient registration process is, among other benefits, expected to result in a reduced volume of land disputes at the courts. With a reduced backlog and appropriate support and capacity building to judges, the average time taken to arbiter land disputes is expected to be reduced. 8. Towards an efficient management of State lands in urban areas in Yemen: The first and key recommendation is the need to consolidate the institutional framework for the disposition of State lands by restoring the State Lands and Real Estate Authority (SLREA)’s function as the sole custodian of State lands as per the provisions of the Law. In the case of investment lands, the decision/recommendation to allocate State land would come from the General Investment Authority (GIA), with endorsement from the Governorate Local Council (GLC), after coordination with the deconcentrated branches of the concerned line ministries (e.g. tourism, industry, agriculture, etc). In the case of residential/non-investment lands, the recommendation to allocate would come from the GLC. In the case of land grants, the allocation would follow Presidential instructions. Overall, there needs to be a shift from the current administrative system of State land allocation (directly to individuals or based on lists) to market-based allocation mechanisms (i.e. auctions). Administrative allocation would only be restricted to clearly identified policy objectives such as low-income housing with proper targeting mechanisms. The disposition of State land at market prices is particularly important to curb speculation incentives, address allocation and land market distortions, and allow for recovery of service delivery costs. Equally important is a concerted effort to develop a comprehensive and accurate inventory of State Lands. An appropriate starting point for this challenging and long-term endeavor would be a pilot initiative to document State lands in strategic locations such as key investment lands and urban expansion areas in fast-growing coastal cities. Finally, it is important to revise the existing

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legal framework governing State lands to address among other things the legal ambiguities surrounding the definition of State lands, which have resulted in a large number of ownership disputes with tribal and private claimants. 9. The findings and recommendations noted above and throughout the report are also presented in summary form in the attached Action Plan Matrix. At this juncture, it is important to emphasize that this program of land sector reforms and capacity building measures will require a number of years to implement and will need to be sequenced appropriately. First and foremost are initiatives that the Government of Yemen will need to take in order to build a solid foundation of consensus and ownership over a process that requires immediate actions and long-standing commitment. Among these key actions are the following:

• Issue a Council of Ministers Decree to formally recognize the establishment of the Land Policy Task Force and setting out its mandate;

• Issue a Land Sector Policy Statement reflecting consensus around the policy recommendations made in this Policy Note to which all key stakeholders agree;

• Complete revisions to the Land Registration Law and the State Land and Real Estate Law taking into account the recommendations in this Policy Note; and

• Consolidate land/property authentication and registration under the Survey Authority and Land Registry.

10. In addition, recognizing the significant capacity building and technical assistance needs identified in the Action Plan, the Government of Yemen will need to prepare a multi-year financing plan in order to seek donor support in implementing this reform program over the coming five to ten years.

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Matrix of Short, Medium and Long-Term Recommendations , Responsible Entities, Timeframe and Prerequisites

Recommendations Timeframe Responsible Entity Prerequisites

A. GENERAL RECOMMENDATIONS

A.1. Enact decree formally recognizing the Land Policy Task Force (LPTF) as an institutional mechanism for land policy formulation, consultations with the private and civil society, stakeholder coordination, action plan follow up, and mobilization of donor assistance. LPTF mandate includes holding dissemination workshop for the present Policy Note, and establishing working groups around specific policy issues as needed

Immediate Council of Ministers (COM) decree

Donors commitment to provide technical assistance and support

A.2. Develop consolidated land sector policy statement reflecting consensus around policy recommendations and participatory process launched under the current Policy Note

Immediate LPTF Donor support/technical assistance

A.3. Survey Authority and Land Registry (SALR) and State Lands and Real Estate Authority (SLREA ) to be directly affiliated and report to the President’s office

Immediate/short-term (1 year)

COM decree

B. LAND REGISTRATION & DISPUTE RESOLUTION

B.1. Complete the revision of LRL of 1991 taking into account the issues discussed in this policy note and LPTF recommendations

Ongoing Ministry of Legal Affairs (MOLA )

Policy note & LPTF recommendations

B.2. Removing constraints to demand for land registry services and removing incentives/mechanisms for using authentication as an alternative to registration

B.2.1 Consolidation of land/property authentication and registration under SALR

Immediate COM decree (with Ministry of Justice (MOJ) & SALR cooperation)

Revision of relevant aspects of authentication law

B.2.2 Design and implement public awareness campaign on property rights and registration involving a series of workshops, media campaign, etc

Medium-term (3-5 years)

LPTF with private sector involvement

B.3. Enhance the judicial/legal involvement in deed registration decision-making

B.3.1 Amend LRL to institute position of registrar with judicial/legal qualifications as overseer of registration decisions

Part of ongoing effort to amend LRL

MOLA (with MOJ & SALR cooperation)

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B.3.2 Design and implement staffing/capacity building program for placing registrars at field offices

Long-term (5-7 years) SALR (with MOLA & MOJ cooperation)

B.4. Develop laws or by-laws governing the conveyance process and regulating/monitoring Amin activities

B.4.1 Develop amendments to authentication law to standardize and regulate the conveyance process including canceling conveyance by non-Amins/lawyers

Short-term (1 year) MOLA (with MOJ & SALR cooperation)

Donor support/technical assistance

B.4.2 Design and implement a system for standardization and regulation of conveyance process including developing procedure manual and qualifications/ admissions examination for Amin

Short/medium-term (1-2 years)

MOJ & SALR Donor support/technical assistance

B.5. Improve the registration process and registry maintenance

B.5.1 Develop by-laws to LRL/authentication legislation to require standard method of assigning legally unique parcel ID numbers for all properties that enter the conveyance/registration process

Part of ongoing effort to amend LRL law



B.5.2 Design and implement a unique Parcel Identification Document (PID) system


SALR with donor support

Donor support/technical assistance Updated maps

B.5.3 Refine/reengineer the registration processes and record-tracing procedures including development of manuals


SALR with donor support


B.6. Establish the legal/technical framework accompanying the transition from sejel shakhsee to sejel ainee system of deed registration

B.6.1 Develop amendments to LR legislation to ensure that proper safeguards are taken into account in implementing sejel ainee system

Part of ongoing effort to amend LRL



B.6.2 Map out and implement program to accompany this transition Medium-term (3-5 years)

SALR (with Higher Judicial Council (HJC), MOJ cooperation)


B.7. Reduce the volume of land disputes at the courts and ensure expeditious and efficient land dispute resolution process and improve judicial enforcement effectiveness

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B.7.1 Identify, develop and implement better/alternative methods of early adjudication and dispute resolution (arbitration, community involvement, etc) to reduce court case load based on international best practice

Medium/long-term (3-10 years)

HJC, MOJ, GLC with LPTF cooperation


B.7.2 Establish legal/judicial task force to prepare reference and procedures manuals and legal casebooks for use by judges involved in land-related dispute resolution and capacity building/training to judges


LPTF, HJC, MOJ, MOLA, Lawyers’ syndicates (with SLREA & SALR cooperation)


C. STATE LAND MANAGEMENT

C.1. Complete the revision of State Land and Real Estate Law of 1995 taking into account the issues discussed in this policy note and LPTF recommendations

Ongoing (end within 6 months)

MOLA (with LPTF cooperation)

Legal/judicial committee recommendations on areas of disputes

C.2. Consolidated institutional framework for the disposition of State lands with clear division of roles and responsibilities

C.2.1 Issue a decree prohibiting any other government entity but SLREA to dispose of State-owned lands (except land already designated as Free Zone)

Immediate COM (with SLREA cooperation)

Hand to SLREA land transfer documents from different entities

C.2.2 Amend SLRE law to establish clear consolidated institutional process for entities recommending allocation of State-owned lands (GIA for investment lands; GLC’s for non-investment lands)

Immediate (end within 1-2 years)

Cabinet/ SLREA Donor support/technical assistance

C.2.3 Issue administrative regulation to consolidate the contractual forms/types of disposition of State-owned lands into the following types: land grants, sales, leases, other appropriate methods for private sector involvement (BOT, BOOT, concessions, etc) and mahdar tasslim for government entities

Immediate (end within 1-2 years)

SLREA Donor support/technical assistance

C.2.4 SLREA to delegate authority over State-owned lands within city/municipal boundaries to Governorates

Long-term (5-10 years) SLREA (with COM decree)

Updated master plans & determined municipal boundaries

C.2.5 SLREA to delegate authority over State-owned lands in clearly defined areas to Special Purpose Entities (e.g. Special Economic Zones, Coastal Development Zones, Free Zones, etc)

Long-term (5-10 years) SLREA (with COM decree)

Completion of State land inventory in designated priority areas

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C.3 Standardized and transparent State land disposition methods and procedures

C.3.1 Shift from administrative to market-based allocation of State-owned land. Revise SLRE Law to establish auctions as default method to dispose of State-owned urban lands, except for clearly defined policy arenas where administrative allocation is needed (mainly low-income housing)

Medium-term (within 3-4 years)

MOLA (with SLREA cooperation); Cabinet (MOP) and Parliament to define areas of administrative allocation


C.3.2 Submit an annual report on SLREA activities to the House of Representatives detailing land distribution activities against plans/strategies


SLREA, with donor support to GLC’s for strategy development


C.3.3 Ensure standardized contract forms are used across all SLREA branches Ongoing (within 2 years)

C.3.4 Introduce the “Request for Proposals” method for the disposition of strategic State-owned land assets

Long-term (5-10 years) GLC’s with donor support

Devolution of control from SLREA; Updated master plans; Capacity building of LG’s to design/evaluate process transparently; donor support/technical assistance

C.3.5 Remove any restrictions on foreign land ownership (as currently proposed in the draft revised Law by SLREA)

Immediate COM

C.4 State Lands clearly defined by Law and conflict-free in strategic pilot locations

C.4.1 Establish legal/judicial committee to resolve ownership conflict over marahek (i.e. mountain slopes channeling rainfall) and include recommendations into revised SLREA law

Immediate (end within 6 months)

HJC, MOJ/MOLA (with SLREA cooperation)

C.4.3 Identify strategic areas for investment and urban growth purposes and implement pilot projects for adjudication and registration of State-owned lands

Short/medium-term (end within 2-3 years)

MOPIC, SLREA, GLC’s (with MOPWH cooperation)

Donor support/technical assistance; use cases of Aden & other cities with updated master plans as basis for this

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C.4.4 Undertake mass titling adjudication and registration program in urban areas

Long term (10-15 years) SALR/SLREA/Awqaf with donor support

Revision of LRL and authentication laws; establishment of LPTF; issue of land sector policy statement

C.5 Completion of a comprehensive, accurate and centralized inventory of State-owned lands

C.5.1 Develop manual of procedures for undertaking State-owned land inventory and pilot the process in key strategic locations

Short-term (2-3 years) SLREA with donor support

Donor support/technical assistance; GLC’s identify strategic locations

C.5.2 SLREA authorized in revised Law to retain percentage of revenues collected to finance State land inventory, and improve performance/services

Part of ongoing effort to revise SLREA law (within 6 months)

COM decision Amendment of Public Revenues Law on issue of retention of funds; detailed/transparent plan on use of extra revenues

C.5.3 Complete the inventory of State-owned LRE assets Long-term (10 years) SLREA (cooperation of government entities)

Donor support/technical assistance; funding & updated maps made available

C.6 Improved mechanisms to preserve State-owned land against speculation and encroachment

C.6.1 Identify, demarcate and/or find alternative uses for strategic State-owned lands to prevent encroachment


SLREA & GLC’s

C.6.2 Institute policy & establish plans for swiftly removing encroachments and implement on city-by-city basis


GLC/MOPWH overseen by LPTF

C.6.3 Establish framework with clear criteria for enforcing the repossession clause of allocated State land remaining undeveloped after the expiration of maximum timeframe for land development

Short/medium-term (2-3 years)

LPTF with SLREA (GIA/COM decrees)

C.6.4 Regularize procedures for leasing of State-owned lands eliminating the Short-term (1-2 years) SLREA Political will to cancel

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unnecessary step of Mahdar Tasslim/Takhssiss and enforcing the cancellation of leases and repossession of undeveloped parcels according to the law

leases in non-conforming cases & repossess the land

C.6.5 Cancel the “rasm ma’zouniya” fee applied indefinitely on transfer of leases of State-owned land where price is unsubsidized. If subsidized price, establish one-time transfer fee if transfers take place before a specified period (e.g. 5 years)


SLREA with COM decree amending the SLRE law/by-law

Adoption of auctions; definition of timeframe for fee application

C.7 Proper land use planning and growth management

C.7.1 Update/undertake land classification and land use maps for the main cities and widely disseminate such maps among government agencies, Amins, brokers and other entities as needed


GLC/MOPWH Donor support/technical assistance; Updated maps

C.7.2 Develop clear rules & procedures governing the administration of Taadil legalizing encroachments on State-owned lands to ensure transparency, fairness & eliminate abuse


SLREA

C.7.3 Develop clear rules & procedures governing the practice of amending detailed neighborhood plans including mechanisms for proper consultation


MOPWH Donor support/technical assistance

C.7.4 Decentralize the revision of cities’ master plans at the Governorate level according to capacity and launch a comprehensive effort to revise/update master plans

Long-term (5-10 years) COM decree based on GLC’s request endorsed by MOPWH

Central government & donor support/technical assistance to capacity building for GLC’s in urban planning

C.7.5 Build capacity and train urban planning staff in the different Governorates


MOPWH with donor support


C.7.6 Swiftly implement recommendations of master and detailed plans by expropriating land needed for services with fair compensation; tracing and grading/leveling of main streets; as per the Policy Note recommendations


GLC’s with MOPWH and donor support

Donor support/technical assistance; capacity for land/property valuation; prior budgeting of funds for immediate implementation needs

C.7.7 Identify and implement growth management mechanisms in pilot cities, Short/medium-term (2-4 GLC’s with MOPWH Donor support/technical

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especially Aden and Mukalla (including clear service delivery boundaries) years) and donor support assistance; revised city master plan identifying extent of sprawl, vacant land, densification potential, etc

C.7.8 Revise urban planning and land subdivision standards based on the experiences of Aden, Hodeidah, Mukalla and Taiz master plan revision. Objective is to increase population density, reduce ROW and land parcel sizes.



Recommendations of ongoing city master plan revision process

C.8 Standardized and transparent land valuation methods and application of market pricing

C.8.1 Capacity building and training to staff involved in land and property valuation



Donor support/technical assistance; development and dissemination of information on land & real-estate (LRE) market

C.8.2 Encourage the development of private sector professional valuation expertise including by creating demand for it in State-owned lands, mortgage market, taxation, etc


Professional associations and universities with donor support

Donor support/technical assistance; regulations required; development and dissemination of information on LRE market

C.8.3 Develop and disseminate information on land and real-estate markets Medium/long-term (2-5 years)

MOP, MOF, SLREA, SALR, professional associations, universities with donor support


C.9 Need to formulate an overarching policy framework for management and strategic utilization of State-owned land assets

C.9.1 Develop State land asset utilization/leveraging policy guidelines and strategy at the national and local level


LPTF with donor support

Donor support/technical assistance; land sector policy statement; decree establishing LPTF

Section 1. Introduction

1.1 Background

Access to urban land (both for non-residential/investment and residential uses) represents one of the most critical obstacles to growth as well as to poverty alleviation in Yemen due to high risks and transaction costs resulting from unclear and unenforceable property rights. In particular, there are ambiguities in the legal framework, as well as unclear institutional mandates and jurisdictional overlaps concerning the management and disposal of State land, land and property transaction registration, and land dispute resolution. Overall, the existing frameworks for the administration of land tenure security and State land management are characterized by: (i) an ineffective land and transaction registration system; (ii) non-transparent and unclear State land disposition mechanisms and unstructured valuation of rental/sale values; (iii) an inadequate legal framework with key provisions that are missing and ambiguous clauses that lend themselves to multiple interpretations (in particular the LRL No. 39 of 1991 and the SLRE Law No. 21 of 1995); and (iv) an overloaded and ill-equipped Courts’ system with limited capacity to handle land-related disputes, coupled with weak enforcement of judicial decisions. As such, the process of acquiring land for investment and residential purposes is fraught with many problems. This includes multiple entities distributing/allocating State land without coordination and often without a clear legal mandate or territorial jurisdiction, frequent land ownership disputes that have forced many to pay for the land to the grantor and subsequently settle with the tribal/private claimants, etc. To be sure, Yemen’s land reform challenges are not unique. Indeed, one of the greatest challenges facing many developing countries today is to find a means of unlocking the economic value of the vast corpus of extralegal or unregistered land. In one of the more recent landmark studies in the fie ld, The Mystery of Capital (2000), Hernando de Soto, asserts that about 90% of the Egyptian population holds its real estate assets extra-legally, meaning that the exchange value of these assets cannot be fully utilized. He further estimates that there is over US$245 billion of land assets in Egypt’s extralegal sector, an amount six times the total savings and time deposits in Egyptian banks and 30 times greater than the market value of 746 companies registered on the Cairo stock exchange. Consequently, policy makers are increasingly paying greater attention to the value of land in the extralegal sector, both for its use value and for its exchange value as more sophisticated financial instruments are developed to leverage land as an economic asset. It is no surprise, therefore, that efficient, automated land titling and registration systems have become of increasing interest to policy makers.

1.2 Objectives The objective of this policy note is to provide the Government of Yemen with practical and politically feasible policy recommendations to reform/improve the existing land administration and State land management framework and address the dysfunctions of the urban land market in Yemen. Such recommendations are developed with an explicit aim of forming the basis for future interventions by the Government and donor agencies both in the short and long-term. To enhance the impact and potential for success of such a reform agenda, the analysis and overall policy recommendations will need to address the dysfunctions in the urban land market in Yemen in a comprehensive and integrated way rather than through narrowly-focused reforms. This was a major finding that emerged from an examination of the experience of the World Bank’s LRE projects during the 1990’s (Razzaz and Galal, 2001). The study found that narrowly focused projects that have overlooked other related dimensions in land sector reforms, especially the institutional dimension, have mostly failed to achieve the desired development objectives.

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The comprehensive approach taken in this Policy Note is intended to provide a short-, medium- and long-term framework for reforms of the urban land market in Yemen. Once the overall framework is in place, the next step will be to agree an action plan for implementation, with the aim of prioritizing a set of practical, politically feasible and strategically-sequenced policy recommendations, with proposals for pilot activities and projects1. The (short and long-term) recommendations will be based on a thorough understanding of the formal as well as informal rules, procedures and practices in place in the urban land market in Yemen so as to identify, respond to and where feasible build upon the key legal, institutional, administrative, and behavioral constraints and opportunities that influence the behavior/actions of key actors. This note will attempt to build upon the underpinning institutions and rules that are well-established within the institutional landscape and whose improvement/reform is vital to change. Tackling the multi-faceted set of problems related to urban land and property rights in Yemen is particularly important to achieve the following long-term development objectives:

i) Contribute to growth by improving the investment climate through greater predictability and reduced costs in land transactions;

ii) Contribute to poverty alleviation through improving the administration of land tenure security (by among other things reducing the risks associated with land transactions) and potentially increasing the supply of State land available for disposal to serve the public policy objective of reducing poverty; and

iii) Contribute over the long-term to resolving one of the main causes of litigation.

1.3 Government Commitment

Government officials have on numerous occasions underscored the need for urban land market reform, with government commitment at the highest level, namely H.E the President of the Republic. In his keynote speech to the first stakeholder workshop held on February 21, 2005, the Deputy Prime Minister and Minister of Planning and International Cooperation reiterated that the reform of the urban land market in Yemen is one of the Yemeni Government’s top priorities since land is a necessary underpinning element in both the private sector-led growth and poverty alleviation agendas. He also expressed strong commitment and backing for the World Bank’s assistance in preparing this policy note that would lead to a set of policy and operational recommendations to introduce reform to the urban land market in Yemen. The issue of land and property rights policy reform is also currently occupying center-stage in the policymakers’ priorities. Indeed, it is central to two key axes/pillars of the current Yemen Poverty Reduction Strategy Paper (PRSP) of 2003-2005: (i) achieving economic growth (the issue of property rights is central to financial sector reform, and other priority programs), and (ii) improving infrastructure, especially in underserved neighborhoods. In addition, the parliamentary committee that was set up within the House of Representatives to review laws and decrees has also underscored the need for updating/amending the Land Registration and SLRE laws as key priorities. Yemeni parliamentarians and other key public and private sector stakeholders met through the course of the scoping mission welcomed the World Bank’s timely involvement in this critical issue.

1 Focus in this study has been aimed at potential “low-hanging fruits” that can build momentum for the reform process and encourage stakeholders to remain engaged, particularly following the formation of the Urban LPTF following the February 2005 Consultative Workshop.

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1.4 Study Methodology and Stakeholder Engagement

In light of the importance of developing a solid understanding of the nature, characteristics and issues involved in land disputes in Yemen, a study was commissioned to analyze several land dispute cases and profile their specific dynamics. The aim of this qualitative approach is twofold: to augment the limited quantitative data, and to shed light on the dynamics, types and specific workings of land disputes, which quantitative statistics cannot reveal. Four cases are profiled in the Policy Note. Each case is somewhat different from the others and more importantly each one highlights key land dispute-related problems. All four land dispute cases share certain aspects in common (especially the lack of enforcement of court decisions). In addition to case studies, a small survey was conducted, interviewing 100 buyers of land who used the conveyancing services of Amins in Sana’a and lawyers in Aden. The aim of the survey was to develop an understanding of land owner perceptions of the efficacy and patterns of use of various modes of land registration. The sample comprised 60 buyers in Sana’a and 40 buyers in Aden, who purchased the land in question in 2004. The sample was selected to represent various neighborhoods (and hence various average LRE values) in each city, on account of 10 buyers per neighborhood. In Sana’a, the six areas selected are: Sheraton (residential, medium land values, newly developed but consolidated area), Alraqas-Sunaina (mixed use, low to medium land values, newly developed but consolidated area), Fag Attan (mixed use, medium to high land values, new urban expansion area), Bait Bous (residential, low to medium land values, new urban expansion area), Al Hasabah (residential, medium land values, old established neighborhood), and Musaik (residential, low to medium land values, old established neighborhood). In Aden, the four selected areas are: Buraika (mixed use, medium to high land values), Mansoura (mixed use, medium to high land values), Al Sheikh Othman/Dar Saad (mixed use, low to medium land values), and Khormaksar/Sirah (mixed use, medium to high land values). The sample is clearly small, which limits the ability to make conclusive inferences. Yet, it provides an opportunity for important insights as to landowners’ perception of the land registration system. Building on the survey and case studies, missions were organized to consult with, gather data from, and solicit insights from key Yemeni stakeholder officials and institutions. This Policy Note has benefited greatly from their expertise and local knowledge in the areas of legal affairs, land survey and registration, finance, public works, and the private sector. Early information-gathering missions were followed by a Consultative Workshop held on February 20-21, 2005, in which over 40 participants contributed to the discussion, enabling many of the preliminary findings and recommendations to be vetted and refined. This was followed by the establishment of the Urban LPTF comprised of 13 members spanning across 8 different public agencies and private businesses. Their efforts at data gathering and analysis and the feedback subsequent to the Workshop provided the team with extremely valuable input in preparing this Policy Note and their contribution is therefore gratefully acknowledged.

1.5 Limitations

Problems associated with land administration and tenure security touch upon a number of policy issues and impact many different institutions, communities and interests. Recognizing the limitations of any study taking on the subject of land, it is important at the outset to explain the scope of the study and the rationale for the choices made as to what to include in the review. The primary focus of the study has been on analyzing and addressing land issues within the urban context. There are four main reasons for focusing on land issues in urban areas only. First, the rapid

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rate of urbanization in Yemen over the past years2 has placed significant pressures on land, especially in the main cities that are particularly attractive for rural migrants (Sana’a, Aden, Taiz, Hodeidah and Mukalla). The result is both very high land prices (in Sana’a, an average lebna—i.e. 44.45 m2—costs about YR1.5 million or USD8,010) and a major problem in the form of uncontrolled land development (in Hodeidah, over 25% of the city’s population of 450,000 inhabitants live in squatter settlements). Second, intense development pressures in urban areas have led to increased contestation of public (and private if land was transferred by the State) land ownership in peri-urban areas, especially by tribal claimants. This problem is particularly acute in the main cities including Aden (where all future extension areas were contested by Al Mossaaba and Al Alban tribes) and Mukalla (where a similar problem exists with Al Akabra tribe). In addition, vacant lands within the urbanized area in a city like Taiz are likely to be undeveloped due to contested ownership claims.

Third, the transformation of Yemeni cities into engines of growth is currently among the top priorities of the Yemeni Government’s policy. The focus on making Yemeni cities competitive through the impact of improved urban land policy and property rights regime on the business and investment climate is also consistent with the goals of the Yemen Country Assistance Strategy and PRSP. In addition, land policy is a key element of the Bank, MENA region and Yemen urban strategies, which all focus on the importance of creating competitive cities. The Yemen urban strategy also singles out the importance of tenure security for urban poverty alleviation. Moreover, a Country Social Assessment (CSA) is being carried out by the World Bank in parallel with this analytical work and will be exploring, among other topics, land issues in relation to rural poverty, in addition to exploring gender issues. For this reason, this study does not delve into a disaggregated analysis of all land-related issues, although efforts were devoted to coordinate with the team working on the CSA.

1.6 Contents

This Policy Note is organized into three main sections , following this introduction. The first deals with land registration and land dispute resolution, being two key foundations of the land tenure security administration system. Section two gives special emphasis to the legal framework governing land registration, given the pressing need to revise the existing law and ongoing efforts by the government in this area (which is expected to result in a revised law very shortly). Section three deals with State land management. These are followed by eight Annexes with tables referenced throughout the text.

2 The urban population in Yemen has been growing at an average annual rate of 4.4% between 1992 and 2003 compared to an average annual rate of 3.0% for the total population during the same period.

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Section 2. Administration of Land Tenure Security: Land Registration and Land Dispute Resolution

2.1 Introduction

A critical constraint to the investment climate in Yemen is the low confidence of and perceived inability among most investors in the ability to acquire secure title to urban land for investment purposes. The existing regime of tenure security and the associated land registration system appears to be ineffective. According to a World Bank Survey in 2002, one-third of 946 respondents in Sana’a, Hodeidah, Aden, Taiz, and Hadramout identified land ownership-related problems as a key constraint to doing business in Yemen (see Table below)3. And if Hadramout were excluded from the sample, the statistics would be much starker: over half of the businesses state that land problems hamper business operations (See Table 2.1).

Table 2.1 Survey Responses to whether Land is a Problem in Doing Business in Yemen Location Yes (is problem) No (problem) N/A Total Sana’a 99 157 9 265 Hodeidah 42 64 - 106 Aden 84 163 2 249 Taiz 46 146 8 200 Hadramout 16 110 1 127 Total 287 640 20 947 Source: World Bank, 2002. Land disputes appear to be particularly widespread and their resolution is a lengthy and costly process. Indeed, firms involved in land disputes in the survey on average took more than one year to resolve the disputes in courts. The judicial system appears to be particularly overburdened with a large proportion of land disputes (as opposed to reliance on mediation and alternative dispute resolution mechanisms). In effect, as will be shown later, depending on the Governorate or court district in question, land-related disputes normally account for 30-50% of the total number of civil cases heard before Primary Courts and sometimes even of the caseload of the Appeals Courts (which implies a much longer timeframe for dispute resolution). This situation of less than adequate security of tenure clearly has negative impact on direct investment and the credit market, in addition to undermining the predictability and certainty of private and commercial transactions and thus distorting the functioning of the market economy. It is not uncommon to hear that a landowner sold the same piece of land several times to different buyers or that an individual sold land that he does not lawfully own. As will be discussed later in detail, there appears to be a general perception of low confidence by the public (and some institutional stakeholders) in the usefulness and effectiveness of the land registry, which is in part because registration does not, in itself, secure title to land. The problem is further exacerbated by the fact that most land transactions are not registered in the land registry. Overall, land is an extremely important topic in Yemen, if one judges from the level of interest and the passions it provokes across all institutional and individual stakeholders from the public, private and civil society/community sectors both in formal and informal settings. Land tenure security figured on the policy agenda in Yemen in various degrees of prominence during the 1980’s and the early 1990’s (especially with the challenge of restitution of nationalized property in the former South after Yemen’s unification). The problem with past efforts, however, was that they were mostly focused on only one institutional stakeholder and many interventions had a narrow scope of the

3 World Bank, 2002.

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technical aspects needed to support the conduct of land registration. Today, land—specifically urban land—is returning to occupy a center stage position in Yemen’s policymaking agenda. Specifically, improving the land market’s functioning in urban areas to encourage investment and contribute to growth and poverty reduction appears to be a key priority as far as policymakers in Yemen are concerned.

2.1.1 Integrated Framework for Study of Land Registration This section covers a critical component to the functioning of the urban land market in Yemen, namely the existing dynamics, issues and problems related to the administration of urban land tenure security, in addition to proposed remedies. This study adopts an integrated framework in its examination of the issues and problems, consistent with the recommendations of an important World Bank policy paper on reforms to the LRE sector.4 The paper underscored that many prior policies and projects aimed at reforming the land sector and improving tenure security failed to address the requisite issues in a holistic and integrated manner. Indeed, a major problem with much analysis of land tenure security is that it tends to myopically focus on land registration alone (as a technical problem) and fails to give the institutional dimension (related to land registration and dispute resolution, as key tenets to any system of administration of land tenure security) the importance that it deserves. Cognizant of this problem, the study uses a holistic and integrated approach to examine the administration of land tenure security in Yemen that is intended to go beyond answering the question of “how to expand the use of the land registry.” The study uncovers the interplay of multiple institutional and operational/organizational forces as the fundamental dynamic underlying the land tenure security administration system in Yemen, particularly the numerous stakeholders that have a direct and indirect impact on the administration of land tenure security in Yemen. This dynamic will be shown to have impacted the land tenure security outcomes in the past and as such represent an important, if not the key issue to address in future policy interventions. The following framework has been developed to address key land registration issues in an integrated manner. The framework (illustrated in Figure 2.1) addresses key aspects of land registration including institutional issues; legal issues; administrative/implementation issues; and perceived benefits/level of utilization of services, as follows:

4 Galal and Razzaz, 2001.

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Figure 2.1 Integrated Framework for Examining Urban Land Registration Issues

Institutions of Land Registration: These are the key stakeholder institutions that influence matters of land registration in Yemen, and which can be classified in two groups. The first group includes the entities with direct influence on the process: (i) the so-called Amin, and to a lesser extent the lawyers that perform the same functions in Southern and Eastern Governorates; (ii) Courts; (iii) Ministry of Justice (MOJ), as well as the Higher Judicial Council (HJC); and (iv) SALR. The second group includes the entities with indirect influence on the process: (i) SLREA; (ii) Ministry of Religious Endowments (Ministry of Awqaf); (iii) lawyers/attorneys; and (iv) real estate brokers (called semsar in Arabic). Different Modes of Land Registration and Perceived Benefits: As will be shown later, there are three co-existing (and competing) modes of land registration or forms of obtaining perceived/ actual tenure security in Yemen, which are associated with the following institutions: (i) the Amin; (ii) the Courts; and (iii) the Land Registry. Given the difficulty of measuring net added value due to land tenure security arrangements, the study examines the perceived benefits from the use (or intent of use) of these three modes of obtaining land tenure security, as well as the perception of fees associated with the different services performed (i.e. the monetary cost of deriving greater land tenure security). These aspects (perceived benefits and costs) would be useful in assessing the perceived added value of each modality of land tenure security. Another important issue is whether there are in place adequate incentive mechanisms or perceived benefits for the various institutions (Amin, Court and Land Registry) to engage in the process positively. In other words, what benefits/incentives do the various institutional stakeholders derive so as to adequately and efficiently deliver the requisite services? In the case of the Amin, these are the fees charged, while in the case of government agencies, these may be monetary (in the form of incentives to staff based on retention of revenues, or rent-

Status of Land

Registration

RegistrationInstitutional

Issues

RegistrationUtilization

Issues

RegistrationAdministrative/Implementation

Issues

RegistrationLegalIssues

Status of Land

Registration

RegistrationInstitutional

Issues

RegistrationUtilization

Issues

RegistrationAdministrative/Implementation

Issues

RegistrationLegalIssues

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seeking behavior) or non-monetary (prestige, power, self-fulfillment, etc). Even though this issue could not be studied in detail due to lack of information, yet it will be highlighted in the discussion as an important factor underlying the operations of the land tenure security system as a whole. Laws, Decrees and Norms Governing Land Registration: The set of rules that governs the behavior of individual and institutional stakeholders involved in administering land registration. This includes the official rules (Laws, by-laws and decrees) and the unofficial and often unwritten rules that apply in the land tenure security arena. In Yemen, the key official rules include: LRL (No. 39 of 1991); Authentication Law (No. 29 of 1992 amended by Law No. 24 of 1997); and the relevant parts of the Civil Code (governing real property rights), SLRE Law (No. 21 of 1995), and other laws/decrees. The unofficial rules comprise traditional customary norms (called Aaraf in Arabic, plural of Orfi) which are Shari’a-based and influence all facets of the land sector (e.g. land transactions, court rulings, etc), in addition to the reliance on traditional or customary institutional organizations to ensure or enforce tenure security including kinship, tribal and/or neighbor-based transacting to guarantee land tenure security and retain the ability of recourse. Administrative Processes and Implementation of Land Registration: The natural extension of the offic ial and unofficial rules is the processes through which the rules are translated, which determine the way in which land tenure security is implemented in reality. It is through these processes (to obtain deeds, perform transfers or inheritances, etc) that landowners, citizens or investors experience the institutional/organizational environment and which in turn affects their perceptions of the merits of each system.

On the basis of this framework, Figure 2.2 summarizes the key aspects and forces underlying/ explaining the ineffectiveness of land registration.

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Figure 2.2 Key Problems Affecting Urban Land Registration

As mentioned earlier, the focus in this research is intended to be broader than just registration at the land registry, which allows to address broader customary and non-registry approaches used in the administration and delivery of land tenure security. Better understanding of how these alternative approaches to land tenure security operate in the context of Yemen is particularly important when developing approaches for increasing the reach of formal land registration.

2.1.2 Definitions and Overview of Common Approaches to Administering Land Tenure Security Before discussing known and practiced approaches to administering land tenure security, it is important to clarify the meaning of the phrase as used in this policy note. There are several definitions of land tenure security. Bruce (1998)5 provides three levels/definitions as follows:

• The first and narrowest definition of land tenure security from a legal perspective revolves on the right to use and to exclude. This implies that others (i.e. State or other private individuals) cannot interfere with the landholder’s possession or use of land. The tenure itself may be short such as a one-month lease, but the leaseholders’ certainty that they will be able to keep the land for the whole month is what makes tenure secure. This security is premised on confidence in the legal system.

• The second and broader definition of land tenure security from an economic perspective adds

the factor of time. The one-month lease, while having a legally secure right to use and exclude for its duration, is too short to encourage occupants to invest in the land by, say, planting trees because that they do not expect to be able to reap the benefits of wood/greenery

5 Bruce, John, 1998 .

Ineffective Land

Registration

Weak Laws/Decrees vs.Reliance on Custom

Institutional Focus vs. Goal ConflictAmin, Courts, SLRA, MoJ/HJC

HighDisputes/Low ValueBy LandOwners

InadequateProcess &ProceduralGuidance

Ineffective Land

Registration

Weak Laws/Decrees vs.Reliance on Custom

Institutional Focus vs. Goal ConflictAmin, Courts, SLRA, MoJ/HJC

HighDisputes/Low ValueBy LandOwners

InadequateProcess &ProceduralGuidance

10

several years downstream. Thus, from an investment viewpoint, the one-month lease is seen as insecure due to its short duration. From an investment viewpoint, the security of tenure relates to the time needed to recover the cost of an investment.

• The third and broadest definition adds to the right to use and exclude and incentives to invest

the following dimensions: the right to transfer the land freely whether through inheritance or through the ability to sell it on the market. Even if the tenure is secure for the lifetime of the holder and is inheritable, it may be insecure if it cannot be freely bought and sold (as in some leases). As such, this level of security of tenure requires full rights in the land, i.e. full private ownership. This definition is the focus of this policy note.

As for land administration, it is defined as the overall institutional, legal and procedural framework that is responsible for the definition and protection of real property rights; the recordation and dissemination of information about tenure/rights, value and use of land; the protection of the validity of transactions; and enforcement of contracts and dispute resolution.6 The quality of the land administration system is thus the main determinant of the extent of land tenure security. In most countries, land administration has evolved from separate systems to manage private rights in land and manage public or State land. As far as the administration of land tenure security is concerned, there are generally four regimes of recording rights to and over land7: (i) customary tenure; (ii) private conveyancing; (iii) registration of deeds; and (iv) registration of title. These four regimes are used to different degrees and in different combinations in various countries, though the latter two are more prevalent in the West.

Customary: Under this regime, rights to and over land are based on informal means usually recognized by a tribe or community. Interests in land can be transferred through a locally administered community-based institution/system. The scope of formal documentation varies significantly among localities but can in some cases involve a “record/book” maintained by the tribal chief or community leader (e.g., mokhtar or mayor). A variation of this approach is the regime according to which majority of the rural land in Yemen is administered. Private Conveyancing. Under this system, registration and recording of rights to and over land are based on the claims presented by the person occupying the land. Interests in land are transferred by signing, sealing and delivering a private deed. The conveyance stating the owner’s claim to the parcel of land, an abstract of all documents referring to said parcel, a description of the parcel and a contract of sale relating to the parcel are all that is needed to complete the transfer transaction. Weaknesses of this system include a lack of duplicate title deed, an absence of physical examination or survey of the parcel of land and usually a lack of public registration of the transaction. No safeguards or protection exist as the transfer is based on a personal claim, rather than “trusted” marketable title. In Yemen, the basira prepared by the Amin is effectively private conveyancing. Registration of Deeds (Contracts or Basira ): This system resembles in many ways the private conveyancing system except for the additional requirement that the transaction be registered (legal publicity) for the interest of the public at large. Registration is carried out by a public

6 The so-called RICE framework is developed in Galal and Razzaz, 2001. 7 Transfer of land means transfer of certain interests temp orarily enjoyed in and over the land. Ownership of land means ownership in perpetuity. Ownership for a limited period of time is called leasehold. Minor interests, known as encumbrances, can also be imparted on land. These may restrict the physical enjoyment (right of access, water or conditions of use) under certain circumstances. Examples of encumbrances include rent and mortgages. Interests in land may also be exercised by horizontal strata. Someone other than the person having surface rights may have mining or oil rights.

11

official who copies or abstracts the deed in an official registry. Title to a given parcel of land is proven through a search in the deeds registry against the names of all indiv iduals who may have formerly enjoyed ownership rights over the parcel. The success of the search depends on the thoroughness of the registration process. The deeds registry is a record of transactions in rights and not of the rights themselves, as the registrar has no way of knowing if the owner is justified in claiming the alleged property rights. Usually, deed registration was introduced to prevent fraud in conveyancing, reduce time -consuming and costly searches and bring order into the land transfer market. It is limited to recording private conveyances and does not extend into investigating the validity of the documents produced. Legally, a deed which was registered first has priority over a deed registered at a later date. While it constitutes an improved system relative to private conveyancing, it is nonetheless criticized for lacking elements of certainty and uniformity. This system has been adopted by France, Italy, Holland, Greece, India, Turkey, South Africa, Pakistan and parts of the United Kingdom until recently. According to the LRL of 1991, Yemen applies a version of the deed registration system (the system was known as “sejel shakhsee”—a person-based deed registration—until it was changed in 2000 to “sejel ainee” or parcel-based deed registration system). In reality, however, due to the very low volume of registration, what is practiced is a version of the conveyancing regime.

Registration of Title : Widely believed by the advocates to be the best land registration regime, registration of title is an authoritative system of recording interests in land at a public office. The identification of the parcel, the nature of the rights enjoyed over it and the identity of the beneficiaries of such rights is the basis of the registration. Every transaction impacting on title to the parcel is registered. A cursory examination of the title at the land registry reveals all that needs to be known about any given parcel. The validity and legality of the information provided by the land registry are government guaranteed. Title registration, however, depends on two critical components. First, it is highly dependent on a commitment to the on-going recordkeeping and maintenance of the system as the volume of transactions increase. Second, it depends on an efficient system of cadastral surveying whose prohibitive cost has been one of the main reasons why many countries have not opted for title registration as their land registration system. A cadastral survey would describe and determine, beyond doubt, the boundaries of a given parcel of land. This system has been adopted by such countries as Switzerland, New Zealand, Australia, Lebanon, Syria, Tunisia, Algeria, Morocco, Scotland, and Kenya (and some counties in the states of New York and California in the U.S.A.). One system of registration of title, the Torrens system, first introduced in South Australia in 1858 and in New Zealand in 1870 had outstanding success and has since been adopted and adapted by many counties worldwide.

2.2 Background on Historical Legacy of Land Registration in Yemen

In countries with a colonial background, like Yemen, there is often a dual system; imported systems based on western models operate in urban areas and areas formerly occupied by colonial landholders, and customary systems operate elsewhere. There are a number of legal sources for colonial systems. 8 In the majority of the countries, there is a mixed colonial legacy which is reflected in the evolution of land administration systems during post-independence. Many of these former colonies have tried to unify their systems after independence. The legal and judicial framework in Yemen is still in a state of transition following the unification in 1990 of Northern and Southern Yemen, which had different legal regimes. While North Yemen’s 8 In countries influenced by British legacy, the legal source in English common law, usually based on the law prior to the major changes introduced in England in 1925. Other countries in the Middle East have different influences ; in Lebanon, Syria, there is significant influence of the French Civil Code and German Grundbuch.

12

legal system drew heavily on legal traditions of the Ottoman system, South Yemen’s system had a distinct common law influence resulting from decades of British mandate. The Constitution of the unified Republic of Yemen espoused the principle of independence of the judiciary. The judicial system of North Yemen has become increasingly influential in the southern part of the country since the end of the civil war in 1994. In Yemen, the first LRL was passed in the North in 1976, in an attempt to bring together Shari’a law and elements of English law after the creation of the Yemen Arab Republic in 1962. 9 There is a varied recognition of customary tenure in the land administration systems throughout the world. With some, there is an explicit recognition of customary rights. But these administrative systems operate in a very complex and conflicting policy, legal and institutional environment and, as a result, offer limited security of tenure. In other instances there is a unified legal system based on customary law (for example, Uganda and Mozambique). In Yemen, there is the community tenure regime, in rural areas, where it appears to be efficiently administered by the tribal system. In many countries the core land administration functions of registration and cadastral survey/mapping operate separately, often in different Ministries, while in others they are brought together. In much of Europe and Latin America, registry offices and cadastral offices are separated with the former usually linked to local courts or administrative districts. Separate registries and cadastral offices frequently lead to problems with inconsistent and duplicated records. In some countries, the registry operates without a reliable survey/map base, which creates difficulties with the definition of the parcel over which a registered right might apply, leading to problems with overlapping and duplicate rights. In Yemen, the current organizational setup for land administration is a combined agency. However, the actual organizational location of this agency has been changing. It used to be under the Ministry of Public Works and Highways (MPWH). It is now an independent authority reporting to the Presidency of the Council of Ministers (i.e. Prime Minister). The institutional/organizational framework appears to be currently under discussion. One proposal is to separate the registration function from the Survey Authority and attach it to the MOJ. In some countries, private actors (e.g. notaries, lawyers, private surveyors and other intermediaries) play a significant role in many land administration systems. In Yemen, the notaries (in Arabic called Amin, which are licensed and monitored by the MOJ) play a significant role in the former North, while in the former South, members of the bar, effectively most lawyers, perform this function. There are three formal types of land ownership in Yemen: Waqf land, State land, and private land.

Waqf land is usually held in permanent trust by the Ministry of Awqaf for the benefit of Islamic institutes and charitable purposes (hospitals, schools and mosques). Waqf property is classified into three main types: inner Waqf , consisting of all mosques and their land held in cities and towns or properties held in the rural areas whose revenues are used for the benefit of the town mosques; outer Waqf consists of all mosques and their land in rural areas for the upkeep of religious institutes in villages; and private Waqf is land in private ownership where a portion of the income from land is donated for religious purposes and remains an encumbrance on the land for perpetuity. State land (in Arabic, amlak al-dawla or hokoomi) is land which was previously the property of the former royal family and was taken over by the state upon the formation of the Yemen Arab Republic in 1962, and State lands in the South after the unification, and which included former Sultanate lands from pre-republican times. Related urban land records were kept in the Ministry of Finance’s department of public domain. Currently, the land is administered

9 Indonesia, a populous Moslem country, for example, took 12 years from independence in 1948 to draft and promulgate the Basic Agrarian Law in an attempt to unify land law

13

by the SLREA, under the MOPWH, and in rural areas by tribal or village leaders. Prior to SLREA establishment, the original deeds of State land were kept in the Central Bank of Yemen, and the registers of transactions, sales, leases and purchases were kept in the branch offices of the Ministry of Finance. State land consists of large areas of open land (especially in Southern and Eastern Governorates), land for military use, land used for public services (schools, hospitals and ministries) and land used for public utility, i.e. roads and streets. State land may be leased (or purchased/granted in special cases) from the Government. Private land (in Arabic, mulk horr) type covers all land held in private ownership, urban and rural, which is neither Waqf land nor State land. Private land is subject to the Shari’a-based Civil Code which ensures that an owner’s direct descendants and, failing that, indirect descendants inherit the estate upon the owner’s death. Private land may be freehold , in which case certain interests are owned in perpetuity, or leasehold , in which case certain interests are for a strictly limited period.

In general, it is possible to discern a spatial pattern of administration for land tenure security in Yemen which is highly intertwined with its colonial and pre-unification legacies. In the North, there is a distinct mix of English law influencing the land law which passed in 1976. The Shari’a doctrine was the underlying basis for the practices and customs which governs the practical aspects of the latter law in day-to-day transactions. This system is in practical terms has been operating in the urban areas of the North. In the South, due to the nationalization of property, the majority of lands were State-owned. The administration of State land was largely affected and continued using the English methods. After reunification, a LRL (with very minor changes to the 1976 version of the North) was passed in 1991 which attempted to unify the two systems in the North and the South. In practice, due to prior legacies, this spatial pattern of administering land tenure security continues today. In the North, the modus operandi practice of registering transactions was known as “sejel shakhsee.” Despite the passage of the 1976 Law on registration of land transactions, which required in addition to private conveyance the registration of deed at the land registry, registration at the land registry was at best ad hoc and at worst non-existent. Hence, the administration of property rights relied primarily on the conveyancing system, which is administered primarily through the notary public/Amin . The post reunification LRL of 1991 did not change this modus operandi significantly. In the South, since reunification, the conveyance system is practiced in a slightly different manner. The lawyers and brokers can serve instead of the “notaries”. The dominant regime of land tenure security as experienced/practiced by the landowners is private conveyance. Increasingly more transactions appear to be channeled to the land registry. Therefore, the legal form of administering land tenure security in Yemen is through a dual system of private conveyance and deed registration. In practice, that dual approach has not functioned well, if at all, resulting in a pure private conveyance approach in most cases. This will be discussed later in detail. The 1991 law specified the usage of “sejel ainee” in parallel to the “sejel shakhsee” system. The ‘sejel ainee” system (as practiced) involves visiting the site and performing ground survey as well as doing title searches of prior registered deeds. However, this system was not implemented until 2000. Subsequently, the land registry has been moving to the latter system based on transactions that come in on-demand. It is important to highlight that “sejel ainee” is effectively moving from an “owner-based” deed registration system to a “parcel-based” deed registration system. This is distinct from a “registration of title” system which has a different underlying philosophy and legal doctrine. This distinction is essential as no formal guarantees can be made by the land registry in processing cases based on “sejel ainee” or parcel-based deed registration which would be equiva lent to the guarantees offered by the title registration system. This is a key issue discussed later in detail. In terms of the process of transactions, the modus operandi is as follows. To buy and sell private real property, both the seller, with his deed, and the buyer should report to a notary public’s office. The notary draws up the sale contract. A new deed is prepared and features a full description of the property, including area, neighboring parcels, boundaries and measurements. The property is paid for

14

and the new deed is signed by both parties and by the witnesses. The old deed is endorsed by the seller with a statement declaring the change of ownership, and handed over to the buyer. The deed must be registered in the office of the notary public and the land registry. The records of the transactions at the notary are supposed to be reported to the land registry on a periodic basis. Nowadays, many sales of land are concluded without registration with the land registry. Reasons range from people’s lack of awareness of the requirements of the law to their lack of confidence in the land registry and perhaps their wish to avoid paying transfer taxes. Given that proof of registration is required by commercial banks prior to financing a mortgage, and by the MPWH prior to granting building permission, only those affected by these requirements have an incentive to register. Others have little incentive to do so as registration does not appear to provide concrete benefits vis-à-vis a secure title (and there may be a perception that it may in fact trigger collection of sales tax and the religious tax, called zakat). Figure 2.3 illustrates the different stages/modes of administration of property rights to land. Figure 2.3 Different Stages/Modes of Administration of Property Rights to Land in Yemen

*This step is referred to here as “re-“authentication since it is not strictly speaking required, but is performed as a matter of practice.

2.3 Land Registration and Land Dis pute Resolution: Existing Situation, Issues, Problems and Potential Remedies

The ultimate test of any land tenure security regime and its implementation is the extent to which the land owners buy into it. The legal penalties and the threat of no official recognition of land rights for real property exist as “sticks” to prod the owners into registration of their transaction. However, it is the “carrot” of the added value that at the margin makes a difference for owners in enticing them to register their rights and inducing them to pay the associated fees. The alternatives of do-nothing and business-as-usual are usually far more attractive than the formal registration approach. The following items are highlighted regarding the value added dynamics for formalizing land registration: a brief overview of land prices (relative to poverty levels) in Yemen; the volume of land/transactions that

Administration ofLand Registration

Deed RegistrationRegistered

LandTransaction

LandTransaction

Conveyance

Amin/Notary

Private ConveyanceNon-Registered

LandTransaction

CourtAuthentication

of Amin*

Deed Registration

Land Registry

“Re-”Authentication*

Courts

Administration ofLand Registration


LandTransaction

LandTransaction

Conveyance

Amin/Notary


LandTransaction

CourtAuthentication

of Amin*

Deed Registration

Land Registry

“Re-”Authentication*

Courts

15

have gone through deed registration; the perception of landowners regarding the deed registration and conveyance system; the financial burden of registration and associated perception of landowners; and the level of land disputes. There are five indicators/benchmarks that are used to measure the relative level of development of administrative capacity for registration of land rights in various countries:10

• What percentage of properties falls under the formal legal registration system? • What percentage of properties falls under the informal/semi-formal registration system? • What percentage of the country and population is covered by the formal system? • What level of disputes over land? • Average time taken to resolve land disputes

Most of the above indicators are hard or simply impossible to obtain for Yemen, either due to lack of record keeping or due to the novelty of the practice or both. Nevertheless, an attempt is made to offer some proxy indicators for the above or at least a qualitative notion of the level of the indicator.

2.3.1 Land and Some Related Economic Indicators The relative income levels in Yemen are somewhat low compared to the region. The Upper Poverty Line income level according to the 2002 PRSP is less than YR 40,000 per annum. The relatively higher income groups in urban areas, e.g., Sana’a, can earn up to 5 to 10 times that, i.e., YR 200,000-400,000 per year (USD 1,078-2,156). Mid-level civil servants (e.g. teachers, department directors, etc) reportedly earn YR 17,000-20,000 per month or YR 204,000-240,000 per annum (USD 1,100-1,294). In comparison, the typical undeveloped land parcel on the outskirts of the urbanized area in Sana’a sells for approximately YR 100,000 per lebna (one lebna equals 44.45 m2), meaning that a 20 lebna parcel would sell for YR 2 million (USD 10,782). The price of LRE for a same size developed parcel for residential use (typically a 3-4 floor house with one unit per floor) ranges between YR 5-10 million (USD 26,594-53,908) according to interviewed semsars. Such prices imply the following: (i) LRE commands a very high premium in the market, even for locations which are not considered prime; (ii) LRE is a very highly prized commodity and very valuable form of wealth accumulation, which far outdistances other forms in terms of value (in fact, no other forms of wealth come close to competing with urban LRE in their value/growth potential); (iii) LRE is simply out of reach for many families who are at or around the upper poverty line; and (iv) for the higher income groups (but by no means the well-to-do), a typical LRE purchase constitutes 10 to 20 times of their annual income. Given that very few resources command such value and growth potential, it would not then be surprising that LRE tend to be handled in less than transparent means, and that private land transactions tend to be regarded as a target of rent-seeking behavior in official/formal dealings (e.g. land registration, judicial and enforcement officials, Amin, etc). Generally, there are two types of land which are transacted: privately -owned (horr ) and private Waqf , and these command different prices. Interviews with semsars and different stakeholders indicate that Waqf land on average trade at a little more than 50% of the price of private land. The price difference is attributed to the restrictive covenants which are typically stipulated in the transfer contract: (i) that the land is an endowment and thus can at least in theory revert back to the Ministry of Awqaf ; and (ii) that Waqf land always stipulates a specific set of uses/other covenants which must be adhered to. For example, in the Hadda neighborhood, according to the Amin, the land price for private type is on

10 World Bank, 2003.

16

the average YR 1.5 million (USD 8,086) per Lebna and for privat Waqf YR 800,000 (USD 4,313) per Lebna. Due to the unavailability of solid data on average prices for LRE in Sana’a and other urban areas, the team interviewed brokers (and Amins) in Sana’a, who were requested to price a hypothetical (but typical) situation, namely a parcel of land of 10 lebna (444.5m2) with a four-story residential construction on 4 lebna (177.8m2). Table 2.2 lists the average/prevailing LRE prices for six different hypothetical locations in Sana’a. The breakdown of cost between the land itself and the land development (the building) was taken at 60% and 40% respectively, based on the interviewee’s experience.

Table 2.2 Prevailing Prices of Residential Land and Real Estate by Location in Sana’a, 2004 Type of area/ location

Location Price of land and building (YR million)

Land price (YR million per lebna)

Building Price (YR million / built lebna)

Price/Unit Combined

High-end / central

On 60m road 50 3 2 5

High-end / central

Off 60m road 30-40 1.8-2.4 1-1.2 3-4

Middle income

On main road 25-30 1.5-1.8 1-1.2 2.5-3

Middle income

Off main road 15-20 0.9-1.2 0.6-0.8 1.5-2

Low-end / peripheral

On main Road 10-12 0.6-0.7 0.4-0.5 1-1.2

Low-end / peripheral

Off main road 8-10 0.5-0.6 0.3-0.4 0.8-1

Source: Interviews with Semsars (2004) Note: These prices are indicative of LRE price levels in 6 different location types in Sana’a. The object of

assessment is a hypothetical parcel of 10 lebna (444.5m2) with a four-story residential construction on 4 lebnas (177.8m2). The Floor-Area-Ratio in this example is 1.6 (i.e. the ratio of the overall built area to the land area).

The price of LRE is also very high in secondary cities,11 and although less than Sana’a, the financial burden is also 10 or more times annual household income. In Yarim (Ibb Governorate), the price of one lebna of land is YR 500,000 (USD 2,695) if on the main commercial street, YR 200,000 (USD 1,078) if in other urban areas, and YR150,000 (USD 809) if in the urban fringe. The price of LRE for a four lebna parcel with a modest single-family house ranges between YR 1.3-3 million (USD 7,008-16,173). In Attaq (Shabwa Governorate), a 400 m2 parcel would sell for YR 2.5 million (USD 13,477) if along the main commercial street, YR 1-1.5 million (USD 5,391-8,086) if on a secondary street, or YR 500,000 (USD 2,695) if in the urban fringe. In Thula (Amran Governorate), a four lebna parcel would fetch YR 400,000-600,000 (USD 2,156-3,235) if on the main paved road. In Zabid (Hodeidah Governorate), the cost of a 500m2 land parcel is about YR 500,000 (USD2,695) within the boundaries of the core area and YR 300,000 outside the core (USD 1,617). In Ja’ar (Abyan Governorate), the price of a 250m2 parcel would be YR 700,000 (USD 3,774) if on the main road and YR 100,000-200,000 (USD 539-1,078) if on a secondary road.

2.3.2 Deed Registration at the Land Registry: Existing situation According to the land registry statistics, there are approximately 288,000 registered deeds in Yemen since 1977, the year in which the first branch was established in Sana’a following the enactment of the LRL in the former North in 1976 (by contrast, the first branch to open in the former South was in

11 Angelo Bonfiglioli et al , 2005.

17

Aden in 1992, following the enactment of the LRL of 1991 for unified Yemen). The detailed data is provided in two tables corresponding to the two different methods of deed registration used: “sejel shakhsee” (a person-based deed registration used until 1999 and which did not include site inspection) and “sejel ainee” (a parcel-based deed registration used since 2000 and which involves site inspection and survey). Table 2.3 covers deeds/basiras registered under the sejel shakhsee system between 1977 and 1999, while Table 2.4 lists the deeds/basiras (also the parcels) registered under the sejel ainee system between 2000 and 2004. The total figure of 288,000 registered deeds in Yemen since 19777 comprises about 240,000 deeds of privately-owned land, 40,000 deeds of State -owned lands, and some 8,000 deeds of Awqaf lands. In addition, some 25,000 mortgages were registered between 1977 and 2004. In the case of the privately-owned lands, it is important to note that the 240,000 registered deeds do not necessarily correspond to an equal number of registered land parcels. The true number of registered private parcels is expected to be less since the manual index based on the transacting parties’ names, which was used in the sejel shakhsee system until 1999, is not equipped to capture the eventuality of several sequential transactions on the same parcel. No estimates, however, can be made of the true number of parcels. The volume of deed registration activity has been highly concentrated throughout the 27 years history of the registry. Sana’a as the capital and home to the oldest registry branch accounted for 61% of all registered private deeds between 1977 and 1999 and 47% of the deeds registered since 2000. Besides Sana’a, 34% of all registered private deeds between 1977 and 1999 were in three other governorates (Aden, Taiz and Hodeidah), which means that 95% of all registered private deeds during this period were in four Governorates only. Similarly, 90% of all registered private deeds since 2000 took place in Sana’a and five Governorates (Aden, Taiz, Hodeidah, Hadramout with its two offices in Mukalla and Say’un, and Ibb with its two offices), which accounted for 43% of all registered private deeds during this period. In terms of Awqaf lands, Ibb and Sana’a alone accounted for 92% of all registered deeds between 1977 and 1999, and 87% of all registration since 2000. As for State lands, Aden and Mukalla alone accounted for 93% of all registered deeds between 1977 and 1999, and 68% of total registration activity since 2000 (another 25% of registration activity since 2000 were in Hodeidah). It has to be noted, however, that 10 out of 20 land registry offices opened since 2000, so it may be too early to measure the impact of land registration. The other 10 offices were established as follows: Sana’a alone in the 1970’s, six offices in the 1980’s, and three during the 1990’s. Table 2.3 All Registered basiras/Contracts with the Survey Authority and Land Registry Using

the sejel shakhsee System, 1977-1999 Registered basiras/contracts of land and real estate Mortgages Year

Branch Private % of total

State % of Total

Awqaf % of Total

Total Number % of Total

Branch Est.

Sana’a-HQ 106,393 61% 386 3% 1,554 32% 108,233 11,893 62% 1977 Aden 18,096 10% 4,581 32% 155 3% 22,832 113 1% 1992 Taiz 23,941 14% 409 3% 32 1% 24,382 792 4% 1982 Hodeidah 17,063 10% 160 1% 0 0% 17,223 3,611 19% 1982 Mukalla 0 0% 8,794 61% 0 0% 8,794 110 1% 1995 Ibb 1,182 1% 67 0% 2,908 60% 4,157 1,336 7% 1982 Zamar 6,666 4% 6 0% 17 0% 6,689 936 5% 1982 Saada 991 1% 108 1% 195 4% 1,304 75 0% 1985 Ma’reb 1,100 1% 0 0% 0 0% 1,100 349 2% 1985

Total 175,432 100% 14,511 100% 4,861 100% 194,714 19,215 100% Source: Survey Authority and Land Registry, 2005

18

Table 2.4 All Registered Properties with the Survey Authority and Land Registry Using the sejel

ainee System, 2000-2004 Registered land and real estate property units Mortgages Year

Branch Private % of Total

State % of Total

Awqaf % of Total

Total Number % of Total

Branch Est.

Sana’a-HQ 30,414 47% 221 1% 1,584 52% 32,219 2,928 48% 1977 Aden 6,873 11% 4,302 17% 57 2% 11,232 283 5% 1992 Taiz 7,283 11% 76 0% 82 3% 7,441 542 9% 1982 Hodeidah 2,835 4% 6,274 25% 0 0% 9,109 653 11% 1982 Mukalla 377 1% 9,772 39% 0 0% 10,149 448 7% 1995 Say’un 4,552 7% 2,909 12% 79 3% 7,540 556 9% 2001 Qutn-Sayun 243 0% 106 0% 0 0% 349 15 0% 2003 Ibb 4,853 8% 31 0% 1,047 35% 5,931 288 5% 1982 Kaida-Ibb 675 1% 0 0% 7 0% 681 3 0% 1999 Haja 291 0% 12 0% 6 0% 309 22 0% 2000 Tihama -Haja 72 0% 0 0% 0 0% 72 13 0% 2003 Zamar 2,772 4% 10 0% 28 1% 2,810 143 2% 1982 Jhran-Zamar 412 1% 0 0% 0 0% 412 7 0% 2000 Saada 281 0% 49 0% 97 3% 427 70 1% 1985 Ma’reb 230 0% 88 0% 0 0% 318 7 0% 1985 Lahj 151 0% 536 2% 16 1% 703 28 0% 2001 Abyan 821 1% 420 2% 4 0% 1,24 5 8 0% 2001 Mahwit 200 0% 0 0% 11 0% 200 0 0% 2001 Mahara 536 1% 123 0% 0 0% 659 6 0% 2002 Amran 731 1% 0 0% 12 0% 743 106 2% 2001

Total 64,602 100% 24,929 100% 3,030 100% 92,549 6,126 100%

Source: Survey Authority and Land Registry, 2005 Judging by the volume of development activity in most cities and the active urban LRE market reported by brokers (urban areas accommodate 35% of Yemen’s population), the percentage of registered private deeds must represent a fraction of total transactions (the same is certainly true for AWaqf and State lands). However, it is difficult to actually estimate a ratio for the nation as a whole that is reasonably accurate. An attempt is made to estimate the capture rate in Sana’a (or the ratio of registered transactions relative to the total volume of transactions). With a population of 1.7 million persons, it could be assumed that the number of land parcels in Sana’a is somewhere between 300,000 and 500,000 parcels. In line with trends observed elsewhere, it could a lso be assumed that some 5-15% of parcels or properties change hands/are transacted each year. Assuming 400,000 parcels and an annual transaction rate of 10% of total stock, then some 40,000 parcels/properties are thought to be traded each year. The average annual number of registered private deeds in the 2000-2004 period (under the improved sejel ainee system) is 5,500 parcels (Tables 2.5, 2.6 and 2.7 provide the statistics on land registration in Sana’a in the 1977-1999 and 2000-2004 periods). This would imply a capture rate of only 13.8%. If only the latest figure of registered deeds was used (close to 8,000 parcels were registered in 2004), then the capture rate of the land registry rises to about 19.6% of all traded parcels. This means that, after 28 years of operation, the land tenure security regime through a system of deed registration at the land registry is being used by one in five or one in six buyers/sellers of land. That only 15-20% of landowners use the land registry means that the remaining 80-85% of landowners rely only on the pure conveyance method without registering their transactions at the land registry.

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Table 2.5 Registered basiras in Sana’a Municipality Using Sejel shakhsee System, 1977-1999

Year Registered basiras

Registered Inheritances, Subdivision, Partitioning

Total Registered basiras

% Change from Previous Year

Registered Mortgages

1977 481 0 481 NA NA 1978 2,777 0 2,777 477% NA 1979 3,418 0 3,418 23% NA 1980 3,043 0 3,043 -11% NA 1981 3,155 0 3,155 4% NA 1982 4,110 0 4,110 30% 251 1983 5,834 0 5,834 42% 988 1984 6,591 607 7,198 23% 993 1985 6,854 760 7,614 6% 809 1986 5,839 738 6,577 -14% 734 1987 4,626 725 5,351 -19% 645 1988 3,556 545 4,101 -23% 964 1989 3,471 413 3,884 -5% 888 1990 3,613 573 4,186 8% 724 1991 4,789 529 5,318 27% 633 1992 5,417 737 6,154 16% 646 1993 5,674 589 6,263 2% 557 1994 3,879 338 4,217 -33% 435 1995 5,308 470 5,778 37% 544 1996 4,622 369 4,991 -14% 513 1997 3,514 412 3,926 -21% 604 1998 3,571 297 3,868 -1% 511 1999 3,697 352 4,049 5% 454 Total 97,839 8,454 106,293 11,893

Source: Survey Authority and Land Registry (2005) Note: The sejel shakhsee use was discontinued in Sana’a Office in 2000, replaced by sejel ainee

Table 2.6 Registered Parcels/basiras in Sana’a Municipality Using Sejel ainee System, 2000-2004

2000 2001 2002 2003 2004 Total Number of registered private lands 3,777 4,242 5,251 6,381 7,825 27,476 In Sana’a Municipality (4 zones) 3,746 4,220 5,230 6,331 7,782 27,309 Outside of Sana’a Municipality 31 22 21 50 43 167 Registered State Land parcels 34 25 23 83 56 221 Registered Awqaf land parcels 255 270 248 345 466 1,584 Registered parcels with inheritance, subdivision, partitioning 555 567 498 529 789 2,938

Total number of registered parcels/ basiras (private, State & Awqaf) 4,621 5,104 6,020 7,338 9,136 32,219

Registered parcels with mortgages 464 536 695 592 641 2,928 Source: Survey Authority and Land Registry (2005) Note: Prior to 2000, registration was through the sejel shakhsee system

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Table 2.7 Registered Land Areas in Sana’a Municipality Using Sejel ainee System, 2000-

2004 2000 2001 2002 2003 2004 Total

Area of registered private lands (ha) 266.8 229.3 416.9 778.8 328.6 2,020.5 In Sana’a Municipality (4 zones) 259.9 212.0 415.1 775.6 299.2 1,961.7 Outside of Sana’a Municipality 7.0 17.3 1.8 3.3 29.4 58.8 Registered State Lands area (ha) 9.0 13.0 10.3 9.0 15.8 57.1 Registered Awqaf lands area (ha) 7.2 10.8 15.1 33.6 29.8 96.6 Registered land area with inheritance, subdivis ion, partitioning (ha)

0 0 135.0 167.2 154.2 456.4

Total area of registered parcels/ basiras (private, State & Awqaf), ha

283.1 253.2 577.3 988.7 528.4 2,630.5

Source: Survey Authority and Land Registry (2005) Note: Prior to 2000, registration was through the sejel shakhsee system An independent check of registered deeds in Taiz governorate against the transactions that underwent the pure conveyance method shows the land registry’s capture rate in Taiz to be around 18%. Indeed, in 2001, only 1,308 transacted basiras were registered at the land registry (or 1,435 basiras if we also included inheritance, subdivision or portioning). By contrast, during the period March 2001-February 2002 (the courts’ statistical reports follow the Hijri calendar), a total of 7,218 basiras of immovable property transfers were authenticated by the different courts in Taiz Governorate. Assuming that the two delays had matched, it could thus be argued that the basiras/deeds recorded at the Land Registry represent around 18% of court-authenticated basiras/contracts (the figure would be close to 20% if the registered inheritance, subdivision or portioning deeds were also included). This figure also does not account for sales/transfer contracts that were drafted by the Amin but not authenticated at court, nor does it include other informal sales/transfers that took place without any documentation or proof. See Table 2.8 A similar check was undertaken in Ibb Governorate on the basis of available information. The average annual number of LRE transfers registered at the Ibb SALR branches during the period between 2000 and 2004 was 1,106 parcels. The statistical yearbook compiled by the Ibb Governorate Appeals court indicates that a total of 4,823 immovable property transfers were authenticated in the different courts over one year period (April 2000-March 2001). Again, if the two timeframes were matching, the land registry’s capture rate would be 22.9% of authenticated basiras.

Table 2.8 Registered Parcels/basiras in Taiz, 2001-2003 2001 2002 2003

Total number of registered parcels/basiras 1,308 1,585 1,722 Of which, in Taiz City (3 municipalities) 1,199 1,451 1,528 Of which, outside of Taiz City 109 134 194 Registered State Land parcels/basiras 24 14 15 Registered Awqaf parcels/basiras 35 12 12 Registered parcels/basiras with inheritance, subdivision, partitioning

127 102 80

Total number of registered parcels/basiras (private, State & Awqaf)

1,599 1,852 1,964

Registered parcels/basiras with mortgages 105 139 135 Source: Survey Authority and Land Registry, Taiz Branch, 2004 The Sana’a estimate suggests that the volume of land transactions captured at the Land Registry ranges between 1/5th and 1/6 th of the annual volume transactions that are expected to take place. The Taiz and Ibb figures indicate that the land registry’s capture rate is around 1/5th of all transactions authenticated at the courts, which does not account for those drafted by and recorded at the Amin only or those taking place in purely informa l terms. If these three figures could be generalized, then one could argue that only one -in-five or one-in-six owners register their transactions at the land registry

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under the formal deed registration system (hence a 15%-20% capture rate), whereas the remainder of the population uses the semi-formal/informal pure conveyance method at the Amin or lawyer/broker. Finally, the stakeholders interviewed estimate that no more of 5-10% of the stock of urban lands is registered at the land registry. While the above statistics are not surprising for several reasons including that the land registry is a relatively recent institution, they nonetheless reveal several challenges related to land tenure security in Yemen. Most importantly, it is clear that formal registration at the land registry is not utilized by the majority of the public to obtain land tenure security. The utilization rate depends on the efficient and effective delivery of the service. However, more importantly, it depends on the perceived need for obtaining such a service. The lack of registration, as will be discussed later in detail, owes to a number of causes including a perception that the utilization is not necessary or not worth the cost. This suggests that the problem of lack of registration involves more than just problems with the Land Registry’s service delivery quality and capacity. Indeed, as will be discussed later, the analysis of the overall environment within which land registration takes place reveals obstacles to registration that have little to do with the inefficiencies of the land registry, which, if addressed, would increase the rate of use of the registry. In particular, it will be argued that the institutional environment may have (inadvertently) set in motion specific dynamics that have effectively created “alternative land tenure security” products/services that compete with the land registry. The nature of Yemeni society is also such that kinship/trust-based networks are likely to continue dominating property exchange circles in the aim of guaranteeing land tenure security, without attributing commensurate importance to official or formal registration. If the financial burden of alternative avenues of obtaining land tenure security is further brought into the equation, then the lack of use of the land registry may be further explained. As such, while fixing the land registry problems is important, it would not be enough per se to solve the overall problem. In addition to ensuring that the land registry offers the right services at the right price with the right attributes in terms of timeliness and efficiency (which would ensure sustainable and consistent use of the registry), it is also important to address issues related to the land registration regime as a whole. Specifically, it is important to approach the analysis of the land registration problem in an integrated fashion to ensure that proposed solutions are not limited in their focus of the land registry alone. This implies figuring out the potential competition among various land registration-related services that are perceived to be offered by the government, and subsequently focusing government’s attention on minimizing such competition and redirecting efforts to ensure effective and efficient service delivery by the relevant agencies. However, the overall design must be cognizant of the cultural setting and specific dynamics of custom-based approaches to land registration that are practiced in Yemen and the institutions that are popularly used. In other words, it is important to strengthen what is already working before testing institutional innovations that can require significant cultural adjustment and which are likely to result significance resistance from the affected agencies or population.

2.3.3 Different Modes of Registering Land: Analysis of Survey Data and Key Issues Although the LRL No. 39 of 1991 (and its predecessor 1976 law in the former North) requires that all land transactions be recorded at the land registry, in practice, however, grantees and grantors (buyers and sellers of land) choose a variety of approaches. The presumed universal mode of performing a transfer of land involves conveyance at the Amin in Northern and Western Governorates and with a lawyer in Southern and Eastern Governorates. A large number of conveyances are also (re-)authenticated at the court. A portion of the latter two is registered at the land registry. In effective, there appears to be competing modes of land registration. The different land institutions and the associated laws appear to be perceived by the landowners as offering them multiple “formal” approaches of obtaining tenure security from which to choose the

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appropriate form (this will be elaborated on the basis of a small survey undertaken in the context of this policy note). Even if this was not the intended effect, it nevertheless appears to be the prevailing modus operandi, which suggests that the perceived added value from using the land registry services for land transactions’ deed registration is at best low. This is an outcome that is reflected in the deed registration statistics—which since 1977 stand at about 240,000 deeds of privately-owned lands all over Yemen. As mentioned earlier, the available data suggests that somewhere in the vicinity of 20% of conveyance transactions actually get recorded at the land registry. A small survey was conducted, interviewing 100 buyers of land who used the conveyancing services of Amins in Sana’a and lawyers in Aden. The aim of the survey was to develop an understanding of land owner perceptions of the efficacy and patterns of use of various modes of land registration (See Figure 2.4). The sample comprised 60 buyers in Sana’a and 40 buyers in Aden, who purchased the land in question in 2004. The sample was selected to represent various neighborhoods (and hence various average LRE values) in each city, on account of 10 buyers per neighborhood. In Sana’a, the six areas selected are: Sheraton (residential, medium land values, newly developed but consolidated area), Alraqas-Sunaina (mixed use, low to medium land values, newly developed but consolidated area), Fag Attan (mixed use, medium to high land values, new urban expansion area), Bait Bous (residential, low to medium land values, new urban expansion area), Al Hasabah (residential, medium land values, old established neighborhood), and Musaik (residential, low to medium land values, old established neighborhood). In Aden, the four selected areas are: Buraika (mixed use, medium to high land values), Mansoura (mixed use, medium to high land values), Al Sheikh Othman/Dar Saad (mixed use, low to medium land values), and Khormaksar/Sirah (mixed use, medium to high land values). The survey instrument and tabulated average responses (for the overall sample and by city) are attached in Annexes 1 and 2. The sample is clearly small, which limits the inference ability. Yet, it provides an opportunity for important insights as to landowners’ perception of the land registration system and the different institutions, stakeholders, services and added value. The main patterns suggested by the survey outcomes are presented below. Figure 2.4 Completing Land Transaction Registration Modes

CompetingLand Transaction

“Registration” Modes


LandTransaction

LandTransaction


LandTransaction

CourtAuthentication

of Amin

Conveyance

AMIN

Conveyance

AMIN

Re-Authentication

Court

Conveyance

AMIN

Re-Authentication

Co u r t

Registration

Land Registry

CompetingLand Transaction

“Registration” Modes


LandTransaction

LandTransaction


LandTransaction

CourtAuthentication

of Amin

Conveyance

AMIN

Conveyance

AMIN

Re-Authentication

Court

Conveyance

AMIN

Re-Authentication

Co u r t

Registration

Land Registry

23

Perceived importance of registration versus intent to register: In an interesting contrast to the limited capture rate of the deed registration system as shown in the above statistics, a large majority (85% of 53 Sana’a respondents and 93% of 35 Aden respondents) of survey respondents perceive registration at the land registry as an important/very important step. This is reinforced by their perception that the use of the land registry has a positive impact on protecting property rights (63% in Sana’a and 68% in Aden). Others perceive the use of the land registry as contributing to increasing their property value and/or compensation to be obtained from the State in case of expropriation (42% in Sana’a and 35% in Aden). Nonetheless, the perceived importance as verbalized in the above responses sharply contrasts with the follow-up intentions of most respondents. Of those that found registration important, 15% appear to perceive registration as an act that merely involves including an “official” aspect to their transaction (without the benefit of protecting their property rights to land). A significant contrast also appears between the (verbalized) perceived importance of the registry and acting on such a perception: less than one-third (29% in Sana’a and 30% in Aden) intend to register within one month, the majority not knowing when they would go to the Registry at all. Perceived alternatives to registration of transactions and hence of registration’s little importance: As much as 60% of survey respondents validated statements as to why they do not attach importance to registration. The breakdown of these—77% (46) of Sana’a respondents and 35% (14) of those in Aden—suggests potential North-South differences in perception of the lack of importance attached to registration. Those who view registration as unimportant do so because they perceive tenure security to be provided effectively through alternative means. These alternative means to securing property rights include, most importantly, court authentication of basiras (by 28% of respondents), as well as the semi-formal/informal networks including the different actors/persons involved in the transaction (Amin, lawyer, broker, witnesses to the Basira , neighbors, and clearly one’s tribal/family network), and for a few the fact that they have no intention of selling the land (a Sana ’a only phenomenon). Use and perceived importance/value added of non-registration alternatives in the decision to buy : As seen earlier, much more basiras get authenticated by the courts than what gets registered at the land registry. The survey, however, suggests a higher capture ratio by the registry than the 20% indicated from the analysis of Taiz and Ibb authentication-versus-registration statistics. In effect, while for 78% of surveyed transactions, the existing deeds/basiras had been authenticated at court, only 48% was registered at the Land Registry. Respondents were then asked to indicate the most important factors that influenced their decision to buy (i.e. what were the different guarantees they sought in deciding to buy). That the previous basira was authenticated at court was found to be by 76% of respondents as an important/very important factor in influencing their decision to buy. Knowledge of the Amin plays the same role for 71% of the sample. Personal or reputational knowledge of the other party in the transaction was a decisive factor for 76% of the sample. By contrast, only 46% of respondents found registration at the Land Registry to be an important/very important factor in influencing their decision to buy. These results lend credibility to the assertion that there is indeed “real” competition between registration and non-registration alternatives as instruments to provide security of property rights, at least as far as the perceptions of land buyers are concerned. Another dynamic may be at work here. The “formalized” basira (i.e. with the court authentication stamp) appears to be at par with the involvement of specific agents (Amins, lawyers/land brokers) and/or the other party in the transaction (that the buyer knows the seller in person or by reputation) in terms of making a transaction happen. Therefore, it could be argued that more “formalization” through some 30 years of deed registration has not yet managed to replace/reduce the importance placed on informal networks and trust-based transactions. Some North-South differences appear here as well, although not as discernible as in other issues. In the 60 surveyed transactions in Sana’a, court authentication of the basira, knowledge of the Amin in question, and knowledge of the other transacting party were found important/very important factors in

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the decision to buy by 79%, 74% and 80% of respondents respectively. By contrast, registration at the land registry was only deemed important/very important by 47% of the Sana’a sample. In Aden, of the 40 surveyed transactions, court authentication, knowledge of the conveyancing agent (lawyer or broker) and knowledge of the other party were important/very important factors in the decision to buy by 73%, 68% and 80% of the respondents respectively. The importance of registration at the land registry was mentioned by 53% of the respondents. Although the North-South difference may not be significant, it may be that the land market in the South appears to be more formal on account of a large share of State land ownership and a tradition of registration from pre-unification times. Confusion between court re-authentication (of Amin) and registration: There seems to be much confusion as the distinctive functions/roles of authentication at the court versus registration at the land registry. As many as 60% of 100 respondents (62% in Sana’a and 58% in Aden) think both steps are equally important, and another 21% respondents (22% in Sana’a and 20% in Aden) think that court authentication of the basira is actually more important than registration at the land registry. These trends in themselves are important to point out the misperceptions among the landowners of the value added/importance of each step. However, combined with a perception among respondents that registration is important (despite their failure to carry out that intention), it could therefore be argued that court authentication might in fact be impeding the expansion of registration, especially when most landowners choose the “path of least resistance” in obtaining what they perceive as an equally valid guarantee of security of rights. In this case, the choice between using the land registry services versus court authentication is clear on financial and procedural grounds; the latter is much simpler and cheaper than the former. De facto role of Amin in the conveyance: More than two-thirds (or 71%) of respondents indicated that their choice of property to buy was strongly influenced by knowledge that a specific Amin has prepared the existing basira . The North-South difference appears not to be significant, i.e., 74% of Sana’a respondents versus 69% of Aden respondents stated a similar preference. However, given that the Amin’s role in the North is markedly different and is performed by lawyers in the South is indeed significant. These statistics point that there is a de facto trust in the Amin function, even if it is expressed as trust in a specific person. At the same time, there were some comments on the need to improve the land convenyancing process including some detailed suggestions on the functioning of the Amin: the use special forms and type of paper in basiras , the need to void previous basiras , and the importance of better regulation of the Amin function. Perceived corruption in land transactions : The survey suggests that close to one-third (29%) of the respondents perceive corruption to exist among some of the parties involved in the land transaction process (including brokers, the courts, land registry staff, other government ministries and agencies including local government staff and MPWH engineers, as well as in the police). This perception appears to be associated with lengthy cumbersome registration procedures, which when coupled with the value of transacted land, provides an opportunity for rent-seeking behavior. There appears to be distinct North-South differences in this case. Indeed, 50% of Aden respondents find that, while registration is important, the problem is dealing with civil servants due to (perceived) bureaucracy and corruption. In Sana’a, the figure is only 15%. In the additional comments section, 10 out of 40 (25%) Aden respondents explicitly stated that both corruption and lengthy bureaucratic are major obstacles to registration (in Sana’a the ratio was 10%). Perceptions associated with the registration fees: The large majority of respondents do not appear to know the fees associated with registration: only a third of respondents in Sana’a and in Aden knew the property transfer fee; less than 15% knew the amount of the penalty on registration delays; and only 38% were aware that the current grantee (buyer) has to pay for fees of the prior non-registered transactions on the same property. When told the exact fees associated with registration, there is a unanimous perception among survey respondents that the costs associated with registration (property transfer fee, penalties for delay, and requirement to pay back fees) are an excessive financial burden. Indeed, 89% of all perceived the property transfer fees of 3% of value to be excessive/high and 85% perceived the penalty on delays of 2% per month to be equally burdensome (although in the latter it

25

seems that the penalty is misunderstood as 2% of land value rather than 2% of the tax amount that is due). As for the payment of accumulated unpaid transfer fees (the single most problematic financial burden associated with the registration process), 50% of respondents perceived it to be unreasonable and unfair whereas 36% found that, while collection of back fees was not unreasonable, discounts are in order if the objective was to encourage the use of the registry. Concerning their preferences for a property transfer tax amount, respondents were split between those who thought property transactions should not be taxed and those who proposed more reasonable tax rates (ranging between 0.5-2.0% of value). Most respondents agreed that a 6-month delay for registration without penalties and a smaller penalty for delay (tha t does not accumulate in a linear way) would be reasonable policies. Perceived added value of registration versus fees and policies: If we extrapolate based on these results, it is possible to link the positive views of property transfer taxation (50%) with those who view the current registration regime as useful, i.e., 49%. Conversely, 50% of respondents regard taxes as unnecessary and those who view registration as of little, if any, importance number around 46%. Potentially correlating these with the perceptions of the registration process and how to fix it, it could be argued that there are 50% who would be induced into the registration system with moderate “carrot ” policies (reduction of fees) and there would be another 50% who would require signif icant “carrot” policies (free/amnesty for first time registration). Perceptions associated with the ground survey fees: While 62% of Sana’a-based respondents found the official charges for surveying activities quoted in the questionnaire—based on the pric e list provided by the SALR (See Annex 3 for the schedule of fees charged by SALR)—reasonable, quite a few respondents (8 out of 60) indicated that they had to pay much more than the quoted fees, ranging between YR3,000-6,000 per Lebna. Aden-based respondents by contrast complained that surveying charges were high (53%), which may be explained by the fact that the parcels in Aden are much larger than in Sana’a (but none complained from paying more than the quoted fees).

2.3.4 Value of Registration to Go vernment: Fiscal Aspects of Land Transfer One the numerous tangible benefits to well-performing land markets is the fiscal dimension. Indeed, in countries that have a mature LRE market functioning in tandem with a formal system of registration that is heavily used by the land owners, the revenues from registration charges and/or land transfer taxation are significant. In Lebanon and Jordan, two countries where registration services are heavily used, the fees collected based on real estate transactions and first time registrations represent between 8-10% of government’s total budget. This explains the attraction of offering such services to the government in countries that have undertaken reforms of the land registration and improvements to the service qua lity and coverage. Despite this potential, and the trend in some Arab countries, the revenues from land transfer fees remain miniscule portion of the budget in Yemen. For example, during the period 1995 to 2004, the revenues from land transfer fees grew from YR 420 million to YR 1,568 million (USD 8.45 million, or about USD 0.42 per capita—See Table 2.9). This is more than a triple increase in the revenues, but it still remains low in comparison to the government budget and in relation to other Arab countries.

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Table 2.9 Revenues from Land and Real Estate Transfer Fees in Yemen and in Sana’a,

1977- 2004

Year Property Transfer Fee

Revenues in Yemen (YR m)

Sana’a as % of Total

Sejel shakhsee

1977 4.37 NA 1978 3.22 NA 1979 2.85 NA 1980 1.93 NA 1981 1.90 NA 1982 6.43 NA 1983 11.79 NA 1984 20.09 NA 1985 33.34 NA 1986 32.23 NA 1987 37.73 NA 1988 49.85 NA 1989 39.66 NA 1990 41.56 NA 1991 85.77 NA 1992 124.40 NA 1993 171.33 NA 1994 203.62 NA 1995 420.97 NA 1996 352.77 NA 1997 371.46 NA 1998 365.89 48% 1999 356.67 53%

Sejel ainee 2000 425.37 61% 2001 573.86 55% 2002 683.06 60% 2003 1,078.34 70% 2004 1,568.04 69%

Source: Survey Authority and Land Registry (2005) Property transfer taxes are set at 3% of the sale price. When the additional flat charge for registration and fee for surveying activities are added, the overall burden is about 3.5-3.9% of value (assuming that previous transfers have been registered). If previous transfers have not been registered, all accumulated back taxes have to be paid in order to register the current transaction. There is also a penalty for delays that equals 2% of the transfer tax amount per each month of delay following the first 15 days from the date of the transaction. Finally, in addition to the transfer tax, there is a Zakat tax of 2.5% charged on the profit made on the sale.12 In practice, as was mentioned earlier, a large proportion of landowners choose not to register their transactions for various reasons, which include the financial burden (particularly if the landowner is asked to pay all back taxes for unregistered transfers). In cases where the land buyer chooses to pay, parties to a sale contract often agree to understate the sale price to avoid paying full taxes/fees. Under steady state conditions, an overall burden of 3.5-3.9% seems reasonable. In Jordan, the fee is 10%, and in Lebanon it is 6%. By contrast, in Palestine, it is only 1%, but the volume of registration at the 12 Zakat is a religious-based capital gains tax, charged on the difference between the purchase price for a property and its sale price

27

land registry is very low much like in Yemen. In theory, 3% is an internationally used levy that should not inhibit the land market nor prevent registration if marketable security were provided through the land registration system. However, it appears as though Yemen (much like Palestine) is still in transition to a steady state regarding its land transfer fee. Therefore, more creative transitional fee structures may be needed, such as, for instance, free amnesty on first time registration, major one-time discounts for delayed registrations, etc.

2.3.5 Land Dispute Patterns at the Courts The prevalent and often quite pronounced view on land disputes is that they are numerous and often resulting from fraudulent and corrupt practices. In addition, the perception also exists that the courts themselves are not well equipped to deal with the cases and there is also some perceived corruption within the courts. Although the data available is not comprehensive, some tentative conclusions on disputes can be derived from the Primary and Appeals Court information from Ibb governorate and from the Appeals court information from Taiz governorate. In Ibb Governorate, there were 2,043 cases reported to be before the Primary Court between April 2000 and March 2001. A total of 249 of these (12%) involved real property ownership disputes. An additional 324 (16%) cases were an exercise of the right of preemption (Shufaa) related to property ownership. The distribution of cases within Ibb Governorate Primary Courts in various localities points to the uneven distribution of land/property disputes. In some localities such as Shaar, Fare’ Odayn, and Hazm Odayn, the real property ownership disputes were more dominant, respectively 31%, 38%, and 41% of the total caseload. Also, in Ibb Governorate, there were 1,723 cases heard before the Appeals Court during the same period. Of these, 104 cases were property ownership disputes, or approximately 6% of the caseload. An additional 190 (11%) were Shufaa cases. Annex 4 provides a detailed breakdown of cases heard before the Appeals and Primary Courts in Ibb Governorate. The situation in Taiz Governorate involves a much higher level of real property disputes. During the period March 2001-Febraury 2002, 600 cases were heard before the Appeals Court. Of these, 213 or 35.5% involved real property ownership disputes (Shufaa cases added another 2%), which suggests a higher volume of property ownership disputes before the Primary Courts (See Table 2.10). Table 2.10 Appeals Court Statistics, Taiz Governorate, March 2001-February 2002 (1422 Hijri)

Number % Total number of civil and procedural cases (of which): 600 100% Property disputes 213 35.5% Rental disputes 18 3.0% Water and water rights disputes 11 1.8% Subdivision disputes 4 0.7% Utility and roads disputes 6 1.0% Shufaa 12 2.0% Source: Taiz Appeals Court: Annual Statistical Report for the year 1422 Hijri A measure of efficiency of the court system and, simultaneously, of the responsiveness of the land tenure security system to the market needs is the average time it takes to resolve land disputes (and disputes in general). Again, adequate data is not available to enable drawing conclusive inferences. However, some preliminary conclusions are possible based on Ibb Governorate statistics. Of the 249 property ownership disputes before the different Primary Courts in Ibb Governorate, 25% (65) were carried over from the previous year. In other words, 25% of the property ownership cases take more than one year to resolve. In addition, there were a total of 85 property ownership disputes pending at year end before the court. Of these, 25% (21 cases) were from the previous year, which implies that a quarter of property ownership disputes appear to take more than two years to resolve.

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As far the Appeals Court is concerned, of the 104 property ownership cases pending before the court, 75% (73 cases) were carried over from the previous year. Again, this implies that 75% of property cases before the Appeals Court can take more than one year to resolve. Furthermore, there were 83 pending cases before the Appeals Court involving property ownership disputes. Of these, 65% (54 cases) were carried over from the previous year. In other words, 65% of the property ownership cases under the appeals process take more than two years to resolve. Given that these appeals cases usually have gone through Primary Courts, it must be that these cases take at least 3-4 years to resolve. This is a very dire situation for any landowner to be in. It is even worse if investment projects involving land disputes are held up for these periods before the courts. Overall, land disputes appear to be widespread, yet there appears to be wide variation according to the Governorate or district in question. For example, in Ibb Governorate the incidence at the District court appears to be 12%, and preemption represents another 16% of cases. However, in Taiz, the Appeals court statistics indicate that there were 35.5% of cases involving property ownership disputes (whereas by contrast, preemption cases were only 2% of total caseload). According to the judge who presided sequentially over two different primary court districts in Sana’a, “land ownership disputes in West Sana’a court are significantly higher than in East Sana’a court, where they represented 10% (although another 15% related to real estate)”. Unfortunately, there is a significant lack of available statistics on court cases that allows for comparing property ownership disputes. This is mainly because the annual statistical reports compiled by the Appeals Courts (on all cases heard in Governorate) do not follow a standard reporting format, which means that only those Governorates that provided a detailed breakdown of their civil caseload could be considered. While the data available does not allow for making more conclusive statements, yet, such fragmented figures and the anecdotal evidence that land disputes are a frequent occurrence all seem to point out to a potential, significant issue. That, rather than serving as an arbiter of last resort, the courts are in effect used as a system of securing land rights (which would normally be the function of the Land Registry). This is inefficient at best and has negative consequences on the business and investment climate at worst. Moreover, the long delays in resolving property ownership disputes (and all cases in general) have negative implications on the investment climate as well as on social stability. Indeed, as courts become increasingly perceived as unable of resolving property disputes expeditiously, this may lead to increased incidence of violence should people decide to take the law in their hands. Suggested remedies: The incidence of land disputes shows that the courts are being used as a means to obtain tenure security which can imply that the land registration is either not functioning properly or that people perceive the courts to be better institutions to obtain tenure security. Although both these results are somewhat negative, there is a hopeful sign in the trend. That is, there appears to be some acceptance of the judiciary and a moderate level of trust in its role to mediate disputes. These trends are indeed positive in that they can be augmented through the strengthening of the role of the courts while at the same time focusing its scope. In addition, the use of the court systems as a means of obtaining tenure security in lieu of land registration should be discouraged. This can be brought about through the type of agreements that have been made between the land registry and a district court in Sana’a. More formally, the expediting of court cases with judgments that are actually enforced can reduce the case load through discouraging frivolous law suits. Illustrative Land Dispute Cases: In light of the importance of developing a solid understanding of the nature, characteristics and issues involved in land disputes Yemen, a study was commissioned to analyze several land dispute cases and profile their specific dynamics. The aim of this qualitative approach is twofold: to augment the limited quantitative data, and shed light on the dynamics, types and specific workings of land disputes, which quantitative statistics cannot reveal. Four cases are profiled below. Each case is somewhat different from the others and more importantly each one highlights key land dispute-related problems. The four land disputes share certain aspects in common (especially the lack of enforcement of court decisions). A summary profile of each case is provided at first and followed by the main

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issues highlighted in the case and potential remedies. It is hoped that the cases together with the quantitative data could provide a more holistic picture on land disputes in Yemen. Case 1. Sale of the Same Mortgaged Property to Multiple Buyers

1. In need for money, Owner X applied to a bank to obtain a loan. The bank agreed to grant X the required loan amount using his property as collateral.

2. X went to the Land Registry and requested an official property mortgage contract to submit to the bank as collateral to guarantee repayment of the loan which he applied for.

3. The Land Registry registered the original property contract after X paid the necessary fees and taxes and then recorded the property mortgage contract according to the established real estate registration procedures. X was then given a property mortgage contract along with the original property document for authentication at the commercial court as part of the procedures of approval of the mortgage contract.

4. Upon authentication at the commercial court, X went to the bank and delivered the original property document registered at the Land Registry and the mortgage contract registered at the Registry and authenticated at the Commercial Court as guarantee to the bank. He then received the loan amount.

5. Time passed and the price of property in that area increased, which encouraged X of thinking of selling the already mortgaged property. Meanwhile, the bank filed a lawsuit with the Commercial Court against X who did not repay the loan on time.

6. As the court was considering the bank’s claim, X went to the Land Registry to request the issue of a substitute property document, claiming the original was lost.

7. The Land Registry issued instructions to the Amin in question to draft a substitute property document in replacement of the one X claimed to have lost.

8. Once X obtained the substitute property document, he sold one -third of the property area to one person and the remaining two-thirds to others. He also deceived a third person by giving him a copy of the property document (given in transfer to the abovementioned buyers) and received a large down payment towards the same of half of the property. X also offered to the purchasers of the two-thirds to buy the remaining (and already sold) third, which they accepted and paid a large portion of the agreed sum.

9. Those who purchased the two-thirds of the property subsequently started building, which led to problems and criminal actions between the different purchasers. The bank meanwhile remained unaware that the property mortgaged by X was already sold multiple times, until the prosecutor handling the investigation of the dispute between the purchasers checked at the Land Registry and found a record of the property mortgage in favor of the bank.

10. Once the Bank discovered the problem, it could not repossess the collateralized property, which already had a multiple -story house built on it and owned by other people. The Bank had thus lost its ability to repossess the property and sued X for reimbursement of the loan and interest due. The Bank obtained a final verdict from the High Court obligating X to pay his debt. Yet, until today, the bank, which has lost the collateral, has not been reimbursed despite that over ten years passed since the case was tried (the events of this case took place in 1993).

Case 1 Issues: The case highlights several points most are to do with the functioning of the land registry and the general lack of adoption of deed registration process. There at least two breakdowns which occurred during the whole process that led to the land dispute.

• Inadequate Index of Mortgages at the land registry. The land registry is meant to record mortgages and perform subsequent checks to ensure that mortgage creditors’ rights are preserved in the property. The handling of the mortgages is only tangentially addressed by the law in 2 articles: 5 and 16. Also, the land registry maintains a mortgage register. This is apparent from visits and also that approximately 100,000 mortgages are registered so far. However, from the facts of this case, it appears as though the process for looking ownership conflicts and upholding mortgage provider’s rights is not working. It is fair to assume that the linkage between deed registration which is the primary function of the land registry and

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mortgage registry are not properly maintained. Also, it is possible that the linkage is not easily accessible or it is difficult to determine if a parcel of land has been subject of a mortgage.

• Inadequate Tract Index of Parcels at the land registry. The land registry is tasked with the

mission of maintaining a tract index of parcels registered and also link this tract index with the index of deeds and also the index of mortgages. However, the facts of the case indicate a breakdown in the lookup of this index as it related to mortgage and deed registers. Therefore, it is fair to assume that, this index and its linkages are inefficient and/or difficult to use/maintain. Ease of access of tract index and its integration with the other indices is absolutely essential in the proper functioning of the registry.

• Improper issuance of replacement deed/basira. According to Article 30 of Law 39/1991, the

land registry is to perform the following: “If a land deed is lost or damaged it s holder must report in person to the office head accompanied by persons aware of the circumstances for losing the deed and in their presence a report should be made and singed by them establishing these circumstances and this report should be published in a daily newspaper. In case no objection is made after fifteen days from the publishing date of this report, the title holder should be given a replacement and the conditions under which it was issued should be indicated on it.” Issuance of replacement deeds are serious matters in most countries under any registration system. The law is clear on what needs to be done. But it is also clear that either no publicity was performed, or even if it were done, it was not adequately public to be noticed by the bank. Therefore, land registry failed to perform its task.

• Non-registration of subsequent basira. According to Article 5 of Law 39/1991, regarding the

sale contracts for land the following must be performed: “Land agreements, even between the contracting parties, are considered not valid under this law if they are not registered in the registry. Such contracts include those regarding sales, exchange, division, utilization, mortgage…etc. But that does not prevent the counteracting parties from following up their personal rights before the courts.” The parties that subsequently purchased portions of the land from the owner (who had obtained a basira fraudulently to avoid the mortgage notation) could have potentially detected the problem if they had registered their land. However, because they did not, they were vulnerable to fraudulently obtained basira. This non-registration of contracts at the land registry is common in Yemen. The survey results show up to half grantees do not register their basira. In practice, this % may be as high as 80%.

• Ineffective implementation of court judgment. It is a curious feature of this case, that several

years gone by since the District, Appeals, and Supreme Court have made their final decisions. However, the judgment of the Supreme Court has not resulted in the appropriate recovery of funds by the bank from the defendant. This state of affairs points to an ineffective system of implementing court judgments. The judiciary is usually the arbiter of the last resort. In Yemen, the judiciary appears to be used far more frequently and perhaps as a means of obtaining land tenure security. However, it is also apparent that judgments of the judiciary do not have the weight and force of law.

Case 1 Suggested Remedies: Proper implementation of land registration procedures by the land registry, especially critical provisions which are related to design, implementation and maintenance of tract, deed and mortgage indices are not followed or executed properly. Also, the procedure for replacement of documents must be diligently followed. The execution of court judgment, must become routine, else the whole system risks being derailed. This is a task that related to the functions of judiciary especially the courts and the MOJ.

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Case 2. Illegal sale, Occupation and (Re)Registration of Property Previously Registered to Another Owner

1. Some 20 years ago, X purchased from Y a large land parcel which was then unplanned and located beyond the urbanized perimeter of Sana’a.

2. X, a well educated person, knew of a recently issued law regulating land registration. Thus, he went to the Land Registry following his purchase of the land and applied to register his basira or property ownership document.

3. The Land Registry first collected from X the tax on real estate transfers and then registered the basira without undertaking any of the requirements under the registration Law no. 12 of 1976 (thus there was no site inspection or ground survey nor were the boundaries recorded on maps). Nor did the Land Registry require that the seller Y registers the land prior to its transacting.

4. Once the limited procedures were completed, the Land Registry delivered to X the original of the land property document stamped with the official red seal. X thought that his ownership of the land has thus become guaranteed and that it could not be infringed upon. He placed the official property document in a safe.

5. Time passed and housing construction activities boomed in the area in question after it was planned and integrated within the urbanized area. That area in question also witnessed the distribution of land parcels to the members of a housing association, which triggered housing construction activities. An active land market was also created followed the paving of an access road by the Public Works directorate, which made the area attractive and increased land prices.

6. A dispute emerged between Y and the housing association, to which he has sold the land. The association’s management accused Y that he sold them less land than paid for, which meant that some of the members did not receive a parcel. The land sold to the association was adjacent to that which X bought. X had since become a senior government official and his duties made him forget to look after his land, which he hadn’t even walled off to prevent squatters or encroachments.

7. The association management believed that X’s land was still owned by Y. Given the shortage in land distribution they were facing, they convinced their members who had not yet received their parcels that the adjacent parcel owned by X was in fact theirs. Some of the association members therefore started building on X’s land while others sold their parcels.

8. X was unaware that most of his land area had been developed into houses owned/occupied by others. Only a small part of X’s land was still vacant, but one of the association’s members unaware of X’s ownership actually purchased it from Y to adjoin it to his adjacent property. The overall situation was further aggravated when Y was shot and died.

9. X filed a lawsuit before the courts concerning the infringements on his land. After three years, X finally obtained a primary verdict establishing his property and obligating the association’s members who built on the land to compensate X according to the current market prices. The court also ruled X’s right to repossess the remaining vacant parcel of land, which the neighbor had purchased from Y to annex to his property

10. Seven years from the date of the primary verdict, the case is still today being tried at the Appeal Court.

11. What is interesting is that all property ownership in this case (that of X and subsequently those of the individual members of the housing association) is registered at the Land Registry in different periods, which made all parties wonder about the utility of registration.

Case 2 Issues: The case highlights also several points, most of which are to do with the functioning of the land registry: basira of all parties with claims to portions of the same land were recorded without noting any conflicts. This effectively constitutes:

• Improper registration of sale contract/basira. According to Article 6 of Law 39/1991, the land registry is to perform the following: “Land disposal and contracts must not be recorded in the register if they contradict with the established rights of others as per the register.” This is the most basic function of the land registry. However, there are significant challenges in

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actually executing this article. There are supposed to be fours registers within the registry. The basic register is one that records contracts. This is supposed to be linked to the tract or parcels register (an index of parcels which are registered). However, given the type of problem arisen in this case, it is reasonable to assume that the tract register and/or index is not able to provide the information needed to highlight conflicting claims on the same parcels.

• Inadequate tract index of parcels (inadequate/non-existent unique parcel identification

system)

• Ineffective implementation of court judgment Case 2 suggested remedies: Proper implementation of the most basic functions of the registry, i.e., detecting conflicts of incoming transactions with recorded transaction is of paramount importance. However, this presumes proper tools at the disposal of the land registry. Detecting potential conflict as mentioned implies comprehensive but also easily accessible deed and tract indices which are maintained well. However, the tract index presents a special challenge. A well functioning tract index that enables the registry to detect conflicts on the same parcel of land are usually depends on a unique parcel identification system. Furthermore, it also requires that the process of issuing parcel identification numbers be a legal process with binding results with a easily searchable and transparent lineage “tree” to trace parcel history. It is obvious based on the land dispute case and also personal visits to the land registry that such a system does not exist in Yemen. Case 3. Registration of Old Forged Documents

1. Residents of a small settlement located on the outskirts of Sana'a have customarily owned large areas of scattered land around their settlement which they and their parents have been cultivating. Ten years ago, as a result of the urban expansion of Sana’a, the area in question was planned by the Public Works Directorate as a high-end residential neighborhood and the road network was planned and paved.

2. Aware of the fact that the area became attractive and property values soared, X implemented a major fraudulent act. He went to an old mosque and tore out plain paper from old Koran manuscripts, which he used to forge historical basiras about his ancestors’ ownership of the vacant lands in question and that the current customary owners were actually his ancestors’ tenants. The act was completed with fake old-looking stamps. X then faked inheritance documents tracing his lineage to these ancestors, coupled with fake Irrevocable Powers of Attorney from the other heirs in his name.

3. X then submitted his fake documentation to the Land Registry and registered his ownership 4. To reinforce his claim, X offered large bribes to some of the residents of the settlement for

attesting that they are indeed lessors of X’s ancestors and that they are hereby rescinding their lease agreements.

5. X then got a group of partners and started selling the land in the area at cheap prices, relying in this on the complicity of some Amins to draft the transfer basiras.

6. The area residents then found some buyers that started to build on their lands. When they prevented them and informed the police, they discovered the transfer deeds from X.

7. The case was referred to the Public Prosecutor which investigated the case and arrested X and his partners and accomplice Amins. A large number of draft basiras were also seized, and the case was then referred to the Courts.

8. Meanwhile, X died in prison and the Court confirmed the area residents’ land ownership and voided all the sales basiras/documents concluded by X and his associates. The verdict was appealed and the decision was upheld, thus confirming the area residents’ ownership.

9. Over eight years later, the area residents are still today dealing with the implications of the fraud since X has sold land to a very la rge number of persons. People still turn out claiming parts of the land with transfer documents from X. While the first final verdict is a precedent to turn all subsequent claims, yet, with each new claim, the area dwellers have to undergo a costly and lengthy process including prosecution and court cases, all of which was due to a flawed process of registration that allowed X to claim the land in question.

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Case 3 Issues: The case highlights also several points, most critical of which is to do with the functioning of the land registry: forged old documents were used to obtain false basiras which were registered at the land registry. This effectively constitutes:

• Inadequate judicial/legal focus for first-time registration. The handling of first-time deeds registration and the rules of evidence for determining authenticity are important. This is the part of the overall process where there is great vulnerable for document forgery and related fraudulent actions. Therefore, first-time registration loopholes especially regarding rules of evidence and standards of testimony should be better spelled out. Furthermore, and much more important, due to its foundational impact on subsequent registrations, the first-time deed registration needs to involve greater participation by the legal/judicial entities to ensure that the chain of evidence presented in support of the registration is authentic. This is not a purely technical matter but matter of legal rights and should be looked at as such.

• Improper registration of sale contract/basira-Technical Issues-1. Regarding the land registry’s

obligations to do with establishing the authenticity of underlying documents, the Law 39/1991 does not offer any guidance. In addition, the Law 29/1992 and 24/1997 on the duties of the Amin do not offer any obligations or guidance on ensuring that authenticity of the underlying documents. More importantly, neither the qualifications of the land registry officer nor the Amin in terms of knowledge and training are at the level to enable them to detect sophisticated forgeries. Therefore, although the laws are silent on the obligations in tandem, in the absence of adequate capacity to identify forgeries, it is to be expected that sophisticated forgeries go undetected.

• Improper registration of sale contract/basira-Technical Issues-2. As with the prior case, the

land registry should have been able to detect conflict between incoming transactions and the parcels already registered. The breakdown again reinforces the dire need for a easily maintainable unique parcel identification system. This is currently lacking and has already been addressed above.

• Ineffective implementation of court judgment

Case 3 suggested remedies: This case is not just about detecting document forgeries which is always a matter of experience and know-how. But it is more to do a judicial/legal examination of chain of evidence regarding land rights. As such it is more a judicial/legal matter and less technical matter. Therefore, the involvement of legal/judicial entities in the process of awarding first-time registration should become a permanent feature of the law. However, sophisticated document forgeries can still take place. This case highlights these capacities (judicial/legal and document forgery know -how) are lacking at both the Amin and land registry. They should be developed. In addition, the law is not clear on the obligations and procedures for performing this task. The other problem identified in this is the lack of a unique parcel identification system. The thorough examination of documents to enable forgery detection should be clearly identified as an obligation—or at least in general ensuring the authenticity of underlying documents. This is especially important for the Amin as most contracts are drawn up by the Amin. However, land registry’s responsibility and qualifications should similarly be denoted. The recommended approach to a practical unique parcel identification system is important as well. Case 4. Ineffective Implementation of Court Judgments

1. X, a non-Yemeni, owns a large land parcel in a strategic location in the center of a main city. He agreed to sell it to Y, received a down payment and promised to finalize the sale contract upon his return to the country.

2. Later, X refused to complete the sale contract for Y on the grounds that he wanted a higher price. Y’s efforts to resolve the case amicably did not succeed, so he filed a lawsuit at the

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court to obligate X to complete the sale contract and offered to deposit the remainder of the price with the courts.

3. The court notified X through diplomatic channels to appear before it or commission a lawyer on his behalf. Despite receiving the claim notification, X declined to act upon it.

4. The court proceeded to examine the claim and issued a verdict stating that the sale contract was indeed valid and had to be enforced. The court obligated Y to deposit the balance of the sale price in a special account opened in X’s name at an international bank and required X to hand over the original basiras in his possession to Y, who was to become the rightful owner. The court also required the Land Registry to record the transfer of the property title from X to Y.

5. The court sent a copy of the verdict to X through diplomatic channels and a notification of the deposit in his name of the price balance, to be accessed from any international branches. X did not reply to the court nor contest the verdict during the appeals period. He also did not dispatch/hand over the originals of basiras in his possession.

6. After the verdict became final at the end of the appeals period, the Land Registry recorded the transfer from X to Y as per the ruling, which confirmed Y as the property owner.

7. Several years later, Y discovered that Z recently obtained another transfer deed from X of the same parcel. Because Z is an influential person, Y has been unable until today to exercise his legal right of ownership of the land despite the passage of over 13 years since the court ruling was issued. At the same time, Z is unable to register his transfer deed as the land in question is registered in Y’s name. As such, this strategically located parcel remains vacant until today, as a result of the fact that neither the act of registration nor the court verdict could protect Y’s right of ownership.

Case 4 Issues: The case highlights also several points, most critical of which is to do with the functioning of civil and contract law: the court’s judgments appear to be ignored and/or not implemented. This effectively constitutes:

• Improper implementation of civil code and contract law. A functioning civil code and contract law system is a pre-requisite for development of secure property rights in land. That is, the latter depend on the former for their further development. According to this case, the courts appear powerless to force action on individuals despite the legality of the process and judgments which are handed down. Therefore, first and foremost the effective functioning of law and thus legal rights to land imply that contracts in land can be enforced. This is the first order of priority.

• Ineffective implementation of court judgment

Case 4 suggested remedies: The real remedies for addressing this issue are really beyond the scope of the note. However, given the prevalence of these issues in all qualitative case, it is a foundational step that must be undertaken systematically. If it is the case that indeed influence of the judiciary is limited and thus contract enforcement is either lacking or handicapped, then indeed action is needed in this arena as well: strengthening the perceptions of the relevance of rule of the law and also actual enforcement of contracts and judgments of the courts.

2.3.6 Summary of Key Issues and Potential Remedies In summary, the trends in the opinion of the survey respondents and the government revenues from land registration point to a series of widespread perceptions that in reality run counter to the intended purposes and practices of land registration. These perceptions can be summarized as follows:

• Perceived importance of registration versus intent to register • Perceived lack of importance attached to registration • Perceived alternatives to registration in transactions

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• Perceived higher importance of court re -authentication (of Amin ) versus registration • Perceived importance/value of non-registration alternatives (in the buyers’ decision) • Confusion between court authentication and registration • De facto role of Amin’s in the conveyance • Perceived corruption in land transactions • Perceived importance of registration versus intent to register • Perceptions associated with the ground survey fees • Perceived value of registration versus fees and policies

Of these issues, the key dynamics are summarized as follows. First, there is a competitive dynamic between registering at the land registry and re-authenticating the Amin’s conveyancing work at the court. The users of the system seem to effectively regard the latter as a substitute for the former. Second, the trust in the role of the Amin and non-formal means of ensuring the land tenure security are a feature of the system. Third, the financial burden of the fees on the intent to register is subtle. On the one hand, 50% intend to register or would buy registered land. On the other hand, 50% or more would not, especia lly the accumulated fines pose a definite challenge in this regard. These issues provide a glimpse of a series of policy prescriptions that can potentially improve the formal land registration system in Yemen at least as regards the above perceptions. First, the competition among the registration and court re-authentication should be either eliminated or incentives to use it be removed. A current policy being debated in Yemen, where the land registry and authentication functions would be consolidated under one roof, represents a potential solution to this problem. Second, given the importance attached to the role of the Amin, it is easier to augment this trust (rather than eliminating it as suggested by some) by building greater safeguards into the whole process. This will potentially result in a greater efficacy of the whole conveyance portion of land transactions. Some of the more specific aspects of these recommendations are provided in a later section. Third, although the fees are needed and should be collected, since the system of land registration is in its infancy in Yemen, emphasis should be placed on building up the stock of registered land rather than fees revenue potential of this activity. A distinction between first-time and subsequent registration is one aspect of such an emphasis. In addition, a multi-tiered incentive and amnesty program can create the necessary conducive environment for landowners to register in greater numbers. Offering windows of well publicized amnesty and waving the accumulated fees for a period of time are examples. Also, reducing the fee in general to a lower level for the next 2 years of operation for example sets a clear guidepost for the public to realize that the fees will go up.

2.4 Issues from Institutional and Administrative Perspectives

The emphasis of most land administration projects is on land registration expansion. However, the institutional/organizational framework for administering land tenure security usually involves multiple agencies with overlapping roles and responsibilities, each supported by empowering legislation. The lack of project emphasis on the institutional realities has led to less than ideal results in most countries. Institutional issues remain one of the biggest obstacles to successful land administration reform in most countries and Yemen is no exception. In other words, regardless of project design, the analysis should clearly identify the multitude of players and stakeholders in the institutional arena. This integrated approach, to holistically approach the institutional component of administering land tenure security, is undertaken in this section. In particular, in Yemen, the administration of land tenure security and its various arrangements are directly affected by the policies and actions of the following entities: (i) the Amin; (ii) the Courts; (iii) the HJC and the MOJ; and (iv) the SALR. In addition, the SLREA, the Ministry of Awqaf, the attorneys and real estate brokers exercise indirect influence over the outcomes in this arena. Figure 2.5 below illustrates this institutional and organizational setting. Specifically, the overlapping jurisdictions (ovals) may not be intentional or visible in the underlying laws, decrees, or custom. Nevertheless, the overlap has been present in practice and has created a challenging situation for the

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effective and efficient administration of land rights. The remaining entities (within the dotted diamond) do influence some key aspects of land tenure security, albeit indirectly. Therefore, they are represented outside the basic ovals, but in the same arena. Figure 2.5 Institutional and Organizational Framework for the Land Tenure Security Administration System

The actual handling of land transactions based on the system of conveyance by the Amin and also deed registration are the key aspects of existing administration of land tenure security—how it is practiced in Yemen. The Amin performs the conveyance function, and the land registry performs the deed registration function. In addition, the courts have become de facto involved in the “business of land registration” not as arbiters of last resort in resolving land disputes. But they are used by the public for authentication of Amin’s signature on the basira which is obtained through conveyance. This is not required but common practice. This is in addition to the courts’ involvement in resolving land disputes. Thus, currently the role and practice of courts/judges is significant and crucial in both the conduct of land registration and the resolution of land disputes (as well as the interpretation of the land laws). In addition to these direct interactions within the land transactions activities, two other institutions are involved with the administration of land tenure security: HJC and MOJ. The HJC is involved by virtue of its direct role in the appointment of judges. The MOJ and the Courts are also involved because they have joint responsibility for the commissioning/oversight and potential prosecution of the work of Amin. The overall interaction among these stakeholders is illustrated in the diagram below vis-à-vis the role they play in the land transaction handling process and outcomes. The remainder of this section provides an overview of the specific roles and function played by each stakeholder as well as some of the existing practices that were observed during the preparation of the policy note. Figure 2.6 below illustrates key institutional stakeholders’ involvement in the formal land registration process (the dotted lines imply involvement but not in transactions). In general, formal recording of land transactions almost always involves the Amin and mostly (87% of survey respondents) court authentication of the basira. By contrast, registration at the land registry is less frequent.

SLREA

Attorneys

Real EstateBrokers

Endowments

Amin(Conveyance)

Courts(Authenticate Signature)

MoJ/HJC(AminOversight)

Land Registry(deed registration)

LandRegistration

SLREA

Attorneys

Real EstateBrokers

Endowments

SLREA

Attorneys

Real EstateBrokers

Endowments

Amin(Conveyance)

Courts(Authenticate Signature)

MoJ/HJC(AminOversight)

Land Registry(deed registration)

LandRegistration

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Figure 2.6 Key Institutional Stakeholders’ Involvement in the Formal Land Registration Process

2.4.1 Amin and Conveyance of Land Transactions In North Yemen, the Amin is a role that functions effectively as an expanded notary public consistent with historical role performed in a large number of Arab as well as Islamic and Western European countries (such as Netherlands and Spain). In the South, the Amin function is typically performed by lawyers and/or brokers. The Amin in Yemen is somewhat distinct, because it functions as overseer of all types of contracts including marriage. However, the role of the Amin in land transactions is essential. Usually, all transfer transactions involving land have to be performed and certified by the Amin in the North. He is effectively the conveyance agent and performs the function much like other parts of the world. This transfer is supposed to be subsequently registered with the land registry. Some of the land transactions are and most are not registered at the land registry. In the opinion of one of the Amin interviewed, the some cases where the registration does not take place reasons can be the owner has no intention of selling or he is in poor financial status, thus not being able to afford the property transfer tax mandated under the registration process, which amount to 3% of the purchase price. If the property has changed hands more than once, then the current owner should ensure that previous transfer have been registered in the Land Registry Office. If any of the previous transfers have not been registered the current registrant is required to pay the previous transfer fees, as many as they may be. By tradition and social custom as well as Shari’a the role of the Amin is very significant, as indicated by the survey responses. The Amin is commissioned/certified by the MOJ. There are 285 certified Amin in Sana’a City (See Table 2.11). One of the main problems that the Amin faces is corrupt Semsars. According to the law, several Amins may serve the same geographic area, but each Amin is not authorized to perform activities except in the jurisdiction area specified in his license. However, it is not uncommon that Amins perform conveyance for properties within other geographic area, contrary to the law.

FormalLand Registration

Amin

Land Registry

Courts

HJC

MOJ Judges

LandTransactionOutcome

LandTransaction

Input

FormalLand Registration

Amin

Land Registry

Courts

HJC

MOJ Judges

LandTransactionOutcome

LandTransaction

Input

38

Table 2.11 Number of Registered Amins in Yemen, 12/2004

Location Number of

Amins % of Total

Number of Decommissioned

Amins

Population Served by Amin *

Taiz Governorate 853 41% 2 2,692 Sana’a municipality 285 14% 5 5,221 Sana’a Governorate 86 4% 0 15,721 Shibwa Governorate 45 2% 0 10,111 Aden Governorate 3 0% 0 168,000 Al Dhalee Governorate 87 4% 0 4,632 Al Bayda Governorate 37 2% 0 15,216 Hodeidah Governorate 178 9% 0 10,910 Rimah Governorate 68 3% 0 NA Ibb Governorate 258 12% 0 7,826 Saada Governorate 3 0% 0 198,667 Hajja Governorate 14 1% 0 97,214 Al Mahwit Governorate 13 1% 0 34,769 Ma’reb Governorate 3 0% 0 75,333 Amran Governorate 33 2% 0 28,970 Abyan Governorate 2 0% 0 210,000 Hadramout Governorate 41 2% 0 21,293 Lahj Governorate 68 3% 0 9,559 Total in Yemen 2,077 100% 7 8,792 Source: Ministry of Justice, 2005 * Based on population figures for 2000 According to one of the Amins interviewed, based in a relatively affluent neighborhood in Sana’a, he processes approximately 25 transfers per month. The average LRE value for the conveyances he performs is around YR 27 million (USD 145,552). There is no standard fee set for the work of the Amin. However, he usually charges, YR 10,000-15,000 (USD54-81) per transfer transaction, which usually would be paid by the buyer. The office of the above Amin visited was very meager and austere and without security guards (in the office lied a machine gun on the floor which is culturally common in Yemen). Furthermore, the citizens appear to trust the Amin with the record keeping function for the conduct of transfers far more than any government agency. The Amin visited indicated that record keeping has improved over years at the Land Registry and it used to be somewhat chaotic and unclear. Key Aspects of Current Conveyance Administrative Practice Processes: The practice of conveyance in the Northern and Western governorates is distinct from Southern and Eastern governorates. In the Northern and Western governorates the conveyance is performed by the Amin, and in the others by either a broker or a lawyer. Therefore, this difference should be noted, since the references here are made to the Amin. The process for recording a transaction contract at the Amin’s office for land transfer approximately is according to the following process (see figure 2.7 below). The buyer and seller agree on a price prior coming to the Amin. They bring their documents, especially, the ownership documents of the seller and their authenticity are meant to be “rigorously” checked. The Amin usually checks the signatures of the previously recorded transfer contract known as basira in Yemen. The signature and the reputation of the Amin play a key role in this examination process. If the reputation of the previous Amin is in question or the authenticity of the previous contract is in question, at least in theory, the Amin performs “more thorough search” on the lineage of the previous transfer contract. This is an important part of the process, as the authenticated transfer contract by the previous Amin is the basis for establishing the ownership of the parcel of land. If the previous transfer was recorded in the current Amin’s office the process of checking is quite straightforward. However, it is more involved, if an Amin from another area or district is involved.

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Figure 2.7 Prevailing Convenyance Process in Northern and Western Governorates

As a matter of practice, usually the transfer contracts are certified by the Amin where the property is located in. However, it is also common that an Amin from another district could have certified the previous transfer contract. The Amin also acts as the custodian of funds which the buyer pays to the seller upon transfer. It appears as though the Amin holds the funds in equivalent of “escrow account”. He then releases the funds in tranches usually depending on the speed with which the underlying ownership lineage can be ascertained by him. According to custom, after an initial contract is drafted and some of the funds are released to seller, the buyer is allowed and/or encouraged to go to the site and “break” the ground (this is a custom that appears to imply ritualistically the start of the transfer). More realistically, this step is presumed to serve as a form of publicity function (i.e., it attracts the attention of potential claimants) for the whole conveyance process. In other words, if there are other claims on the land parcel, they are presumed to see the groundbreaking and potentially contest the sale. This is primarily to the benefit of the buyer. If this process is smooth, then the full complement of funds is released to the seller from the escrow account. Any potential irregularities which may surface are presumed to delay the process until “proper” investigations have been conducted to resolve them. If (“light”) fraud is uncovered after some of the funds have been given to the seller, the seller is asked to return the received funds. The threat of sanctions appears to be reputational rather than criminal (this point is not clear and should be investigated further). If actual forgery is discovered, then the matter is referred to the criminal court for prosecution. The transfer contract drafted by the Amin is presumed to include all conditions of sale and the associated land use covenants (especially in cases involving Waqf land). In addition, Amin is presumed to balance the interests of the buyer and seller when he is preparing the purchase and sale contract and the transfer agreement. The final transfer contract is known as the “Basira” and it is only prepared and signed after the full transfer is completed without any problems. Prior to the preparation of the final Basira, a draft transfer contract is prepared (called Meswadah ) and it is entered into the “register” of contracts by the Amin. The register of contracts is a bound book that contains references to the clauses of the basira and the bottom of the page is signed by the buyer, seller, as well as witnesses. In addition to signing, the witnesses and signatories put thumb prints as a unique reference to person’s identity. The basira agreement contains metes and bounds descriptions, acreage, and potentially encumbrances on the property (this point needs further clarification). The references for the work of Amin are numerous and include the following legal elements:

Buyer/SellerAgree on Price

Visit Amin withDocuments

Amin ChecksSignature

Establishment ofEscrow Fund

Initial ContractIs Drafted

Portion of FundsAre Transferred

Ground BreakingIs Performed

Entry intoRegister ofContracts

Basira isPrepared

+ coventants

Basira is signedBy principal

parties/witnesses

Discharge ofBasira to Buyer

Final transferOf funds to

Seller

40

• Civil Law • Evidence Law • Registration Law • Endowment Law • Authentication/Notarization Law

The recording of any mortgage against a property is not usually on the basira. As a matter of practice, banks physically hold the basira after it is transacted as a guarantee that the landowner will repay the loan. After the settlement of the mortgage this is usually released to the owner. Issues Regarding the Conveyance at the Amin: The Amin appears to perform most (if not all) land conveyances in the Northern and Western governorates. This points to a strong institutional presence and a very well adopted and assimilated function at least as perceived by the public at large and land owners specifically. However, there have been cases of impropriety as well as general inefficiencies which deserve to be looked at closely and rectified.

• Lack of conveyance procedures and/or processes (and standardization of the latter) • Lack of basira standard forms and information items • Inadequate qualifications regarding matters of land conveyance

In general, there appears to be no law which governs the conduct of conveyance. Even in the absence of the latter, it is expected that such a prevalent practice would have had procedures and processes that make it predictable and thus more trustworthy. However, there are no established documented procedures and processes to guide the process. In addition, there is no standardization to the documents and/or the information items which are common across land conveyances. This has led to a situation where a large variety of practices and personal styles as regards the contents of the basira. This effectively renders the contents of the basira at best difficult to interpret and at worst outright open to multiple interpretations. The combined effect of the lack of conveyance procedures and non-standard basira forms/information items inhibit the effective application of the land registration procedures by making it difficult to related current basira to previous ones and create an effective chain of evidence whereby judgments can be renders efficiently and expeditiously. Remedies: The following remedies are proposed:

• Passage of laws and development of by-laws on the conduct of land conveyance • Development of standard forms with common information items across all land conveyances • Improved qualifications, capacity building and examination/certification procedures

First, either as a new law or preferably as amendments to the existing authentication law, the conveyance as an important legal activity should be regulated and given high visibility. The associated by-laws should be developed and spelled out in sufficient detail to avoid misinterpretation. Second, standard forms should be developed which then are required to be used for the performance of conveyance. These forms must include standardized information fields which aid in their proper interpretation addressing matters of land ownership. Third, the process of certification and decertification of the Amin should be better supervised. In addition, re-certification of the Amin may include examination based on maintaining the level of qualifications. This may necessitate re-training or other equivalent means to ensure that the latter’s qualifications are up-to-date and maintained over time.

2.4.2 Survey Authority and Land Registry

The SALR is an independent government agency. It reports directly to the Presidency of the Council of Ministers (COM)—Prime Minister’s Office as of 1982. It is the “Surveyor General” arm of

41

government and performs a variety of ground survey (functions) in addition to being responsible for the geodetic control network (triangulation points), and map/cartography production for topographic maps. It is the other arm of the agency, the function of interest to this policy note, that performs property (cadastral) survey and land registration functions—it is known as the Land Registry (LR) (sejel al akari). The LR is the agency that performs deed registration of real property transactions for the applicants. According to the law transactions that are not registered at the LR can be subject to legal challenge. The practice of deed registration is relatively new, i.e., less than 30 years old. It is based on the 1991 LRL No. 36 which amended the former LRL of 1976 No. 12. The former is a minor amendment of the latter and was enacted after the unification of the North and the South. The dominant practice (not necessarily the intent of the law) entailed registering deeds for the conveyances which have carried out by the Amin or lawyer/broker until 1999. Within Yemen, this regime is referred to as “Sejel shakhsee”, i.e., declaration of transfer by the previous owner to the current owner (grantor and grantee respectively) as authenticated by the notary (Amin). Internationally, this practice is referred to as transcription of rights to property (versus inscription as will be elaborated later). Beginning in 2000 with the tenure of the current chairman, the SALR has begun implementing a regime of “Sejel ainee” which involves doing site visits and doing checks on the chain of evidence prior to actually performing the registration of the deed. According to SALR, this intended to rectify existing deed registration problems. However, it is important to point out that, due to its underlying legal doctrine and also actual processes of execution the intended results may be difficult to obtain. That is because, this is effectively moving from a “person-based” deed registration to “parcel-based” deed registration system. This move has been tried in several Latin and Central American countries, namely Peru and El Salvador, with less than ideal results. 13 SALR attributes the large number of land ownership disputes that exists today to bad/inadequate laws and regulations, as well as insufficient knowledge by the judges who hear the land dispute court cases. According to SALR, several judges are not adequately qualified in the technical and legal aspects of land rights matters, and that verdicts are made based on insufficient information in certain cases. SALR suffers from inadequate resources to perform adequate inspection of parcels due to lack of adequate up-to-date large scale maps. Large scale maps are now with the MPWH’s planning division. In 1998, the SALR participated in a study by the Dutch government which attempted to develop a work plan for survey and mapping training as well as photogrammetric acquisition. This work plan entailed working to develop a large scale base map for Sana’a and other cities. The SALR had prepared a draft LRL in 2001 which presents a more formal/stricter approach for the switch from a “person-based” deed registration to a “parcel-based” deed registration system. A new approach is proposed which involves a multi-stage process. For example, a committee is to be appointed which is headed by an independent but well trained judge in each SALR office. The committee membership will involve representatives from SALR, the MOJ and others. This committee makes a preliminary decision. However, the decision can be appealed. The committee’s work would involve legal, technical and administrative matters. A major aspect of the new law is that it will be final and only subject to court reversal in cases of: forgery (tazweer) and non-authenticity (tadlees). The new law makes a distinction between the rigor with which the process of checks and balances are applied in the procedures to ensure that property rights are adequately enforced: (a) first time registration; (b) subsequent registrations. The first registration is purported to be much more stringent and would take a longer time, while the subsequent registration would be less stringent and quicker. The logic behind this is that the initial registration check will have resolved potential problems. The 13 World Bank, 2003. This important point will be discussed later in more details.

42

subsequent ones are pure transactions. Although the new draft law makes the point emphatically that conveyances are not legal until registered and obtaining a registered deed, the key issues will remain those of enforcement and perceived added value by the owners. The cadastral survey unit within the land registry currently has a complement of four surveyors who are seconded from the SALR staff to work for the cadastral survey section and perform its work. An additional eight survey technicians are involved in supporting this work. The survey section appears to be in need of survey equipment, specifically total stations. Key Aspects of Current Deed Registration Administrative Processes : The new (although included in the 1976 law, it was not implemented until 2000) regime of deed registration is characterized as “sejel ainee”, i.e., a process which involves site survey and inspection of the parcel as well as neighboring parcels and their owners’ opinion of the focal parcel boundary. Prior to implementation of sejel ainee, usually the support documents or the basira itself contained “metes and bounds” description and little or no attempt was made to do site inspection and/or verification of the exact location and measurements of the parcel. Today, according to the SALR, the following process is followed to perform the registration of land transfers using the sejel ainee method. An application form is filled out and handed in along with the relevant documents. Some of the major documents include: ID; Ownership proof; Mortgage documents. The agency performs the following preliminary checks: Amin Certification/Commission Validity (from the MOJ; Area Register (sejel al manteqah). Then, after checking, the transfer contract is recorded in the Register of Contracts (Sejel Kayd Al Melkiyah ). In cases, where the inheritance or transfer invo lves land sub-division a croquis (i.e. sketch) is done. Subsequently, a survey team performs a ground survey and also contacts the neighbors to crosscheck the ownership status of the parcel in question and the owner’s claim. A site plan is produced which has measurements and also descriptive metes and bounds statements. If any discrepancy is discovered upon the ground survey and meeting of the neighbors the process is stopped and referred for review (it is unclear if this review amounts to adjudication though). The types of discrepancies include: ownership, boundary, or public right-of-way encroachment. Figure 2.8 below illustrates the process. Figure 2.8 Land Transaction Registration Process at the Land Registry

The SALR has engaged in a records computerization project of the existing registered basira or deeds. It is being entered into a computer database (Oracle®-based)—this covers the Sana’a city. However, due to lack of a standardized approach to assigning and perform ing consistency checks on

Hand inRegistrationApplication

Hand in Documents

ExaminationOf

Documents

Recording ofContract in the

Contracts Register

Site VisitQuestioning of

Neighbors

Site SurveyMetes/Bounds

Description

Inspect forConsistency

No Discrepancy:Fee Payment/Registration

DiscrepancyExists

In case ofDiscrepancy:

Technical Review

In case ofDiscrepancy:

Judicial Review

ResolvedTransactionRegistered

43

land parcel numbers, the latter cannot yet serve as a basis for uniquely identifying and referencing land parcels that have been transferred via registered basiras. Issues: Based on the examination of the process above and also the details of the qualitative case studies of land disputes, the following are potential issues that should be addressed:

• Lack of adequate processes and procedures • Lack of an adequate tract/parcel index • Lack of a unique parcel identification system • Lack of a legal framework for a unique parcel identification system • Lack of by-laws and guidelines • Lack of easy to access mechanisms for handling encumbrances, legal notations, etc. • Lack of easy to access mechanisms for handling mortgages, liens, financial instruments, etc.

The last two items (the others have been addressed in the earlier sections) are addressed here. First, at first glance the contents of registers at the land registry appear adequate. However, this is misleading because standard information coverage on the legal notations including law suits and encumbrances appears to be either lacking or minimal. These are either maintained under the same register as the parcels or a separate register. Second, the there is a similar need for proper and easy access to liens, mortgages and the associated information regarding various parcels. Again, there is already a mortgage register. However, its inefficient and ineffective operations, as evidenced by the land dispute case studies, points to the dire need for improvement. Remedies: The above issues are directly translated into a series of remedies which are aimed to rectify the underlying administrative problems:

• Establish adequate processes and procedures to ensure loopholes are closed • Establish an adequate tract/parcel index • Establish a unique parcel identification system • Establish a legal framework for unique parcel identification system (legal procedure for

creating new parcels numbers and retiring non-existent parcel numbers) • Develop by-laws and guidelines • Develop easy to access mechanisms for handling encumbrances, legal notations, etc. • Develop easy to access mechanisms for handling mortgages, liens, financial instruments, etc.

With respect to the last two points, recordkeeping should concentrate not only on providing information but also on devising a clear and easy method for its organization and subsequent access. This point is particularly important as various interests in land must not only be recorded but also be easily accessed through a unique indexing system. Therefore, the recording of various encumbrances, legal notations, liens, and mortgages must be organized based on the unique parcel identification system. Furthermore, it should refer to related entries in a separate record which keeps track of all incoming items through a unique identification system such as a “daily log”. The daily log is a central cross-index mechanism which refers to docket numbers of court cases and/or various other orders such as a mortgage recording requests in one “register”. The advantage is that, this minimizes the potential for error by consolidating and focusing multiple registers into one. However, all depends on unique parcel identification and unique daily log number.

2.4.3 The Courts

Typically located in the commercial center of a District, a District Court’s jurisdiction is specialized in that it covers cases relating to one area of the law. There are District Courts that look into civil cases, criminal (public property, traffic and juveniles) cases, family law cases and commercial cases. District courts that entertain commercial cases are found only in Sana’a City, together with the

44

governorates of Aden, Taiz, Hadramout and Hodeidah. There is one District Court in each of Sana’a City and Aden governorate that hears cases pertaining to customs duty and taxation. Six District Courts have been established in Sana’a City and the governorates of Sana’a and Al Jawf, Aden, Taiz, Hadramout and Hodeidah. The first District Court looking into juvenile cases was established in the Governorate of Aden in 1992. The number of District Courts, their location, the number of judges to be selected and appointed for such courts and the territorial jurisdiction of each such Court are all determined by a resolution of the HJC, after considering joint proposals to this effect by the President of the Supreme Court and the Minister of Justice. District Courts have jurisdiction in all cases. Depending on the monetary value of the case, a single judge (also called magistrate) or a full court of three judges may hear the case in a District Court. The court performs authentication of Amin’s signature. However, the primary function of the court is the handling of land disputes, which appear to be numerous and varied. In West Sana’a, a key matter which is contributing to the land disputes is the inadequate urban planning basics, e.g., master plan as well as zoning documentation which are up-to-date. Another contributing factor is the Amin’s mistakes as well as lack of qualifications (there are cases in which the same property appears to have been sold in three separate basira from three different Amin). Another cause of disputes is the inheritor selling land rights as if these were entitlements to the full parcel of land. Other cause of disputes is the low level of sejel ainee land registration (parcel-based deed registration), which covers about 20-25% of urban land in Sana’a but no more than 5-10% of all urban land in Yemen. Issues: Several potential issues arise out of the observed dynamics and trends in land disputes, as well as the re-authentication of the Amin’s signature on basira:

• Lack of by-laws for conduct of authentication by the Courts • Lack of standard record keeping methods on authenticated land-related documents at the

court • Lack of standard procedure for investigation/disciplinary action on Amin ’s work • Low-impact (low-trust in) of deed registration at the land registry on the judiciary process • Citizens’ Perceived significance of re-authentication of Amin’s signature • Apparent ineffective implementation of civil code and contract law

The last three issues have been addressed earlier. The first three are expanded upon. First, although the authentication law includes provisions for development of by-laws and procedures, there appears to be non available formally, especially in regulating the relation between the courts and the Amins in matters of authentication and monitoring of conveyance activities. Second, the current perception of the public regarding authentication is that it serves an important function. This coupled with the problems revealed by the court cases imply that procedural steps as well as record keeping regarding what has been authenticated are very important. The underlying law underscores this by requiring adequate documentation for keeping track of authenticated documents, etc. However, the actual details are not clearly spelled out in the law. These observed conditions point to the need for adequate record keeping regarding authentic ated documents by the court. Third, despite the requirement in the law for monitoring and oversight of the Amin based on investigative and disciplinary powers of the court, it is neither established nor practiced. Remedies: It is proposed that in order to rectify the negative impact of these issues the following remedies be undertaken:

• Development of by-laws for conduct of authentication by the Courts • Development and execution of standard record keeping methods on authenticated land-related

documents at the court • Development and execution of standard procedure for investigation/disciplinary action on

Amin’s work

45

These recommended remedies will increase the overall visibility of the process of authentication by the courts and also ensure that it is undertaken with highest level of transparency and consistency.

2.4.4 The Ministry of Justice The MOJ certifies the Amin and administers the court system (though not the appointment of judges) who are involved in judging land disputes. According to MOJ, the fast pace of development in urban areas and its acceleration since the unification has produced significant numbers of land disputes, which even involve homicides. According to the MOJ officials, the land dispute court cases are approximately 25% of the total course cases. In terms of breakdown of these cases, the MOJ presumes that the majority or more than 75% of the total land dispute cases are to do with ownership, the rest with boundary issues and other problems. One of the key issues that cause land disputes are the fraudulent conveyance deeds that continually surface. In addition, the lack of executive regulations to govern the actual administrative practice of land registration had a negative effect on the volume of registration, which in turn has left judges overseeing land disputes to interpret the law with inadequate basis to make a judgment as well as inconsistencies among the judgments by different judges. MOJ wants to increase transparency for the awarding of title deeds, and to do, it proposes that the legal aspects of land administration be performed by the government within an entity attached to the MOJ. The Ministry is contributing to the new legislation, which provides for registration to be performed through a systematic approach that would include canvassing and publicity of rights prior to the full registration ( in Arabic, Ish-haar). The new Ish-haar process is presumed to be based on three distinct but related aspects of ascertaining ownership: technical, legal and judicial. The goa l is to move completely away from the person-based deed registry (sejel shakhsee ) and to supplant the sejel ainee (visual/ground inspection parcel-based deed registry) with Ish-haar system (effectively a title registry). The MOJ links the disputes to the lack of definitive proof of ownership and that ownership is based on the basira (i.e. sale contract deed, which can be easily produced fraudulently) rather than the registry. The Site/visual inspection-based registration (sejel ainee) is trying to resolve these problems, but with limited success. This is why the MOJ is interested in moving to a process called in Arabic “Ish-haar” based on the publicity concept, where titles to property would be determined in a systematic fashion through canvassing (list of rights) for each plot of land, and a title registration system produced. MOJ recognizes that such a process requires significant resources, skills, and institutional setup to carry out. The MOJ calls for piloting systematic titling of land. Issues: Several potential issues arise with regards to the regulation of the Amin and also the related qualifications oversight functions of the MOJ. In other words, there are:

• Lack of standard certification/decertification procedures • Lack of standard procedures for announcing certification/decertification of Amin • Lack of by-laws to guide the work of the Amin • Lack of systematic oversight/inspections of Amin’s work/premises

First, there appears to be a lack of certification process for the Amin that is used and practiced throughout Yemen (at least in the Northern-Western provinces). The current certification requirements are ad hoc and very rudimentary. For example, good handwriting and grammatical use of language are mentioned in the practical requirements for Amin’s certification. More importantly, the decertification procedures are almost non-existent—only seven Amins have been decertified, which is contrary to the preponderance of the land disputes involving errors (intentional or not) by the Amin. There is a need for developing strict certification and decertification procedures and implementing them. This is an important step given the foundational role of the Amin in conducting all conveyances in the Northern-Western Governorates. Second, there is the related issue of actually

46

publicizing both the certified and decertified Amins in a meaningful and consistent manner so that the citizens can make informed decisions regarding their choices of the available Amin and with a sound reputation. Third, especially as regards the notion of land conveyance, the authentication law does not provide for development of any by-laws. However, this is much needed as the process and steps of the land conveyance should be standardized. Fourth, the MOJ is tasked with inspections of the Amin’s work premises. However, it is our impression from site visits that this is rarely taking place. Since inspections bring visibility to operations and visibility can mean recertification or decertification it should be practiced frequently and with formal results. Remedies: The following remedies are recommended to improve the discharge of MOJ’s responsibilities as far the Amin’s oversight and monitoring is concerned:

• Development of standard certification/decertification procedures • Development of standard procedures for announcing certification/decertification of Amin • Development of by-laws to guide the work of the Amin • Systematic and formal conduct of inspections of Amin’s work/premises

These recommended remedies will improve the regulation of Amin’s work and in the long-run increase the reliability and trust in the whole land conveyance process as conducted by the Amin.

2.5 Practical implications of weak registration law and customs

The conduct of land registration administration is presumed to be based on a multitude of customs and laws. Determining the key issues and weaknesses of customs and laws on land registration can facilitate the understanding of the underlying problems in Yemen significantly. The major issues regarding the fundamental land customs and laws are presented below as they relate to the land registration administration: land conveyance; authentication law; and LRL.

2.5.1 Customs Governing Conduct of Conveyance In Yemen, the most commonly used and basic form of securing interests in land is through the operation of a conveyance system. This conveyance function is performed by the Amin in the Northern and Western Governorates and by brokers/lawyers in the Southern and Eastern Governorates. The predominance of conveyance is shown to exist based on the survey results of 100 land owners, only half of whom indicated they would use the land registry. In other words, this conveyance system was meant to be combined with a formal deed registration at the land registry first in a 1976 law and later in a 1991 amendment. However, this dual approach to formally securing property rights appears to have stalled. This is underscored by the very low volume registration at the land registry over the past 28 years—during 1977-2004 period there were less than 240,000 registered private deeds at the land registry. There are very few real statistics to determine the potential volume of deed registration, but our estimate shows that 5 to 6 times registration volume would be conservatively possible. In fact, in our assessment, the real capture rate of all conveyances that take place is perhaps closer to 20%. Despite the predominance of conveyance, there appears to be no special laws or related by-laws or formal decrees that govern the conduct of conveyance in practice, which led the Amin to develop methods of performing this based in large part on the Shari’a. There are also other specific considerations that relate to the conduct of LRE transactions with roots in the Yemeni customs more than laws or regulations, such as the use of ground breaking (digging the parcel before paying the full price). The only exception appears to be the general guidance that is contained in Law No. 29/1992 and No. 24/1997 amendments, Articles 10 and 11. Article 10 states that the Amin is authorized to perform

47

inter alia : “Writing of delegation of authority and conveyance of assets; … Preparation of other documents required by law or requested by concerned parties such as those related to conveyance of land or money unless the license otherwise; … Submission, every two months time, to the competent court (authentication department) copies of contracts and its draft registry concerning land conveyance and other to be reviewed and to document its authentication.” Furthermore, Article 11 (G) states that: “When writing documents the applicable rules must be observed in connection with land and family registry, taxation, and other law in connected to this law.” These are the only direct references to performance of land conveyance. However, in terms of any substantial content regarding actually carrying out the conveyance they are totally silent and no information of guidance is provided. Issues: Despite these shortcomings in the conveyance process as conducted by the Amin, at least two factors point to requirement for urgent actions to improve the conveyance. On the one hand, there is great importance attached to the practice of conveyance among the landowners. Furthermore, its widespread popularity makes it a fixture of the institutional landscape. On the other hand, there is mounting criticism of the deficiencies in the current practices that make conveyance ripe for reform. Remedies: This reform could be through formalization on the one hand and moderniza tion entailing both simplification, and standardization on the other hand. Formalization requires that conveyance be independently legislated as a key area of practice by the Amin. Through further study of the current process and highlighting its deficie ncies, a law can be developed to strengthen and formalize the good features of the current practice and add features where practice is weak. The law could be an executive decree to the Authentication Law or attached to the land registration or a new law altogether. To minimize confusion and focus the implementation, amendments to the authentication law may be the most useful. Modernization which is based on simplifying and standardizing various aspects of Amin’s conduct of land conveyance can be accomplished by requiring its implementation as a part of recertification of the Amin. For example, preparation of basira can be based on standard forms with standard content parts. The basira contents can also be simplified through guidelines for inclusion of such items as metes and bounds descriptions or inheritances, etc. The Amin’s recordkeeping practices must also be targeted for simplification and standardization by requiring standard books by the MOJ which contain minimum but meaningful information items that can serve as adequate basis for the later tracing of transactions.

2.5.2 Authentication Law —Amin versus the Courts Although the Authentication Law No. 29 of 1992 and its amendment Law No. 24 of 1997 address the conveyance function by the Amin in a shallow manner, they have detailed coverage of several aspects of authentication (notarization) to be performed by the Amin and the Courts. Several key aspects of the law which is of interest in the land arena are presented below. Authentication by the Amin: The authentication of a transfer contract in the form of a conveyance deed (or basira ) is included within the domain of the Amin’s powers within the law. The basira is considered a form of generic contract, therefore the Amin’s jurisdiction over them is to be expected. The law does stipulate certain land-related matters which are worth mentioning.

• “The Amin should have a good knowledge of legal procedures, personal statutes, and evidence, land taxes/fees, land registration, surveying, and other related laws” (article 6E). This article is supported by the Minister of Justice Decree No. 200 of 2001, which stipulates that among the requirements for appointing an Amin is for the candidate to pass (with a score of over 50%) an examination of knowledge of the abovementioned laws, civil affairs issues, in addition to good handwriting and a dictation test. Beyond listing the required areas of knowledge of an Amin, there is no requirement of thorough examination/re-examination and

48

little procedural detail on the admissions test. More importantly, the decree does not require an Amin to have completed any given education level; an attestation of the Amin’s “knowledge” by one of the Ulema is enough. In addition, there are no by-laws or established procedures related to the monitoring process and renewal of Amin licenses by the MOJ. In practice, there are lots of complaints by the landowners that the Amin often does not have much qualification in the above subject areas.

• “The Amin should not authenticate any document with regard to land conveyance unless the

ownership of the land is well established. The land registry office should be provided with a list of documents authenticated and registered stating the land’s type, area, boundaries, and authentication data” (article 11D). First, this guidance is a general declaration of principle rather than details of a process. Second, the guidance has to do with making sure there is consistency among the documents (theoretically a requirement for any Amin). Third, it states the filing requirements at the land registry for the conveyances conducted by the Amin. The first two items are implemented highly unevenly and the third item is usually rarely complied with by the Amins.

• “The Amin is prohibited from drafting any contract outside of his administrative jurisdiction

as indicated in his work license” (article 14). This is a particularly important issue. While the law prohibits the Amins from operating outside of their jurisdiction. it is not uncommon to hear of an Amin from one jurisdiction preparing conveyance deeds for properties in another jurisdiction. This takes place either because the buyer trusts a particular Amin (and/or has less confidence in the other jurisdiction’s Amins) or because of fraud as in the third profiled case. This part of the law, although important, appears to be weakly enforced if at all. This and the following point are two weaknesses or loopholes that could greatly hamper the functioning of the Amin institution in the future in issues around conveyance (other civil affairs’ contracts may not be that much of an issue).

• Another major loophole is that the Law authorizes instances in which some people other than

the Amin can draft land transfer transactions, namely dignitaries and respected public figures (such as judges, Ulema , etc). Similar to the previous point, this seems as an article that was conceived by the lawmakers with in mind such instances as one of the honorable Ulema drafting civil union contracts, but its implications on land conveyancing were not thought of. Since the conveyancing activities of such dignitaries are unregulated by Law and that they are neither incentivized nor regulated/accountable to the MOJ, it would be highly unlikely to expect them to perform the required checks on land ownership or follow up on authentication or registration that an Amin would. This loophole needs to be closed.

The remedies for these issues have already been addressed earlier. Re-Authentication by the Court: A widespread practice in Yemen, confirmed by the 76% of survey respondents, is that a basira authenticated at the court is a major influence on the decision to buy a piece of land. As much as 28% of the respondents actually find registration unimportant because it is the court authentication that guarantees their land property rights. Despite this widespread practice, and the associated notions of land tenure security afforded through it, in fact the authentication law is either silent or open to interpretation on this point. Court authentication appears to be either as an unnecessary or redundant step since it appears to be more of an authentication of the Amin than of the basira itself (hence it is referred to as re-authentication). The discrepancy between the intent of the authentication act by the Court and its expected value by the land owners is cause for alarm. It also appears that the procedure may be used to give semblance of legality to land documents which may have been prepared through illicit means. It is important that the misalignment of legal intent versus people’s perception of that legal intent be rectified. In

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addition, the reform of the latter should address the potential abuses of the process and take action to minimize the avenues for abuse. The remedies for these issues have already been addressed earlier. Court authentication versus registration: the stakeholders’ viewpoints: On June 16, 2004, the SALR and the East Sana’a Court signed a Memorandum of Understanding (MoU) on coordinating the three procedures of registration at the land registry, Court authentication of the basiras, and the Amin’s conveyance activities (from the perspective of the Court’s monitoring role). The following were the agreed actions in the MoU:

• The Court’s authentication department shall provide the SALR with a list of Amins, their geographic jurisdictions, license expiration dates, and a list of decommissioned Amins so that SALR does not register a basira drafted by an ineligible Amin ;

• The Court shall notify SALR of each incoming/pending dispute in all court branches so that SALR does not register a basira for a contested property;

• SALR shall notify on a monthly basis the Court with all registered basiras by the concerned Amins so that the Court can better monitor the Amins’ work and notify SALR of the disputed cases;

• SALR shall not register any basira undertaken through a Power of Attorney or involving inheritance unless if the Power of Attorney or the inheritance/estate subdivision agreement are authenticated by the Court;

• The Court’s authentication department sha ll not authenticate any basira or contracts for mortgages or leases of over three years until after it has been registered at SALR;

• The Court’s authentication department shall monitor the Amins to ensure that they do not draft any basira until after existing original proofs of ownership have been registered at SALR and authenticated by the Court;

• If asked to registe r a basira drafted by a person other than the Amin (the Law allows judges, Ulema or “respected public figures/dignitaries” to do conveyancing) which it does not recognize, SALR shall then contact the Court’s authentication department. If the authentication department's answer is that the drafter is “known” to them, then basira can be registered; and

• Reiteration of the procedures governing SALR issuance of substitute basiras that have been/are claimed to be lost. This was found to be a major cause of problems in two instances.

o When a registered property is mortgaged, the bank retains the original basira. Some owners would then claim to have lost their basira and ask SALR to issue a substitute. SALR in theory publicizes this request and contacts the banks, but it is often the case that a substitute basira would be issued to a mortgaged property due to lack of proper communication. Owners would then use the substitute basira to get another mortgage or sell the property;

o When a registered property is sold but the buyer has not intent of (or did not yet go for) registering it , some sellers would go to SALR claiming to have lost their basira and to issue a substitute. Sellers would then use the new basira to obtain a mortgage loan or sell the property again (which is done with the help of a corrupt Amin, or an unknowing Amin outside of their area of jurisdiction or an authorized non-Amin).

What is interesting about this MoU is that it organizes the relationship between these three competing (or alternatives as perceived by the public) procedures as follows: (i) no conveyancing should take place until after registration (of previous basira); and (ii) no Court authentication should take place until after registration (of current basira). This in effect means that the sequence of post-conveyance activities, which the public would undertake to achieve security of tenure, is: (i) deed registration, followed by (ii) Court authentication.

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If this sequence were in reality implemented, Court authentication would then seize to become an alternative form of obtaining tenure security in the public’s eyes. Once this sequencing is achieved, it will cast doubt on the whole merit of Court authentication as a separate procedure, as opposed to it being consolidated with registration at the Land Registry, as many stakeholders argue call for. Once the use of the land registry becomes the sole and definitive way of obtaining tenure security, Court authentication would then be perceived by the public as a duplicate/unnecessary function (as opposed to the current perception as the cheaper proxy). Whether the Court authentication procedure should then be cancelled would depend on its underlying objective. This requires answering the following questions:

• Is Court authentication intended to authenticate the basira itself (in which case, it would need to be consolidated with registration at the Land Registry and its usefulness as a separate step—administratively and financially—would be questionable)?

• Or, is Court authentication intended to authenticate, i.e. monitor, the Amin (in which case it should be consolidated in the form of the comprehensive periodic report on activities required by Law from the Amin or the Amin should be subject to random audits, as opposed to a “clearance” for each single document)?

2.5.3 Land Registration Law: Issues & Remedies Land registration, is governed by the Law No. 12, dated February 8, 1976, and later amended by Law No. 39 of 1991 which established a system for the registration of real property rights. The Law No. 39 requires the maintenance of the following registers: (a) register book of contracts/deeds; (b) a daily journal featuring daily applications for registration; (c) an index of proprietors featuring a list of the names of owners entered into the register book; (d) a register book containing all land parcels and their description; (e) a Waqf deeds register featuring all official records of parcels not owned by private persons (i.e. owned by the Ministry of Awqaf). The SALR is the agency charged with implementing Law No. 39/1991. Originally, the parent ministry (MPWH) within which the Survey Authority was housed was also the agency in charge of issuing the implementing regulations to ensure the full attainment of the objectives of Law No. 12 in 1976. Two key issues in close inspection of the law and especially in reference to the new LRLs being considered: level of involvement of a legal authority in the act of registration; and the substantial differences between sejel shakhsee and sejel ainee. Level of Legal Involvement in the Land Registration Process: The Law 39’s only reference to legal involvement in the act of deed registration is within Article 23 which states that: “If a land has not been previously registered, the request to register should be published in a daily newspaper and displayed on the board at the office of the land registry. After one month, if this is not contested with presentation of valid supporting documents, the office head together with the legal advisor should investigate with the neighboring land owners and local authorities and a report should be drafted containing details of the investigation. The office engineers should then survey the plot in question and prepare a map which should be attached to the real estate sheet.”[emphasis added] Typically in most countries, the act of registration of land rights is a primarily regarded as a legal transaction. As such, it usually, though not always, entails heavy emphasis on matters of legal procedure, and especially handing down legal judgment. Therefore, what is usually observed, is that either the final decision is made by authority with clear legal standing or the process is legally flavored and colored by consideration of rights or both. For example, in Lebanon, Jordan and Palestine, the registrar is a lawyer with authority over all aspects of the process including cadastral surveying and mapping issues. In Lebanon, the registrar has an equivalent standing as that of a judge, but clearly his decisions are subject to legal challenge for sufficient cause. This heavy legal emphasis/nature of the registration process has a historical legacy. In Europe, where modern land registration systems have their roots, the technical orientation of land registration was heavily resisted

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by the courts and the legal community as a whole, which resulted in either land registration being given a heavy legal emphasis (i.e. high legal standing of the authority making the registration decision) or becoming a totally legal matter (e.g. in the MOJ) which is supported technically. What is advisable is that the legal and technical aspects remain linked to ensure coordination, but within an overall legally flavored framework. This matter is still being politically contested in some countries where the two agencies of registry and cadastral survey are under different ministries (e.g. Egypt and Bulgaria). It appears as though, in Yemen, both the legal standing of the decision-making authority and legal flavor of the process are deemphasized in the law and in practice. As a result, it is observed that there is very low regard for the registration decisions of the land registry within the court system and by the legal community in general. This state of affairs has two material consequences which are interdependent. First, the courts appear to make judgments in land disputes that often contradict the registration. Second, given other dynamics, i.e., perceived equivalence of re-authentication by the courts vs. with registration itself, then the public at large also appears to exhibit the same level of mistrust. In other words, as reported by the survey respondents, only half of the land owners intend to register their transactions at the land registry. At best, this trend over time has solidified into practices which create contradictory and confusing situation regarding land property rights. At worst, it has thwarted the development and functioning of trustworthy land tenure security apparatus. Therefore, this has become a case of accumulated errors snowballing and cementing into a very persistent but unproductive behavior that unless rectified will inhibit investment and growth well into the future. Implications of Differences between Sejel shakhsee and Sejel ainee: A feature of 1991 Law No. 39 and its replacement being considered as draft laws is the move from sejel shakhsee to sejel ainee. This move has been practiced in limited fashion since 2000 within the framework of 1991 Law No. 39. Several interpretations of these two systems of registration have been observed during the preparation of the policy note. At first glance, most advocates of the move indicate that effectively, they are moving from a system of deed registration to a system of title registration. In other words, a whole slew of problems associated with the land ownership disputes and general low level of security of rights, are assumed to be associated with the deed registration system. Therefore, the logical approach would be if one replaces the deed registration with title registration, most of the problems will also either disappear or at least become irrelevant. However, this assertion and in general the distinction between sejel shakhsee and sejel ainee deserve much closer scrutiny before engaging in the transition on a large scale. If strictly and literally translated, sejel shakhsee means a personal registry and sejel ainee means an inspection/visual registry. A more practically accurate (but still somewhat literal) translation may be: a register of declared rights (of persons) versus a register of observed rights. Furthermore, the advocates argue that, the sejel ainee puts great emphasis on gathering information about the parcel of land in question and has requirements for site inspection and survey. This combined emphasis means that it is a very secure land rights system and effectively functions as a system of registration of title. However, this similarity in form should not be taken to imply similarity in substance. Indeed, this is in reality a move from an owner-oriented deed registration system to a parcel-based deed registration system. This has to do with the structure of land tenure rights and land parcel information management rather than a substantial and legal change from a registration of deeds to a registration of title system, although the latter is typically how the debate is framed. The examples from other parts of the world serve to clarify this point. Indeed, an observed trend in Latin America is also the ongoing moves in several countries from a person-based deeds registry system (folio personal) to a parcel-based deeds registry system (folio real). A further point is made in this context that moving from sejel shakhsee to sejel ainee, is equivalent to moving the land registry from a “declarative” to a “substantive” system. However, property rights in a declarative system (including Yemen) reside in the contracts (e.g., deeds) that are registered and not in the act of inscription in a register, as is the case in a registration of titles system. Furthermore, a substantive system would only recognize property rights if they were inscribed in the registry. Under the

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declarative system an unregistered deed or contract holds between the parties, but is only secure against third parties if it is publicly (based on the publicity principle) registered in the registry. In other words, a parcel-based deed registry system is still a deed registry. In the Western context, similar systems have been known to operate effectively with very low levels of land disputes. In the U.S.A., if the existing deed registry system were combined with the private sector title searches that title insurance companies typically perform under one roof and done by the government, it can be equivalent to the parcel-based deed registry. In the Netherlands, these do function under one roof and almost all conveyances are performed by the notaries and registered at the land registry—effectively also a parcel-based deed registry. This is an important point in the current debate to be clarified and it has significant policy implications. Two critical issues must be addressed in this context. First, given the fact that the system remains a deed registration regime, it is essential to avoid regarding it as if it can be practiced with the similar procedures as title registration or presume that it offers similar level of security of land tenure. Second, sufficiency of land tenure security offered under this regime is usually tightly coupled with a best practices framework needed for it effective functioning. Of course it is fair to say the latter have been absent throughout the history of land registration in independent Yemen. Therefore, as a pre-condition for such a potentially large scale move to sejel ainee both these elements must included as critical ingredients of an overall policy. Also, the effective implementation of these systems in Western countries is based on implementing certain legal principles which are implicit in the deed registration system—chain of evidence as basis for land rights and the sunset clause on the how far back the evidence is conside red. Both of these appear to be missing in Yemen. Remedies:

• First, both the perceived and real degree of judicial/legal involvement in land transaction registration process is lower in Yemen than other countries in the region. This can rectified through various means. However, the essential step to be taken is that the decision to register and declare the act of registration as formally accepted should be made by persons whose legal standing is equivalent to a judge. This is a practice in a large number of countries in and out middles east. It will lend much higher level of credibility to the process. It also potentially will minimize the courts’ perceived lack of trust in the act of registration as non-legal act requiring authentication and/or secondary inspection.

• Second, the current emphasis in Yemen on the move to “sejel ainee” as a solution to the ills

brought about by the use of “sejel shakhsee” will not necessarily lead to the intended results as the above analysis has indicated. The move, while in the right direction, can more accurately be characterized as fundamentally a “sejel shakhsee” which looks like “sejel ainee”. The fear is that the confidence in the “sejel-ainee” approach may distract attention from more basic issues which are sorely needed in Yemen. In view of this reality, the efforts of the improvement may be more fruitfully directed to strengthen key fundamental building blocks of effective registration systems: unique and legal parcel identification system; well designed and maintained parcel tract indices; and consolidated/centralized information gathering on key aspects of land interests (mortgages, legal notations, liens, etc.).

• Third, two critical issues must be addressed in this context. First, there is usually the legal

notion that it is the chain of evidence that establishes conclusive ownership not only the act of deed registration. Second, there should be a legal sunset clause for the duration of how far back the chain of evidence must be considered.

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2.6 Land Registration and Land Dispute Resolution: Summary of Key Issues and Recommendations

2.6.1 Key Issues Overall, there is a very limited utilization of the land registry in Yemen. Since the establishment of the first registry branch in Sana’a in 1977, only 240,000 transactions in privately-owned LRE were recorded across Yemen. The capture rate of the land registry is estimated to be no more than 20% of all annual land and property transactions in Sana’a and about 18% of transactions authenticated at the courts in Taiz. Registration activities also appear to be largely concentrated in Sana’a Municipality (which alone accounts for 61% of all recorded transactions until 1999 and 47% of all registrations since 2000) and the urban areas of Taiz, Aden, Hodeidah, Ibb and Hadramout Governorates. Overall, it is estimated that no more than 5-10% of urban lands in Yemen are registered at the Land Registry. The limited use of the land registry is attributed to both limited demand for registration and the inadequate supply/quality of services provided by the Registry. Low demand for registration is mainly due to the lack of perceived benefits from the act of registration (relative to the service’s cost), which is due to several factors. First, according to the existing registration law, the act of registration is not legally conclusive. In addition, there is little legal/judicial involvement in the registration process, which is why it is perceived with low confidence by the courts. High cost (especially when past land transfers have been unregistered) and a bureaucratic process are also major issues. Most importantly, the procedure of authentication of transfer deeds at the court is widely perceived by the public as an “alternative form of land registration” that provides them with the same added value in terms of “obtaining land tenure security”. Indeed, of 100 surveyed land buyers, 60% find that court authentication is as important as registration, and an additional 21% find authentication more important. The general public perception that authentication is an equivalent (and cheaper) form of securing property rights effectively undermines the process of deed registration. On the other hand, the inadequacy of supply and quality of conveyancing and registration services owes to inadequate regulation governing conveyancing and the monitoring of the Amin activities, inadequate registration and registry maintenance procedures, and an inadequate legal and technical framework accompanying the transition from the sejel shakhsee to the sejel ainee system (both are forms of deed registration used respectively until 1999 and since 2000), which was instituted by the SALR. In addition, there is a large volume of land disputes that clogs the judicial system and cases take a long time to resolve at the courts. This is coupled with weak enforcement of judicial verdicts. These issues are further elaborated as follows:

Widespread public perception that court authentication of transfer deeds is as effective or more effective in securing property rights than deed registration : Of 100 surveyed buyers of land, 76% indicated that the authentication of the previous basira (transfer deed) for a given parcel of land is an “important/very important” factor in influencing their decision to buy. In addition, 28% of the respondents believe that registration at the land registry is not important because it is the court authentication that effectively guarantees their land property rights. As such, it is obvious that there exists a discrepancy between the intent of court authentication (as a check and record of the activities performed by the Amin) and the public’s perception of its role and the way it is being used. This suggests that this otherwise redundant procedure (since it may very well be performed at the Land Registry) gives an “appearance of registration” to land transactions that may have not been registered. The fact that court authentication is perceived by the public as a viable alternative method of obtaining land tenure security (as opposed to relying on the land registry) severely undermines the deed registration process. Perception of added value versus costs further limits demand for land registry services: While the added value from the utilization of the land registry is already undermined by widespread perception of the presence of alternative forms of obtaining land tenure security, the financial burden incurred by those seeking to register their property and perceived

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administrative barriers further sways the equation towards the perceived competing forms of securing property rights (i.e. conveyance and court authentication). While the basic unitary financial burden itself may not be different from international practices (estimated at 3.5-3.9% of value, which includes a transfer tax of 3% of value and relatively small flat charges for surveying and registration), the requirement that landowners pay the accumulated taxes on all past unregistered transactions is certainly onerous and drives many people out of the formal registration system. Survey respondents in Sana’a add that the surveying charges (some YR4,000-6,000 per lebna or 44.45m2) far exceed the Survey Authority’s officially published rates. Another requirement—a penalty on delays equal to 2% of the transfer tax amount per month of delay—appears to be misperceived amongst several interviewed public sector officials and survey respondents as an additional 2% of value (which would clearly be burdensome). The registration process is also bureaucratic and time consuming, including the apparent duplication of authentication and registration procedures. In addition, 29% of surveyed respondents (50% of Aden respondents and 15% of Sana’a respondents, which suggests regional differences) add that the bureaucratic nature of the registration process makes it prone to rent-seeking behavior. All these prove to be push factors away from registration, especially when people do not perceive its real added value.

Inadequately low degree of judicial/legal involvement in registration decisions: The existing deed registration system as practiced in Yemen is based on an insufficient level of judicial/legal decision-making. The existing system overemphasizes the technical aspects (surveying issues and the drive to automate registry services) relative to the legal aspects (settlement/adjudication and registration of property rights). This contradicts international practice where the act of registration of land and property rights is viewed as a predominantly legal matter, which therefore entails a heavy emphasis on legal issues and procedures. In particular, it is typical that the authority making the final registration decision has a clear legal standing and/or that the process is legally flavored and colored by consideration of rights.14 The limited emphasis on the legal/rights dimension a priori in the deed registration process practiced in Yemen today is one of the main causes of the large number of land disputes and the relatively low confidence of the judiciary in the deed registration process, both of which would inhibit further expansion of registration. Inadequate regulation of conveyancing and monitoring of Amin activities: A conveyance system acts as the de facto mode of securing interests in land in Yemen. Conveyancing is performed by the Amin in Northern and Western Governorates and mostly by lawyers/ brokers in Southern and Eastern Governorates. Despite the predominance of conveyance activities, there are no explicit laws or related by-laws and formal decrees governing its conduct and practical implementation. In addition, while the 1991 Authentication Law governs Amin activities, it does not offer them any guidance on procedures and practical implementation of the conveyancing process. The Law also provides minimal guidance on Amin appointment (the process was only spelled out in a Minister of Justice decree in 2001, but without specific skill requirements or detailed examination procedures) and the

1414 For example, in Lebanon, Jordan and Palestine, the registrar is a lawyer with authority over all aspects of the process including cadastral surveying and mapping issues. In Lebanon, the registrar has an equivalent standing as that of a judge, but clearly his decisions are subject to legal challenge for sufficient cause. This heavy legal emphasis/nature of the registration process has a historical legacy. In Europe, where modern land registration systems have their roots, the technical orientation of land registration was heavily resisted by the courts and the legal community as a whole, which resulted in either land registration being given a heavy legal emphasis (i.e. high legal standing of the authority making the registration decision) or becoming a totally legal matter (e.g. in the Ministry of Justice) which is supported technically. What is advisable is that the legal and technical aspects remain linked to ensure coordination, but within an overall legally flavored framework. This matter is still being politically contested in some countries where the two agencies of registry and cadastral survey are under different ministries (e.g. Egypt and Bulgaria).

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monitoring of Amin work and their license renewal are not addressed in detail. Monitoring by the MOJ is especially critical to ensure that Amins perform their functions only within the geographic jurisdiction determined in their license. Simultaneously, the Law should be revised to restrict property conveyancing activities only to Amins. What is interesting is that, in the absence of guidance, the Amins have developed methods of performing their functions that are based on the Shari’a. Other procedures related to the conduct of property transactions evolved from norms rather than laws or regulations, such as the use of ground breaking. Yet, despite all the shortcomings in the conveyance process as practices by the Amin, the great importance that most landowners attach to the process suggests that this historical institution is a fixture of the institutional landscape that should be kept and strengthened/enhanced, in order to address the mounting criticism of the deficiencies in the current practices.

Inadequate registration and registry maintenance procedures: The first problem is the inadequate legally unique parcel identification system (the concept was first introduced under the sejel ainee system in 2000, but it is implemented in an ad hoc way without a legal basis to assign ID numbers and updated maps, which threatens to undermine the system). Such a system is critical to the proper implementation of the registry’s most basic function of detecting conflicts between incoming and recorded transactions. The second problem is the inadequate maintenance of information linkages between the indices of deed, parcels/tracts and liens/notations. The land disputes profiled in this study indicate that the process of checking for ownership conflicts and upholding the rights of mortgage providers is simply not working. This is because the linkages between deed registration (the land registry’s primary function) and the registers of mortgages, parcels and legal notations are not properly maintained, which makes it difficult to determine if a land parcel has been subject to a mortgage or a law suit. Inadequate legal/technical framework accompanying the transition from the person-based deed register to the parcel-based deed register: In 2000, a switch from sejel shakhsee (i.e. person-based deed register) to sejel ainee (i.e. parcel-based register with site inspection and survey) was undertaken in Yemen. This is similar to the trend observed in several Latin American countries of moving from a person-oriented (folio personal) to a parcel-based (folio real) deeds system. The problem, however, is that this switch is equated in Yemen to moving from a “declarative” to a “substantive” land registration system. Yet, property rights in a declarative system (as in Yemen) reside in the contracts/deeds that are registered and not in the act of inscription in the registry, as would be the case in a title registration system. More importantly, a substantive system would only recognize property rights if they were inscribed in the registry, whereas in a declarative system, unregistered deeds/contracts hold between the parties, but are only secure against third parties if they are publicly (i.e. based on the publicity principle) registered in the registry. It is therefore important to underline that a parcel-based deed registry system is still a deed registry. This does not mean that a deed registry is by definition ineffective. Quite the contrary, many Western countries effectively operate similar systems with very low levels of land disputes. In the Netherlands, almost all conveyances are performed by the notaries and registered at the land registry (which is effectively a parcel-based deed registry). The effective implementation of these systems in Western countries is based on implementing certain legal principles which are implicit in the deed registration system, namely the chain of evidence as basis for land rights and a sunset clause on how far back evidence would be considered. Both of these aspects appear to be missing in Yemen. In other words, while Yemen’s move to a parcel-based deed registration system was in the right direction, the corresponding changes in the system that would be needed to ensure its effectiveness have not (yet) taken place.

Land disputes represent a significant portion of overall court cases and take a lo ng time to resolve: The few available statistics suggest that land-related disputes represent 30-50% of all civil cases at the Primary District Courts, depending on the Governorate and Court District in

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question (and not including disputes that get resolved outside of the court system, relying on tribal and other informal/semi-formal dispute resolution mechanisms). Most land disputes at the courts concern property ownership, while some relate to Shufaa (exercise of right of preemption) among other causes. In Taiz Governorate, the situation is even worse since in 2001-2002 land ownership disputes alone constituted 35.5% of all civil cases at the Appeals Court (which implies an even higher volume at the Primary Courts). The volume of land disputes clogs the court system according to interviewed judges. The large volume of disputes also suggests that, instead of being an arbiter of last resort, the judiciary is in fact heavily relied on to bring about land tenure security, and as such effectively substituting for the administrative mechanism of the land registry. The data from Taiz Appeals court also suggests that 75% of land ownership disputes take more than one year in the Appeals process, and that 65% take more than two years in the process. The combination of Primary Court plus Appeals process implies that the majority of land ownership cases take at least 3-4 years to resolve. The sheer volume of land cases, in addition to the courts’ (consequent) inability to process land disputes expeditiously, represents a severe constraint to the investment climate. In addition, the perception that courts are unable to resolve land disputes expeditiously (and fairly, according to some survey respondents) may be seen as a threat to stability as more land disputes are resolved violently outside of the realm of the Law.

Ineffective enforcement of judicial decisions : In addition to the fact that it takes several years on average to resolve a land dispute through the judicial process (District, Appeals and possibly the Supreme Court), the enforcement of the verdict is far from certain. As seen in the documented case studies, even the Supreme Court’s dispensation of its verdict appears not to have resulted in the enforcement of the judgment, which suggests an ineffective system of implementing court rulings. Thus, while it seems that the judiciary may be relied upon as a means of obtaining land tenure security, it is also obvious that court judgments do not carry the weight and force of law. The overall enforcement system appears powerless to administer court judgments on individuals despite a legal process. The rectification of this issue is fundamental to a properly functioning land tenure security system.

2.6.2 Key Recommendations Improving the administration of land tenure security requires addressing the key bottlenecks hindering the effective functioning of the land registration and land dispute resolution systems. Increasing the use of the land registry requires addressing the key obstacles that are limiting demand for registration (including the problem of public perception that there are alternative formal means to obtain land tenure security) and hindering the quality/efficiency of supply of registration services. A more effective land dispute resolution system requires that the courts be better equipped to manage the large volume of disputes as well as effective enforcement of judicial decisions. These issues are elaborated in the following sections:

Activating demand for use of land registry services and removing incentives/mechanisms for using authentication as an alternative to registration: The first critical requirement to activate demand for the land registry services is to revise the LRL of 1991 to give the act of registration conclusive power. This change, coupled with measures to eliminate the incentives and mechanisms that led to the perception of court authentication as an alternative “formal channel” of obtaining land tenure security, would put in place an appropriate legal framework and establish land registration as the sole and definitive form of securing property rights. In addition, increasing the volume of registration would require an (temporary) amnesty on payment of back taxes. Two other measures would play an important role in reducing the steps and uncertainty associated with registration. The first is to build upon the conveyancing role played by the Amins and the lawyers to transform these private, properly

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incentivized and (as is direly needed) properly regulated actors into a type of one -stop shop for conveyancing and registration services, wherein for a small fee they would complete the act of registration on behalf of the transacting parties. This would be especially useful since it appears that the Amin is generally trusted by the public with their original deeds/basiras. The second measure would bring about the consolidation of the two procedures of authentication and registration at the Land Registry, which would eliminate basira authentication at the Courts as a separate step and a proxy to land registration. Alternatively, if consolidation of authentication and registration is not politically feasible or advisable for some reason, it would then be recommended to add to the courts’ authentication stamp the following disclaimer: “authentication does not confer ownership.” In addition, the introduction of different color-coded official documents (e.g. basira on blue paper, which at registration would be stamped with the registry’s official red stamp, while the Wathiqa or equivalent of a title deed/original property document would be issued on green paper). Such color coding would be coupled with a widespread public awareness campaign whose message is that property rights can best be protected through land registration (and that “buying a non-registered property—i.e. without the green document—is risky”).

Enhance the judicial/legal involvement in deed registration decision-making: It is important that the individual making the registration decision (i.e. the registrar, or in Arabic Ma’amour Tasjeel) has legal/judicial standing, either by appointing a lawyer or a judge for the job. Develop laws or by-laws governing the conveyance process and regulating/monitoring Amin activities: The existing authentication law should be amended, perhaps more feasibly, through the introduction of an executive decree/by-law that governs the whole land conveyance process in detail. In addition, an amendment of the Minister of Justice’s executive decree No. 200 of 2001 is needed to: (i) further expand on the skills required of the Amins and their admissions’ examination process; (ii) to establish detailed procedures governing Amin activities (including standardized contract forms for their use, especially in the land conveyancing process, and required automation of the process—possibly as part of the authentication/registration step at the Land Registry—to avoid unclear handwriting, non-standard/non-conforming contents of basiras , and to eliminate the possibility of subsequent “additions in the blank spaces” of the contract); and (iii) to provide for detailed procedures for Amin monitoring/regulation. In light of the widespread reliance/use of the conveyancing process, these measures are critical to address its shortcomings.

Improve the registration process and registry maintenance: The first step is to put in place a well functioning tract index system that enables the registry to detect conflicts on the same parcel of land. This requires: (i) the improvement and across-the-board utiliza tion of the unique parcel identification system that was first introduced in 2000; and (ii) a legal process to assign parcel identification numbers to registered land. The first ensures that all parcels registered are unique and the second guarantees that no parcel is subdivided and legal unless it has a number assigned by a single entity. The legally binding nature of the indexing process and an easily searchable and transparent lineage “tree” to trace parcel history are two key aspects of this system. The second step requires the design an adequate information linkage system among the indices/registers of deeds, or parcels/tracts and of liens/legal notations. The ease of access of the parcel/tract index and its integration with the other indices would enable efficient and effective tracing of rights among these registers, which is absolutely essential to the proper functioning of the registry. Establish the legal/technical framework accompanying the transition from the sejel shakhsee to the sejel ainee system of deed registration : Two critical issues must be introduced: (i) the legal notion that it is the chain of evidence that establishes conclusive ownership not only the act of deed registration; and (ii) the sunset clause for how far back the chain of evidence must be considered.

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Reduce the volume of land disputes at the courts and ensure expeditious and efficient land dispute resolution process: In addition to the effect expected of an improved land registration system (both legally and technically) in terms of reduction of the volume of land disputes, several actions would improve the efficiency and expediency of the courts’ handling of land disputes and would reduce the volume of claims. The establishment of legal/judicial task force of senior and highly respected judges, Ulema and legal scholars to develop basic consensual procedures/rules that are Shari’a-compliant to deal with the contentious sources of disputes (e.g. ownership of mountain slopes channeling rainfall and called in Arabic Marahek, adverse possession, etc) and the provision of specialized training and support in technical matters (e.g. in apportionment and boundary disputes) to judges in court districts with a high frequency of land disputes would greatly reduce the time to resolve disputes. The introduction/strengthening of alternative dispute resolution mechanisms (e.g. reliance on field adjudication in mandatory registrations with local community involvement; expanding semi-formal/formal involvement of elected local officials and such local community figures as Akel Al Hara in mediation and dispute resolution; expanded use of formal arbitration as a fast-track low-cost dispute resolution channel) would play an important role in alleviating the burden on the judicial system. The discouragement of frivolous disputes could possibly benefit from the imposition of stricter penalties and/or larger fines. Strengthening the enforcement regime of judicial decisions is another key requirement if the administration system of land tenure security is to be effectively improved, even if this is a challenge that goes beyond the scope of this study.15

15 To improve the enforcement regime against established standards for implementation of judicial decisions requires devising: (i) “stick” measures to increase the likelihood of the enforcement regime’s compliance (e.g. verdicts shall be enforced within 60 days from their date of issue; failure to do so shall be punishable by …); and (ii) “carrot” measures to incentivize the enforcement regime into compliance (although this could have the perverse outcome of ensuring that “only those who pay would be efficiently served by the system”). Perhaps part of the fines/damages charged to those who lost the case (which, it is suggested, should be high enough to deter frivolous lawsuits) could be made available to incentivize the enforcement regime into (expeditious) compliance.

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Section 3. Reforming the Legal Framework for Land Registration

Yemeni law recognizes private individual property in land and the transactions associated with it in market economies. The Civil Code has codified and applies fundamental Shari’a concepts of property in land, which have much in common with western systems of real property. Many of the issues that arise commonly elsewhere in the world in designing LRLs arise in Yemen as well, though solutions will need to take into consideration the special circumstances of Yemen. This section of the report: (i) provides background on the legal framework for land registration in Yemen; (ii) describes the current law and compares it with two drafts currently under consideration to replace it; (iii) raises several key issues, examining the international experience and what that experience suggests should be considered in Yemen; and (iv) summarizes key recommendations. Detailed comments on some sections of a draft registration law are provided in Annex 6.

3.1 Background: The Legal Framework for Land Registration in Yemen

Prior to Yemen’s unification in May 22, 1990, the only effective real property registration system in the country was in Aden governorate. The British had during the colonial period introduced a system of real property registration in Aden. The system was used to register the large private landholdings of some families and also extensive State land, which the occupation authority purchased and registered in its name, then rented out to citizens after planning and plotting. This led to substantial security of tenure in real property and the system was deeply respected by the public. The holder of a registered property had clear title and was protected from any dispute; there were in fact few disputes. That system of real property registration continued even after the evacuation of the British from Aden on November 30, 1967, but ended when the Housing Confiscation Law No. 32 of 1972 was issued on August 5, 1972. That law cancelled all titles and declared all real property to belong to the State. This situation continued until May 21, 1990, one day before the unification of Yemen, when Law No. 18 of 1990 was issued, which gave the Ministry of Housing the right to transfer ownership of rented real property taken under the confiscation law to the renters for symbolic amounts. The registration of these ownerships was inconsistent with the prior registered property rights. That situation continued even after the unification, despite the fact that on September 12, 1991, a Republican Decree was promulgated providing for the restitution to their former owners of nationalized commercial property in the southern and eastern governorates. The provisions of the Housing Confiscation Law, however, have not been repealed until today, which is a source of many disputes that may also be expected to increase. There are ongoing real estate registrations in Aden governorate carried out in a manner contradictory to and in violation of the earlier registrations. In the northern and western governorates, there was no system for real property registration until February 8, 1976, when a Republican Decree, Law No. 12 of 1976, was issued to provide for registration of real property. The provisions of this law relating to registration were not effectively implemented, and practice by the Department of Real Property Registration was to simply levy a percentage of the de termined tax on real property transfers, putting its red stamp on the title document after registration of the document in its books. People were required to go to through real property registration not so much to secure their title but so they could get a construction permit and get electric and water utilities connected to their houses. They could not do so if they had not registered the house, by virtue of the provision of the law and an agreement among the concerned public entities. There was no legal importance to land registration, no confirmation of the right by registration, and registration was not relied upon in arguments over land rights. Duplicate registrations of one parcel in the name of more than one person appeared, and many registrations were based on forged and inaccurate documents. The situation continued until after the unification of Yemen on May 22, 1990.

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3.2 The Current Law and Proposed Draft Legislation

Shortly after unification, government promulgated a new LRL on April 13, 1991, Law No. 39 of 1991. This law repeals Law No. 12 of 1976 and remains in effect throughout Yemen today. It is worthwhile to consider its basics:

• It provides (art. 3) for two forms of registration: a) “personal” registration, in which documents are authenticated and deposited, similar to a deed registration system elsewhere, and b) registration based on a system of parcel files, referenced to maps. It is not clear from the law which approach should be taken in what circumstances.

• There is no provision for mandatory, systematic titling, nor for a system of unique parcel identifiers.

• Agreements concerning land (sales, exchange, partition, use, mortgage) are not effective, even as between the contracting parties, unless they are registered in the registry, though the contracting parties may pursue their contractual rights for damages (art. 7). Court decisions affecting land rights (arts. 8, 26), takings by the government (art. 26), inheritances (art. 10) and leases of more than five years duration (art. 13) must also be registered.

• Registrations contradicting existing registrations are not to be made (art. 6) and registrations are only to be deleted or cancelled by order of a court (art. 7).

• Endowed (wakf) land is also to be registered, and the charity, administrator and beneficiaries are to be shown (art. 14).

• Those seeking to register land rights are required to present documents to establish their identity (art. 20).

• There is special provision for first registration, requiring publicity (publication in a daily newspaper and posting on the notice board at the Land Registry); a field investigation of neighboring landholders and local authorities; and a survey, with the survey map attached to the real estate sheet (art. 23).

• The Agency may issue by-laws (art. 32) by republican degree subject to the approval of the Cabinet of Ministers (art. 36), and fees are to be prescribed for registration procedures under the law by the Prime Minister, on the recommendation of the Chairman of the Authority (art. 33).

Still, the emphasis in practice has continued to be more on revenue collection than compliance with the requirements of the registration law, and practice does not always comply with the requirements of the law. Articles 4, 22, 31 and 32 have not yet been implemented. Until 2000, registrations were still based on the personal register rather than the parcel register. By-laws that could have compensated for the lack of detail in this law, especially regarding processes, have not been issued. The Land Registration Department is however currently commissioning one of its engineers to inspect any real estate intended to be registered and to submit a report prior to going forward with the registration. How effective this is, in the absence of updated and detailed maps, is questionable. In addition, many registrations currently undertaken are based on inaccurate previous registrations, and the investigation does not explore these issues. It is considered that the investigation as currently done is not an adequate basis for providing conclusive legal effect to registration. The 1991 Law is a very rudimentary and limited law, and the Government has wisely decided to replace it. One draft law has been prepared by the SALR, and another reflects changes to that draft by the Ministry of Legal Affairs (MOLA), which also incorporates comments from the MOJ. The divergences are important but limited, and deal mainly with the treatment of land disputes in relation to land registration. There are several key areas in which both drafts would similarly improve on the 1991 Law, and it is useful to note these at the outset:

• They provide for both mandatory (systematic) registration, and voluntary registration (in areas where mandatory titling has not begun).

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• In the case of a voluntary regis tration, a field inspection is provided for, similar to that under the previous law, but spelled out in greater detail, with specific instructions on the handling of contested registrations.

• The provisions for systematic registration deal in considerable detail with the processes to be followed to ensure transparency and public confidence in results.

• There is an attempt to strengthen the probative effect of registration, an issue neglected entirely in the current law.

• A Real Property Register is provided for, with a register for each parcel, and each parcel identified by a unique ID number, consistent with the best practice in title/land registries.

• There are provisions for subsequent registrations for transactions (subsequent to mandatory, systematic registration) in this register, to be distinguished from “voluntary registrations” in that some of the procedural precautions for the voluntary registrations (most importantly, the field inspection) are not required for subsequent registrations, consistent with practice elsewhere.

These are substantial and important improvements, and the drafters are to be commended. The two drafts diverge primarily on the issues of legal conclusiveness of registration and the role of the courts in settlement of land disputes related to registration, which are considered more thoroughly in section 3.3 below. The comments that follow are framed in terms of key issues, considering the international experience, and then relating this to the current proposals for Yemen. They refer in some cases to articles in particular drafts, either the draft prepared by the SALR (hereinafter “SALR draft”) or the draft currently with the MOLA (hereinafter “MOLA draft”). In the main text of this report, comments are limited to key issues, but there are more detailed comments on specific articles of the MOLA draft attached in Annex 6.

3.3 Key Issues for Yemen The selection of key issues to be dealt with here was based on a) their partial or entire neglect in the draft laws, b) information that they were in fact a matter of contention, or c) conflicts between provisions in the SALR and MOLA drafts.

3.3.1 Institutional Authority and Responsibilities The International Experience: Dealing with institutional (organizational) responsibilities is one of the most difficult areas in reform of the legal framework. Often one finds that different key functions relevant to provision of security of land tenure are being handled by different government agencies. This almost invariably leads to delays and confusion. The two core functions for land registration are cadastral survey and registration, and these two functions are best vested in a single organization. A third important function is the granting of land by the state, and it is helpful if this is in the same agency, but not so essential. The land valuation function, also relevant, can also be vested in the single agency, but a system can also operate satisfactorily if it is (as is often the case) in the Ministry of Finance. Organizational reforms are difficult to achieve. Agencies resist reforms that endanger their vested interests, and attempts to simply coordinate different agencies in developing countries have often failed. The World Bank has struggled with this recently in a project in the Philippines, where as a substitute for the needed organizational reforms (which would have required legislation), the Bank supported a “One-Stop Shop” approach, in which all the relevant government agencies placed staff under one roof, behind one service counter, to provide more efficient service. It was found that the inter-agency jealousies that made legal reforms difficult to obtain also made the operation of the one-stop shop unsatisfactory.

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The World Bank’s experience suggests that the existence of a single agency with key powers is one of the most critical factors in a successful registration program, and this is a major factor in determining whether the Bank supports a land registration program. While there are some older systems that involve two agencies operating in some developed countries, such as that in Germany, the simplicity and efficiency of a single institution is critical when building new systems in developing countries. An argument sometimes made for two agencies (that of checks and balances) does not work in practice in most developing country contexts. Two agencies often means two sets of procedures, two sets of opportunities for corruption, and jealousy and competition rather than collaboration. A Bank-supported program on-going in Cambodia is an excellent example of a program benefiting from all needed functions in a single Ministry. For Yemen, it is fortunate that both survey and registration are currently in a single agency, the Land Registration Agency, reporting directly to the President of the COM. This is international best practice. There have however been proposals to change this situation. In Cabinet meeting no. 12 of 2004, a draft resolution was discussed to separate the land registration function from the SALR and place it under the MOJ, in a new Registration and Authentication Authority. Other proposals have been made that would consolidate the survey and registration functions with urban planning, but none have been acted upon. The current drafts of the new law leave the question of the responsible agency open. As a matter of legislative drafting, this is acceptable, because Government should have the option to reassign responsibilities without amending the law. Substantively, however, the correct resolution of this issue is of immense importance to effective land registration in Yemen. The present arrangement, with both land survey and land registration vested in the one agency, should be maintained. Given the importance of land issues, the current relative disorder in this sector, and the critical need to resolve the problems effectively, it is appropriate that this Agency report directly to the President of the COM (as it does at present) or directly to the President. Where collaboration with other agencies is needed, the process should be specified in the new law (for example, the process for registration of land granted by another agency).

3.3.2 Financial Sustainability The International Experience: The Bank has seen unfortunate examples of land registration systems that have fallen into disuse after major investments in their creation. The reason has often been, at least in part, the lack of funds to operate them. This had led to corrupt practices in registry staff and, in the end, to avoidance of the registry system by those transacting land, its intended beneficiaries.

Bank staff who work with these issues are convinced that this need not happen. An initial systematic registration of land must be subsidized by the State, and because the process is compulsory, no fees or only very modest fees are appropriate. But in terms of sustaining the system, especially in urban and peri-urban areas where transactions are common, a modern registration system can through reasonable fees generate revenues sufficient to cover on-going costs. Thailand and Tunisia are good practice examples in this regard. Ideally, the legislation establishing the registry system should provide that a certain percentage of fees be retained by the Land Agency for support of the system.

The trick here is to find the right balance between the financial needs of the system and fees so high that they drive off the intended beneficiaries. In Madagascar, a 10% transfer fee has driven most of those transacting land away from the system. Registration fees should reflect real costs. Government should not be afraid to lower unreasonably high fees. Lowering fees does not necessarily mean reduced revenue. In Egypt, revenue from fees rose as fees were lowered because more people began

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to utilize the system. As the number of transactions moving through the system grew, revenue grew dramatically. In Yemen, a new LRL would need to deal with some serious problems in this regard. And this is an area where the provisions of the MOLA and SALR drafts differ significantly. Some key issues: Late fees for delayed registration are appropriate, but they should be limited, capped in some sense, or they will become so large that they discourage applying to register transactions. The SALR draft (but not the MOLA draft) deals with this by increasing the percentage of the transfer tax from 2% for two months from signature to 4% for six months or more from signature. The 4% figure may discourage registration. A simple late fee unrelated to the value of the property or the transfer tax would be preferable.

The SALR draft has detailed provisions on the Real Property Transfer Tax (arts.160-165), but these have been omitted from the MOLA draft. The reason for this omission could be a desire to eliminate the transfer tax.16 Or it may be that the section was dropped because this is a tax rather than a fee, and it was considered that it should be dealt with in tax legislation, rather than the registration law. There is a superficial logic to this, but international best practice suggests that if there is to be a transfer tax, it should be dealt with in the registration law. The sustainability of the registry system will depend on the balance of benefits from registration and the burdens imposed upon the user of the registry service, and these should be considered comprehensively in the enactment of the LRL, not separately. If there is to be a transfer tax, one issue in particular calls for attention. The most serious problem in application of the transfer tax has been that where earlier unregistered transactions have taken place, the accumulated fees on each transaction are considered due, with penalties for delay, from the person who applies to register the present transfer. This is both unfair and clearly a major disincentive to registration of a transaction, and should be dropped. In art. 105 of the SALR draft, it is provided that “If several transfers of a real property right were unregistered, the Director of Real Property Registration is instructed not to register the last trans fer until the previous transfers have been registered.” The MOLA draft rephrased it into “until ensuring the validity of previous transfers” (art. 108). This seems reasonable, to establish that the seller has good title. However, based on current practice, there is a danger that this provision will be read to imply payment of the fees for each prior registration. This has in the past been the basis for charges so high as to seriously discourage registration of transactions. Those who failed to register earlier transactions have no real incentive to register their transactions now. Those transactions are finished. It will likely be the parties who are trying to register who will need to bear this burden. This is not fair and will be counterproductive. In such circumstances, a modest flat fee should be imposed for the failure to register earlier transactions, payable by the participants in those transactions that were not registered, and not on the parties seeking to register the current transaction. The SALR draft does not include a fees schedule, instead stating that the fees would be levied by SALR and specified in a Prime Ministerial Decree, but there is a fees schedule with the MOLA draft. The inclusion of the fee schedule in the law itself could pose a problem. Fees need to be adjusted and revised from time to time, and the new law should allow the flexibility to do this administratively. The Constitution requires a law to impose a tax or fee. This law should do so, but the amounts should be adjustable by administrative action. For example, the law could specify amounts of fees in an annex and provide specifically for their adjustment by Prime Ministerial Decree, as proposed in the SALR draft. The increases, if desired, could be tied to some objective standard such as the cost of

16 Most economists would agree with this, arguing that a transfer tax penalizes transfers and that an annual land tax is a fairer and more reliable way to raise revenues.

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living or rate of inflation. Since both the fees and the administrative increases would have been authorized in the law, the constitutional requirement should be satisfied. The SALR draft earmarks for SALR one -half of the real property transfer taxes collected, all recording and registration charges collected, and all property survey fees collected. The MOLA draft has deleted these provisions. International best practice, for sustainable registries, is to include such provisions in the legislation, and to earmark all recording and registration fees and property surveying fees for the registration agency. In addition, a small percentage of the property transfer tax (for collection service) should be earmarked for the SALR. This would require amending the Law on Collection of Public Revenues (no.8 of 1990 and subsequent amendments), which states that “no authority is entitled to retain any portion of the revenues collected irrespective of the reasons” (art.75). Generally, the international experience in this area suggests that the land registration system should seek to recover its costs but should not be used to try to raise general revenue. Instead, reliance for general revenue should be placed instead on the development of a broad-based annual land tax.

3.3.3 Good Process and the Reliability of Registrations: Amins and Courts The International Experience: In most countries, the processes leading up to land registration deserve closer attention in registration laws. Those processes should be set out in the legislation itself; they are not secondary, but critical, because it is only transparency and rigor in process that justify giving the register strong probative value. The Bank has had very positive experiences with systematic, mass registration. Good public information campaigns have proved the key to broad participation in the process. Attractive public education materials in several media are needed, and civil society organizations can play a useful role in informing the public. The public hearing of claims and resolution of disputes at the parcel or in the neighborhood of the parcel is also critical to transparency and public confidence in the process. Good process is so important because it provides a level of confidence in the result that justifies giving the register strong probative value, even providing that it is legally conclusive. There are two on-going Bank-funded projects that illustrate best practices in this area, in Cambodia and Laos. In Buddhist Cambodia, claims and disputes are heard on the grounds of the village temple to encourage honesty. With regard to registrations of inheritances and transfer outside systematic work, the challenges are greater. The Bank in fact funds little such work, because quality control is much more difficult. The solutions tend to be country specific, and this seems likely in the case of Yemen, where the Amin institution plays an important role. In Yemen, the draft laws deal with process in three contexts: voluntary registrations, mandatory (systematic) registrations, and subsequent (to systematic registration) of transactions and inheritances. The provisions are substantially the same in both drafts. Mandatory (Systematic) Registration : The new law, in both drafts, provides for compulsory, mass registration. Articles 42-53 of the two drafts provide an outline of the process. The processes are (potentially) appropriately public and local, but this will depend on important details that are not well fleshed-out in the law. The provisions could however be strengthened in some respects. For instance, publicity for systematic registrations should not be confined to conventional publications and postings, but should also utilize television, radio and local mechanisms such as Akel Al Hara. While the level of detail in these articles is about right for the law itself, there should be added a provision for the issuance of regulations to set out this process in greater detail.

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Subsequent Registrations of Transfers: It is important that registration of subsequent transactions and inheritances be carried out carefully, to preserve the reliability of the register. In many developed countries, the legal profession makes a major contribution to this by ensuring that documentation reaches the registry office in good shape. In Yemen, major roles have also been played by the Amins (in document preparation) and the courts (in authentication of identities, etc.). The traditional role of Amins lends a special dimension to this issue. While one hears of a few unqualified Amins, the institution seems to have broad public acceptance, and there appear to be considerable advantages to working with the Amins. While they are not formally, legally, part of the land registration system, they should for planning and capacity-building purposes be seen as an integral part of the system. That said, the Amin institution and the role it plays need to be strengthened and better regulated.

• The MOJ should much more actively exercise its supervisory role over Amins, withdrawing licenses from those who guilty of malfeasance (only seven licenses were withdrawn relative to 2,077 registered Amins in 2004), and work closely with the Land Registration Agency in strengthening the competence of Amins in matters relating to land;

• Training is needed to strengthening of capacity of Amins for deed preparation and authentication and other processes;

• Amins must be required by the new law to use standardized forms, and certify that certain requirements required by the law have been met, for instance for identification of the parties;

• Amins should be civilly responsible for negligence in performance of their duties, including withdrawal of their licenses, and where they have participated knowingly in a fraud, criminal sanctions should be imposed.

Voluntary Registration: While publicity and participation can be easily achieved in systematic titling, it is more difficult when one parcel is involved, with the holder requesting registration. The drafts wisely provides for a field investigation (settlement) in such cases (articles 18-22 in MOLA draft), restating current practice. Some improvements would be appropriate, however. In announcing the settlement for the parcel, it would be wise to use, in addition to the print media, Akel Al Hara. The nature of the input from neighbors and others present should be required to be recorded in the report (mahdar), with the names of those who provided evidence. The provision that the Director of Real Property may refuse to process an application if the applicant or his/her trustee were absent without acceptable excuse is useful, but there should also be provision that no application should be processed unless the applicant or his/her trustee or agent was present for the settlement. In this context too the role of Amins in preparation of documentation may also be important, and the comments made with regard to their role in subsequent registrations are applicable here as well. There are a number of countries in the region and around the world where the interface between notaries (Amins) and the land registry system has not been handled well, and Yemen has the potential to become a best practice case in this area. Especially important in Yemen is the relationship between the courts and the registries. Courts have traditionally played a key role in Yemen in authentication of contracts, including contracts for the sale of land. Evidence presented elsewhere in this report suggests that there is considerable confusion today concerning court authentication and registration, with many of those engaging in land transactions treating court authentication as an alternative to registration of the transaction. So long as registration was carried out on a personal basis and had limited probative value, perhaps not too much harm was done by this confusion. But once registration is given conclusive or other strong probative value, those who merely take their contracts with the courts for authentication will be seriously disadvantaged, and may loose their land to a subsequent purchaser who registers his title. Two parallel systems cannot be allowed to continue.

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To understand what must be done in this regard, it must be asked what function the courts perform in authentication that could not be performed in registry offices. If the answer is “no”, the authentication of contracts relating to land, or inheritances, should be ended in this law, and the parties given only the option of using the registry. If the answer to that question is instead “yes”, then the legislation should contain an article on this topic, allowing the courts to carry out authentications, but only on forms that specifically state in BOLD that authentication does not make the contract or inheritance effective to transfer title to the land, which can only be done by registering the transfer in the land registry.

3.3.4 The Legal Effect of Registration The International Experience: It has been stressed that a good and rigorous process is the key to reliable results and public confidence in the register, and this determines the legal effect given to registration. Good process permits registration to be given strong legal effect, to provide maximum security of tenure. These provisions are arguably the most important in the statute, and deserve careful consideration. Some key elements that must appear in the law are:

• Priority of registered transfers over unregistered transactions; • Inability of unregistered transactions or inheritances to transfer titles, and • Legal conclusiveness of registration (that is, the person shown on the register as owner is

legally the owner and this cannot be successfully challenged). Title registration systems on the Torrens model provide the strongest possible legal effect, making registration legally conclusive. The fact of registration does not just provide proof of a title, but actually has the legal effect of clearing the title. This means that anyone contemplating purchase of a parcel of land can look in the register and absolutely rely upon what he sees there. The person shown as the owner can pass good title to him in a sale, and that title cannot be successfully challenged by anyone else. Tunisia and Thailand are examples of long-operating, sustainable systems that give strong legal effect to the register, and there are many others around the world, the Torrens system having been used widely as a model by both the British and French colonial administrations. For Yemen, the two draft laws contain provisions on the legal impact of registration. The SALR provisions (arts. 148-154), the first in time, have been modified in some respects by the MOLA draft, and these modifications will be considered.

• Both drafts separate out legal effects of first registration and subsequent registrations. First registrations presumably include both voluntary first registrations and mandatory first registrations, but this should be made clear either in these articles or in the definition section.

• With regard to first registrations, the drafts say that first registration “has evidentiary power and cannot be appealed except on grounds of forgery and non-authenticity”. The terms “evidentiary power” seems to me too weak, and would better be brought into line with international practice by specifying “legally conclusive, except…” for enumerated exceptions.

• The enumerated exception in the drafts for fraud (in Arabic, Tazweer) is normal, but an exception is also created for “non-authenticity” (in Arabic, Tadlees ). In translation at least, this is vague, and worrisome. It should at least be defined clearly, and defined narrowly.

• The clause removed from the SALR version by the MOLA draft, at the end of the provisions on first registration (“Registered real property rights are not subject to “Takadom”, prescription). In some statutes, such as the Sudan Land Registration Act, prescription is allowed even against registered land, but other laws reject this on the grounds that if a title can be acquired by prescription, which does not show up on the register, then the register is no longer reliable. It is suggested that prescription be allowed, but only as against the person owning the land when the possession began or his heirs, in which case a court could change

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the registration if the prescriptor sued and proved his case, but not against any purchaser for value who might have relied on the register.

• With regard to subsequent registrations, the wording should also be “legally conclusive”, or the certainty obtained at first registrations will be lost. Here, the deletions from the SALR version by the MOLA draft seem to weaken the legal effect of registration, and so could undermine security of tenure. They should be restored, though their wording could be clarified. The objective is to protect purchasers, so while the non-registered claimant must not have any right to the land, his right under the contract by which he imagined he obtained the land are valid, and can serve as the basis for an action for damages against the person who purported to transfer the land to him.

In some countries, legislation includes a guarantee of the title by government, with a fund created to compensation of anyone who relied upon the register but was then disappointed. Generally, it is better to make sure that this cannot happen by providing stro ngly for legal conclusiveness of registration, with very narrowly drawn exceptions.

3.3.5 The Handling of Mistakes and Corrections The International Experience: Even in well-managed systems, mistakes will sometimes occur. Their correction needs to be dealt with clearly in the law. If it is too easy to correct errors, then “corrections” will be made where there are no errors. In that case, corrupt practices can be expected and the conclusiveness of the register can be undermined. Some mistakes are substantial, and affect interests, while others are technical, and do not. Technical errors are errors in recording the location of boundaries or the names of right-holders so that the adjudication record does not accurately reflect the results of the adjudication. Most legislation for title registration contains provisions concerning the correction of such technical mistakes. The legal framework regarding mistakes in the registration legislation in most Bank-funded projects is as follows:

• Mistakes affecting the interests of parties should only be correctable through a court proceeding;

• Technical errors, not affecting those interests, should be correctable by the Registrar. • Staff should not be held financially responsible for good faith errors, but should be

responsible for intentional mistakes, in which case they should be both financially responsible for damages caused, and where appropriate, as in a case of participation in a fraud, subject to criminal penalties.

Again, for solid experience in these areas, it is best to consult long-running, relatively successful systems, such as Tunisia and Thailand. In Yemen, both drafts contain a provision on mistakes and omissions, providing that if the correction concerns information on the real property rights or the map and affects others’ rights, the correction may not be undertaken except after all concerned parties make a request and all procedures according to the law are undertaken in a way that protects the rights of all the concerned parties. It would be better if it were provided that if the correction affects the interests of any concerned party, the correction can be made only by a court, even if all the parties agree. The reason for this is that it is hard to know when who all the parties affected by a correction may be, and it is dangerous to do the correction as an administrative act in the registry office. But it should also be made clear in the law that the director of registration (or registrar) has the right to make technical corrections, not affecting the rights of anyone but effectuating the original intention of the registration.

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3.3.6 Openings for Private Sector/Civil Society Participation The International Experience: Modern LRLs allow contracting of selected functions by the implementing agency to private sector institutions. Major land titling programs, even mass titling programs, need not involve the creation of large and expensive government bureaucracies. Some tasks can be contracted out, under supervision by government professionals, such as public education and cadastral survey. Others, such as adjudicating disputes, should remain with government. The best practice cases in this area are recent efforts such as Laos, where the government has contracted with the National Association of Women, an NGO with strong ties to government, to conduct training of staff involved in adjudication of titles and also to carry out public information campaigns in communities where land is soon to be titled. In Cambodia, government has funded legal NGOs to represent the interests of poor households who are disadvantaged in dispute settlement, and also contracts with research NGOs for independent monitoring and evaluation of the registration program. In Yemen, the two drafts make no provision for private sector or civil society involvement in registration processes. But a rapid expansion of systematic (mass) titling seems likely to require such involvement, to get overcome limits placed by current staffing of the relevant government agencies. While this would be new in Yemen, and would need to be introduced gradually, it is important to provide for it in the law. If there is reluctance on the part of the Government to commit itself on particular tasks at this time, then it is possible to simply provide in the law for such assignment by subsidiary legislation under this law. This will make such assignment possible when the time comes, without amending the law.

3.3.7 Settling Disputes in the Titling Context The International Experience: In many countries in which the Bank funds land registration programs, field mediation has proven an effective and efficient way of resolving many disputes arising during systematic, mandatory registration. If the parties agree on an outcome, the agreement can become the basis for the registration. Such field mediation is often carried out by demarcation and survey officers with modest training. If mediation fails, there is often provision for local administrative adjudication, followed by an option to appeal into the court system. In Cambodia, for example, the Land Law provides for local administrative mediation of disputes in systematic registration, followed where necessary by administrative adjudication, with appeals allowed to High Court from the administrative decision on questions of law, but not questions of fact. In cases of voluntary registration and subsequent registrations, disputes often go directly into the court system. It is felt that the local administrative dispute resolution processes that work well during systematic registration have much less potential in the cases of voluntary and subsequent registrations. For Yemen, mediation might play an equally valuable role, but the two drafts do not mention mediation of disputes by field staff of the registering agency. Serious consideration could be given to putting mediation sub-article into the law, which allows the parties to negotiate and settle a dispute with the assistance of the registration staff. Are there approaches to mediation that work well in Yemen? If so, they should be used as models. It should be made clear in the law that the result of agreement reached among the parties after mediation and reflected in a signed document, with appropriate formalities, is a legitimate basis for registration. This of course implies training for field staff in mediation. Where an agreement cannot be reached and a dispute persists, both drafts would resort to a quasi-judicial adjudication institution called the Titling Settlement Committee (TSC) chaired by a judge. They both authorize an executive decree to establish procedures for establishing the TSC and to set out its formation, membership, voting and operations. This is a bit different than what exists

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elsewhere in the world, but it is common practice in this region and can make a valuable contribution to dispute settlement. In both drafts, when dealing with voluntary registrations, disputes are referred to the TSC for decision, subject to appeal to the Court of Appeals. If a case is already pending in the courts concerning the parcel, it is provided that the court upon learning of the application for registration should refer the case to the TSC. In most countries, the administrative settlement provisions are not used for voluntary registration. Here the case is different in that the TSC is quasi- judicial, and its use to resolve disputes arising from voluntary registrations is more appropriate. But it is not so clear that cases already pending should be transferred to the TSC. Arguably, it would be better to leave the dispute to be resolved in the court which already has the case, and postpone registration until a result is received. This provision should be carefully reconsidered, but of course the solution should be one appropriate in local circumstances. In dealing with disputes arising during systematic, mandatory registration, there are important differences between the drafts. In the SALR draft there is a provision that court cases concerning ownership or other property rights in parcels in the area of mandatory registration are not accepted as of the date of publication of the announcement of the date on which registration works start, and that court cases that have been initiated with regard to parcels in the area should be referred by the court to the TSC. These have both been eliminated in the MOLA draft, but should be restored. They are standard provisions to prevent confusion in dispute resolution, and the third provision makes sense in the case of systematic, mandatory registration (though not voluntary registration) because the dispute will likely be better settled in connection with a field process and with the benefit of community input that is available in mass registration situations.

3.3.8 Coordinating Two Modes of Registration The International Experience: Almost invariably, when systematic registration is legislated for a country, a prior system of voluntary registration has existed. The older, voluntary registrations remain valid, and in fact the voluntary system normally continues to operate except for areas specifically designated for implementation of systematic registration. The relationship between the two systems needs to be spelled out careful in the law, or confusion will result. The confusion can be serious. The World Bank in the 1990’s supported a mass registration effort in urban areas in Ghana which went wrong. Older voluntary registrations in the areas designated to systematic registration could not be noted before systematic registration work began, due in part of jealousies between the two registries, under two registrars (within a single Ministry). The systematic work in some cases registered titles contrary to the old voluntary registrations without even being aware that the voluntary registrations existed. When litigation arose as a result, the courts were sufficiently upset with the sloppy work by those who carried out the systematic work that they have not been willing to accord it the legally conclusive effect anticipated in the LRL. The courts have in fact sometimes upheld the title based on the earlier voluntary registration rather than that given during the systematic registration. In Yemen, the voluntary system will continue to operate, and when systematic registration areas are declared, they will contain some parcels that have been already registered voluntarily. The law should provide that prior to the systematic work, the personal registry must develop a list of all registered deeds in that area. The SALR draft provided that applications for voluntary registration of parcels in the mandatory registration area should not be accepted as of the date when registration works start, but this has been deleted in the MOLA draft. It should be restored to avoid serious confusion. The law should also state the level of probative value to be given to earlier voluntary registrations during the systematic work. Given the lack of safeguards when the earlier titles were awarded, and consistent with the existing law on land registration, they should not be treated as conclus ive. They should be treated simply as persuasive evidence of title, or perhaps as creating a rebuttable

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presumption of title. But if clear proof is brought forward that they were granted in error, they should be overturned.

3.4 Summary of Key Recommendations (i) The Government of Yemen is correct in moving to replace the current LRL, which is

rudimentary and inadequate in many regards.

(ii) Existing drafts of the land registration legislation (by MOLA and SALR) share many positive aspects, including: • They provide for both mandatory (systematic) registration, and voluntary registration

(in areas where mandatory titling has not begun). • In the case of a voluntary registration, a field inspection is provided for, similar to

that under the previous law, but spelled out in greater detail, with specific instructions on the handling of contested registrations.

• The provisions for systematic registration deal in considerable detail with the processes to be followed to ensure transparency and public confidence in results.

• There is an attempt to strengthen the probative effect of registration, an issue neglected entirely in the current law.

• A Real Property Register is provided for, with a register for each parcel, and each parcel identified by a unique ID number, consistent with the best practice in title/land registries.

• There are provisions for subsequent registrations for transactions (subsequent to mandatory, systematic registration) in this register, distinguished from “voluntary registrations” in that some of the procedural precautions for the voluntary registrations (most importantly, the field inspection) are not required for subsequent registrations. This is consistent with practice elsewhere.

(iii) The international experience strongly suggests that the current combination of survey and

registration functions in a single agency will greatly facilitate effective registration implementation. While proposals to alter the present structure have been made, it should be retained as is at present, with the single agency reporting to the Presidency of the COM.

(iv) For financial sustainability of the registry system, in a revised law

• Late fees are appropriate but should not be a percentage of value of the land; • The transfer tax collected by land registries should be treated in the registration law

as it forms a part of the cost of registration, and there should be no imposition of penalties for failure to register previous transactions on those seeking to register a current transaction.

• The registering agency should be allowed to retain all recording and registration fees for its support, as well as a modest percentage of the property transfer tax for collection services; and

• Generally, fee structures should seek to cover costs of services, not raise general revenues.

(v) In terms of improved process in registration, leading to more reliable results and allowing

more conclusive legal effect, • More effective publicity procedures are required for systematic registration; • For subsequent and voluntary registrations, the role of the Amin should be reformed

and reinforced to ensure a higher quality of documentation entering the registry system; and

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• The role of the courts in authentication of land transfers must be reexamined, and either ended or substantially reformed.

(vi) The legal effect given to registration should be strengthened, and the law should provide

for: • Priority of registered transfers over unregistered transfers; • Inability of unregistered transactions or inheritances to transfer titles, and • Legal conclusiveness of registration.

(vii) Regarding mistakes and corrections, the law should provide:

• Mistakes affecting the interests of parties should only be correctable through a court proceeding;

• Technical errors, not affecting those interests, should be correctable by the Registrar. • Staff should not be held financially responsible for good faith errors, but should be

responsible for intentional mistakes, in which case they should be both financially responsible for damages caused, and where appropriate, as in a case of participation in a fraud, subject to criminal penalties.

(viii) The law should be amended to permit the assignment, when and if this is considered

appropriate, of certain functions, not including the adjudication function but including surveying and public information and other functions, to private sector and civil society agencies.

(ix) The reliance on a TSC for settlement of land disputes in relation to land registration is

appropriate, but should be supplemented by a provision allowing for field mediation by staff of the registering agency. As for the relationship between the courts and the TSC, the provisions are generally appropriate but: • While ongoing cases concerning a parcel should not be transferred to the TSC in the

case of voluntary registration, this is appropriate in the case of systematic registration, and

• In the case of mandatory registration, court cases concerning ownership or other property rights in parcels in the area of mandatory registration should not accepted as of the date of publication of the announcement of the date on which registration works start.

(x) To ensure lack of conflict between the mandatory system and voluntary registrations,

provision should be made in the law for: • Careful collection of data on prior voluntary registrations in mandatory registration

areas prior to mandatory work being undertaken; • The probative value to be accorded those earlier voluntary registrations, which should

be only persuasive, not conclusive, and • Suspension of applications for voluntary registrations in the area of mandatory

registration.

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Section 4. State Land Management in Yemen: Problems, Issues and Recommendations

4.1 Introduction

The legal framework governing State LRE in Yemen comprises Republican Decree No. 21 of 1995 concerning the SLRE Law (hereafter referred to as the SLRE Law, or the Law) and Republican Decree No. 170 of 1996 concerning the Executive Decree for SLRE Law No. 21 of 1995 (hereafter referred to as the SLRE Executive Decree, or the Executive Decree). By Law, the SLREA is the [sole] government agency responsible for the management, utilization and disposition (as well as revenue collection) of SLRE in Yemen in accordance with State policies/strategies and programs (clause 10). SLREA was established in 1995 following the enactment of the Law. It cons olidated the different land departments that were then under the MOPWH and Highways (then called the Ministry of Housing) and it was administratively placed under the MPWH. According to the MOLA, to date, there is still no administrative decree governing the organizational structure and functioning of SLREA (beyond the few responsibilities and organizational matters that were listed in the Law and Executive Decree), which affects the authority’s functioning. SLREA employs a total of ___ staff including ___ staff in the Sana’a headquarters and ___ staff distributed in the ___ branch offices.

4.2 Definitions

For the purpose of this policy note, State Land Management is defined as the process by which State land assets are identified, documented, preserved (against speculation and encroachment), valued and disposed of to investors and citizens by way of systematic, transparent and equitable valuation and disposal mechanisms and in accordance with existing (land use) plans, as well as leveraged to achieve the State’s social and economic policy objectives. This encompasses the legal/institutional framework regulating and overseeing the State land management process and institution(s) involved (including the clarification of their mandates and responsibilities) and the procedural/operational framework governing the State land management process. As such, the process of State land management comprises the following steps:

(i) State land definition (within the legal framework governing State land management); (ii) State land identification and documentation; (iii) State land preservation from encroachment and speculation; (iv) State land planning and implementation framework, including land use planning,

development/implementation arrangements, and sustainability considerations (v) State land allocation framework, including institutions responsible and disposition

mechanisms; (vi) State land valuation: valuation/pricing mechanisms; and (vii) State land management strategy, especially with regards to leveraging State lands to

achieve State’s objectives of economic and social development

4.3 Key Problems and Issues of State Land Management:

Against the background of the process defined above, the main issues and problems of State Land Management in Yemen can thus be summarized as follows (a detailed assessment is provided in the following sections):

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(i) Ambiguities in the legal framework governing State lands including the definition of what are considered State-owned lands, which contribute s to prevalent conflicts over land ownership with private and tribal claimants;

(ii) Lack of comprehensive and accurate inventory of State-owned lands and lack of the resources/means needed to undertake the documentation process;

(iii) Inability to preserve State Lands against encroachment and speculation; (iv) Lack of updated land use plans in cities, coupled with the lack of appropriate institutional

and financial instruments to implement and enforce plans, and the lack of strategies for sustainable utilization/exploitation of State Lands;

(v) Lack of a consolidated institutional framework, and systematic and transparent methods and procedures for allocating State-owned land;

(vi) Lack of systematic and transparent methods for valuing/pricing State-owned land; and (vii) Lack of a strategic framework for leveraging State land assets to achieve economic

development objectives and maximize private participation in development and growth. All the abovementioned factors have contributed to an inefficient State land management process in Yemen, which has had inter alia many negative implications on the investment climate. The Investment Climate Survey undertaken in Yemen in 2002 and interviews with the private sector17 reveal that access to land is one of the most severe constraints to the investment climate and has negative impact on economic growth. In particular, inefficient State land management proved to be the main reason as to why over 30% of all licensed investment projects in Aden and Mukalla were never initiated or the project never became operational (as will be discussed later). State land management problems have also had a devastating effect on local governments’ ability to deliver public services, a problem that is especially acute in the cities of Taiz and Sana’a (as will be discussed later). The following sections examine the different problems and issues that have contributed to an inefficient State Land Management process, as well as the negative effects that an inefficient State land management process has had on economic growth and on curtailing the ability of local governments to attract investments and deliver needed public services.

4.3.1 Legal Ambiguities Surrounding State Lands and Ensuing Conflicts over Ownership: State Lands, according to the Law, consist of the State’s “public domain” and “private domain.” The State’s public domain is defined as “all lands that by nature are for the public purpose or that have been designated for the public purpose after providing fair compensation to private owners according to the law on expropriation for the public purpose.” Lands that are part of the State’s public domain “shall not be disposed of in any way except if their designation has been changed by a special decree or by a COM decree, or if their public purpose functions have already ceased to exist.” The Law does not define the State’s private domain. Some elements of the State’s private domain are inferred from various references in the Law relating to categories of State-owned lands which may be alienated. The Law proceeds to list the types of land (and real estate) that qualify as State -owned and which include land originally owned or proven to be owned by the State (including the former property of the Imam or Sultans , which were nationalized by the newly formed State) or acquired by the State through purchase, expropr iation for the public purpose, foreclosure, or because it was found to have

17 In the context of three Bank-financed projects: (i) Yemen PCDP, which focuses inter alia on developing participatory City Development Strategies in the three main port cities of Aden, Hodeidah and Mukalla, and promoting Local Economic Development and public-private partnerships; (ii) Taiz Municipal Development and Flood Protection Project, which focuses inter alia on strengthening municipal management and promoting public-private partnerships; and (iii) the present project—Yemen Urban Land Policy and Administration, which involves extensive discussions with the private sector.

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no owners or heirs. Also are considered State lands: uncultivated lands, forests and desert lands unless proven to be privately owned; public “marahek ”(i.e. mountains and slopes that receive/drain rainfall, including the main floodwater channels); as well as beaches and their protection zones, unpopulated islands and semi-islands, and other maritime zones that dry up. Most importantly, the Law stipulates that State land (and real estate) “shall not be subject to Statute of limitations regulations [i.e. the State’s ownership claim does not expire], even if they have not been registered with the SLREA or the Real Property Registry [i.e. Land Registry]”. The legal definition of what constitutes State -owned land proved to be ambiguous in two areas, which have consequently triggered a large number of disputes over land ownership with private and tribal claimants. These include the definition of “public marahek ” and the “unless proven to be privately owned” clause related to uncultivated, forest and desert lands, which inherently include the urban expansion areas of most cities especially in coastal and desert areas . According to several judges interviewed, the most problematic clauses in the Law are No. 42-43, which deal with the lands that are exempted from qualification as public marahek. These two clauses are indeed vaguely/poorly written (and thus could be interpreted in different ways) and no further clarification was provided in the Executive Decree. Clause 42 stipulates that the marahek or slopes adjacent to agricultural lands are exempted from qualification as public lands and are instead considered part of the agricultural lands “if their slope does not exceed 20 degrees or within the range of this ratio if the slope exceeds it, with the slope calculation starting from the separating line between the marahek and the adjacent agricultural land.” Clause 43 stipulates that “the ownership right to the neck of the marahek [i.e. the areas closest to the agricultural lands] for owners of land that is adjacent to the public marahek applies only from the date of expiration of neighbors’ common use rights to these marahek.” These two clauses are also disjointed since one talks of whether marahek as a whole would be considered publicly or privately owned while the other discusses private ownership of part of the marahek . These two Clauses are interpreted in three different ways:

• Judges for the most part interpret that slopes steeper than 20 degrees (as measured from the beginning of the marahek slope) are public whereas gentler slopes, like agricultural or terraces, are an extension of private lands. Judges are thus usually faced with a technical problem when the marahek have varying slopes, as they often do;

• Private landowners argue that they are entitled to all marahek lands that fall under a 20 degrees plane projected from the beginning of their agricultural properties, which given the historically large scale of agricultural landholdings would in effect mean that all marahek slopes in most instances would be private; and

• The SLREA’s interpretation is that the first 20% of the marahek [i.e. the neck] which are adjacent to the (formerly) agricultural land parcels belong to the private landowners and the remaining 80% belong to the State (the procedure to finalize this apportionment arrangement is called in Arabic “Farz”, using a special form developed by SLREA known as Istimaret Farz).

In Taiz City alone, according to the SLREA branch director, the contested ownership of marahek is alone responsible for over 90% of land disputes involving SLREA. The latter is pitted against the landowners who formerly owned agricultural lands within the now urbanized perimeter of Taiz city and who subsequently subdivided and sold their land for urban uses. The magnitude of the problem in Taiz is due to the fact that the city suffers from a real scarcity problem of State-owned land, which means that government entities are often forced to buy land from private owners to deliver necessary public services, and which implies that marahek are the State’s best, if not only bet to obtain free State land for services. To resolve this situation, the SLREA-Taiz branch has for many years negotiated individually with agricultural landowners to reach mutually-agreed apportionment arrangements of the adjacent marahek. Apportionment negotiations typically start at the 20%-80%

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arrangement but the SLREA branch has settled a few cases on a 30%-70% or even 40%-60% basis . The enactment of the SLRE Law in 1995, however, was accompanied by a freeze on negotiated settlements between SLREA and private landowners. Since then, marahek disputes are referred to the courts. According to SLREA, by 2004, only 40% of the marahek cases in Taiz had been resolved. Tribal ownership claims, especially related to desert lands that constitute the majority of urban expansion lands in such cities as Aden, Hodeidah and Mukalla are the other chronic problem of State land management in Yemen. In pre-republican times, large swathes of urban land in the Southern and Northern governorates were under tribal control, usually with natural landmarks separating tribal jurisdiction areas (known locally as the protection or control zone, and which involved a bundle of use rights for grazing, logging, control over water and natural resources, etc). Yet, the emergence of the People’s Democratic Republic of Yemen (PDRY) in 1967 triggered the abolition of private property and nationalization of all LRE in Southern Yemen, based on the 1970 Constitution and a series of Laws (most notably No. 11 of 1972 which abolished tribal groups and expropriated their properties and Law No.32 of 1972 which nationalized all housing). Tribal interests in land in Southern cities including Aden and Mukalla only resurfaced after the unification of Northern and Southern Yemen in 1990 and the enactment of the first Presidential Decree for restitution of nationalized property in September 1991 , which dealt with commercial property. The situation of residential property was more complicated because a PDRY Law (No. 18 of 1990) issued one day before unification granted the ownership of nationalized housing units to their tenants. To avoid social upheaval, the State was forced to compensate the former property owners with unserviced land parcels in the urban expansion areas. On average 1,000m2 or the equivalent of two land parcels was given per case, on the assumption that half of the land could be sold to finance construction on the other half ). 18 According to SLREA, the compensation process for residential property owners was completed except in Aden, where it is estimated that by the end of 2004, only 50% of the cases had been resolved by the restitution committee chaired by the Governor (the remaining cases are those where owners held multiple units). In Aden, two tribes—known as Al Mossa’aba and Al Alban—historically claimed control over most vacant land to the north of the city, especially in Khormaksar and Dar Saad districts. The problem was that most of these contested lands, which represent the current urban expansion areas of Aden, were subject to detailed land subdivision plans during the 1990’s and were largely distributed or earmarked for residential and investment uses (including for compensation). A committee for the settlement of land claims (chaired by the Aden Governor and including the directors of SLREA and the Land Registry, three judges, and the director of Security) was formed to investigate such claims. The dispute between SLREA and the two tribes was only resolved through a settlement mediated by the President in 1997, which earmarked the equivalent of 10 neighborhood planning units (a total area of 400-600 ha) to the two tribes in return for foregoing all their land ownership claims in Aden. T he settlement was not finalized until 2003 when the detailed plans for these neighborhood units were finally approved. In Mukalla, Al Akabra tribe has a similar ownership claim over most undeveloped land to the east of the city, but which unlike Aden has not been resolved. As a result, the tribe has many ongoing disputes with beneficiaries of State-owned land, including with investors and former residential property owners who were compensated for their nationalized housing. In one illustrative case reported by the Hadramout GIA, one of the most established Saudi investors of Yemeni origin was granted a 600ha State-owned parcel for free, following Presidential instructions, to invest USD15 million in a large fish processing plant. The investor had to pay USD1.4 million (YR260 million) to settle with Al Akabra tribe, which claimed ownership of the parcel. This unexpected

18 Noaman, Khaled Abdel Wahed Mohamed and Salem Abdo Al Hajj , 2001, pp. 18-19. In Aden, 1,065 owners were compensated with 1,068,683 m2, which amounts to an average of 1,003 m2 per case.

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financial outlay caused the delay of the investment project (it still remains undeveloped to date), which defeats the purpose of the State’s policy of granting free land as an incentive to large investment projects. Al Akabra tribe has also contested the attribution of land under the so-called Rowainat IV investment project, a land subdivision project of 2,400 parcels. Overall, the conflict with tribal and private claimants over urban expansion and marahek land owes to a combination of ambiguous legal definitions of what are considered State-owned land and poor documentation and registration of State lands. The problem is further compounded by shortcomings in the legal framework governing land and property rights (especially the lack of a Statute of limitations period for the expiration of undeclared and unexercised ownership claims or a specified timeframe after which ownership is allowed through the right of prescription/adverse possession) and the apparent lack of political will to enforce the Law (the tendency instead is to negotiate settlements with tribes and other claimants). One implication is that investors often pay twice for the land, to SLREA and to private/tribal claimants. This increases the financial burden and risk faced by investors, which may not be anticipated or properly accounted for in initial project feasibility studies, hence the significant delays and high ratio of aborted investment projects.

4.3.2 Lack of Comprehensive and Precise Inventory of State Land: According to the SLREA, no information exists in Yemen regarding land classification (whether urban versus rural or classified by type such as urban land, agricultural, uncultivated, desert, etc) nor is there any information about ownership (State versus private versus Waqf19). Based on their analysis of maps and other information, SLREA estimates that State -owned lands roughly represent 90% of all land in Yemen including: (i) desert lands; (ii) the so-called “dead” or non-valorized lands, in Arabic “Arady Mowat,” which are considered State-owned and include undeveloped/uncultivated lands; (iii) mountains and slopes; (iv) unpopulated islands and beaches; (v) lands without identifiable owners or heirs; and (vi) some 70% of the so-called marahek or slopes receiving and channeling rainfall in agricultural areas. The remaining 10% or so would include 5-9% in agricultural and cultivated lands, and 1-2% in urbanized lands covered by human settlements (cities and villages). According to SLREA, the State’s ownership in agricultural and cultivated lands varies by Governorate. In Hajja and Al Mahwit where the topography is more mountainous, the State is estimated to own some 50-80% of the land. In Zhamar, Sana’a and Abyan, the State is estimated to own some 30-40% of the land, whereas in Ibb, State ownership would be limited to some 10%. The remainder would be in private and Waqf hands. In urban areas, the share of the State in land ownership varies greatly from one place to another (the largest share of State-owned lands being in cities in coastal and desert areas), but it is not estimated to exceed 10% of privately -owned lands (especially in light of the State’s policy of restitution of nationalized property in Southern and Eastern Governorates). The accuracy of such estimates cannot however be determined. Until today, no inventory exists of State -owned land in Yemen, whether in the public or private domain. 20 In 2001, the President issued instructions to SLREA to undertake an inventory of State-owned lands. Unfortunately, however, no additional budgetary resources were made available to

19 Waqf has two main forms: public/administered by the Ministry of Awqaf and private/administered by private trustees 20 State-owned lands are classified by Law according to the following categories: (i) State Developable Lands (SDL, in Arabic “Arady Mokhassassa”), which are defined as “lands that have been planned or prepared and serviced in view of distribution,” i.e. the urban expansion zones; (ii) Agricultural lands and uncultivated agricultural lands (in Arabic, “Arady Bour”); (iii) Desert Lands (without planned land uses); (iv) islands and beaches; and (v) “marahek” (which, as stipulated in the Law, are part of the State’s public domain in the “main cities”).

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SLREA to finance this huge undertaking. As a result, the progress in most SLREA branch offices has been very limited to date. The experience of the SLREA Hadramout branch, one of the few branch offices that have started the inventorying process, is telling of the obstacles facing SLREA in this undertaking. The process aimed to inventory the following three categories:

• State-owned lands (and real estate) that are currently occupied/developed by private individuals or corporations;

• State-owned lands (and real estate) that are currently occupied/developed by State institutions including local governments, deconcentrated line ministries, etc;

• Vacant State-owned lands with a planned land use in cities’ master plans and possibly in detailed neighborhood plans as well (both land that is part of the State’s public domain—i.e. earmarked for public services, and part of the State’s private domain for distribution to residential and investment purposes).

In each of these three categories, SLREA Hadramout faced major problems. The documentation of State-owned lands that are currently occupied/developed by private parties was very complex given that many government entities had distributed State land without passing through SLREA or handing over to them the contracts/leases ex post, including most notably the GIA-Hadramout (especially before 1996) and the Ministry of Agriculture’s local branch. By the end of 2003, all land-related contracts and documents held by the GIA and the Agriculture department had been transferred to SLREA, yet the transfer of land-related information at the Awqaf office was still underway. In addition to difficulties of assembling the requisite information, the lack of financial resources and personnel for the task made the progress very slow. Documentation on State-owned lands that are currently occupied/developed by State institutions was equally difficult, especially that local government entities and deconcentrated line ministry branches sometimes bought land directly with funds transferred from the concerned ministries (such transactions were not reported to SLREA) or have had control over State land that predated the establishment of SLREA (and which are thus unrecorded). SLREA Hadramout director also reported that many government entities, when asked to turn in their proofs of land ownership and receive instead new standardized contracts issued by SLREA (as per Clause 174 of the Executive Decree), only very few complied, most notably the Ministry of Education. Non-compliance was attributed to many factors, including that these authorities actually have no accurate information of their landholdings. Finally, the documentation of vacant State -owned lands with a planned land use was the fastest progressing component, except that such documentation was based on (outdated) master plans and on detailed plans that were developed without regard to the actual situation on the ground in terms of land ownership or site occupancy. Indeed, SLREA uncovered many cases in the urban expansion areas that it documented where the situation on the ground did not match that on paper, including land parcels that were in the plan earmarked for neighborhood services and that turned out to be squatted upon, had other land uses developed, or simply that different land parcels were actually controlled by the government entity in question. Overall, SLREA Hadramout roughly estimates that in the first two years it has managed to document (in tabular form without maps or cadastral information sheets) about 50% of State -owned LRE, although no information was available as to the accuracy of such undertaking. Table 4.1 lists the preliminary results of the process in Hadramout Governorate and Mukalla City issued in mid-2003.

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Table 4.1 Preliminary Results of State Land and Real Estate Assets Documentation in

Hadramout, 2002-06/2003

Mukalla City Al Shihr City

Ghail Bawazir City

Total

Unbuit lands (ha) *2,513 25 20 ** 3,794 Built lands (ha) 339 114 28 420 Total 2,852 139 48 4,214

* Includes 2,000ha for Rayan International Airport ** Includes 1,047ha controlled by the Oil Ministry in Dhabba Source: Wahba, Sameh, 2004b , based on information provided in SLREA Hadramout, 2003 The slow progress on the State land inventorying effort is attributed to the lack of additional resources earmarked for this purpose. In addition, the absence of up-to-date mapping, aerial photography or land surveying caused the problem of inaccurate documentation. This is also exacerbated by the fact that the SALR, SLREA and the Public Works’ planning departments in the different Yemeni cities have no updated maps that classify land according to type (especially distinguishing the boundaries of marahek, agricultural land and desert/undeveloped land). One implication has been a large volume of contested State -owned land in Sana’a between SLREA and holders of land transfer deeds from other private entities. According to the SLREA Sana’a branch, some Amins undertake to reclassify, say, a marahek to developable land when drafting a land transfer transaction (basira), which creates multi-layered ownership disputes. The problem of sorting out State-owned land from contested private ownership claims, especially in cities with very high land prices such as Sana’a, is further exacerbated by the following factors: (i) the absence of a Statute of limitations; (ii) high incidence of forgery of old basiras (especially by members of tribes and families that were known to have historically owned or controlled land, and often using the blank pages of an old Koran); and (iii) the prevalence of historical deeds that date for over 100 years and which are of dubious legal quality and in very poor condition (not including the use of proofs of historical control over land such as testimonies from Sheikhs).21

4.3.3 Inability to Preserve State Land Against Encroachment and Speculation: Against encroachment: The lack of a precise inventory of State-owned lands means that vacant State -owned lands that are earmarked for public services or for distribution to residential use or investment projects (or which remain as of yet unplanned but would serve to accommodate future growth) cannot be preserved against encroachment. In addition to the incomplete records at the SLREA, there is very limited registration of State-owned lands at the Land Registry (perhaps encouraged by the fact that the Law stipulates that “State lands are not subject to a Statute of Limitations, even if they are no registered with the SLREA or SALR” —clause 7). Indeed, in the cities of Sana’a and Taiz where SLREA has the most incentive to register State-owned lands due to the high volume of squatting and disputes surrounding these valuable assets, the volume of registration has been very limited (See Table 4.2). In Sana’a, only 44 State-owned properties were on average registered at the Land Registry each year between 2000 and 2004, whereas in Taiz, the average number of State-owned properties that were registered on annual basis at the Registry between 2001-2003 was 15 parcels.

21 As reported in several interviews with lawyers, judges and SLREA management held between February 2004 and January 2005

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Table 4.2 State-Owned Lands in Sana’a and Taiz Registered at the Land Registry, 2000 - 2004

2000 2001 2002 2003 2004 Total Sana’a Registered State Land parcels 34 25 23 83 56 221 As % of all registered parcels at the LR 0.7% 0.5% 0.4% 1.1% 0.6% 0.7% Registered State Land area (ha) 9.0 13.0 10.3 9.0 15.8 57.1 As % of all registered areas at the LR 3.2% 5.1% 1.8% 0.9% 3.0% 2.2% Taiz Registered State Land parcels 24 24 14 15 23 76 As % of all registered parcels at the LR 1.6% 1.5% 0.8% 0.8% 0.9% 1.0% Source: Survey Authority and Land Registry, 2005, and SALR-Taiz branch, 2004. Note: Prior to 2000, registration was through the sejel shakhsee system; as of 2000, registration relies on the

sejel ainee system Surprisingly, such low volumes of registration of State-owned properties in Sana’a and Taiz since 2000 (when the sejel ainee system with its parcel-based surveying and registration was applied) actually represent a significant increase over previous years when the sejel shakhsee (desk-based deed recordation) was in place. Indeed, between 1977 and 1999, only 386 State-owned properties were registered in Sana’a, which amounts to 17 properties per year on average. In Taiz, a total of 409 State-owned properties were registered at the Land Registry between 1982 and 1999, which amounts to an annual rate of 22 properties. In Ibb, a total of 67 properties were registered in the first 18 years, a rate of less than four properties per year (See Table 4.3). While such low volume of registration may be explained by the scarcity of State-owned land in these cities, there certainly seems to be more need for due diligence in the registration of State-owned lands. According to the SLREA, a total of 14,511 State-owned properties (lands and real estate, in both urban and rural areas) have been registered throughout Yemen between 1977 and 1999 under the sejel shakhsee (desk-based deed recordation system), representing some 7% of all recorded deeds combined (State, private and Waqf) during this period. The large majority of State property was not surprisingly in Southern Governorates (about 93% of registered State property was found in two Governorates, Hadramout and Aden). Since 2000 when the sejel ainee system was applied and until 2004, a total of 24,959 State-owned lands were registered, representing about 27% of all registered property—State, private and Waqf—during the same period. These, however, included the conversion of previously registered State property into the new sejel ainee system, which is based on unique property ID’s. Not surprisingly, the two Governorates of Aden and Hadramout (with its two branches of Mukalla and Say’un) comprised over two-thirds of State property. The high volume of registration in these two Governorates may be mainly linked to the processes of restitution of nationalized property and compensation. The real stride in State-owned property registration took place in Hodeidah, where 6,274 properties were registered (25% of the total State property registered during this period). By contrast, in two governorates, not one State-owned land parcel or real estate was registered. In eight governorates, fewer than 100 State properties were registered in each, including major population centers such as Taiz and Ibb, whereas in Sana’a barely 221 State-owned properties were registered (See Table 4.4).

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Table 4.3 All Registered State -Owned Lands at the SALR under the sejel shakhsee System,

1977-1999

Branch All Registered State-Owned

Lands

% of All Registered State-

Owned Lands

All Registered Deeds (Private, State & Waqf )

State -Owned Lands as % of All Registered Deeds

Since (Year)

Sana’a-HQ 386 3% 108,233 0.4% 1977 Aden 4,581 32% 22,832 20% 1992 Taiz 409 3% 24,382 2% 1982 Hodeidah 160 1% 17,223 1% 1982 Mukalla 8,794 61% 8,794 100% 1995 Ibb 67 0% 4,157 2% 1982 Zamar 6 0% 6,689 0.1% 1982 Saada 108 1% 1,304 8% 1985 Ma’reb 0 0% 1,100 0% 1985

Total 14,511 100% 194,714 7% Source: Survey Authority and Land Registry, 2005 Note: It was not possible to disaggregate the information in this table into urban versus rural.

Table 4.4 All Registered State -Owned Lands with the SALR Using the sejel ainee System, 2000-2004

Branch All Registered State-Owned

Lands

% of All Registered State-

Owned Lands

All Registered Deeds (Private, State & Waqf )

State-Owned Lands as % of All Registered Deeds

Since (Year)

Sana’a-HQ 221 1% 32,219 1% 1977 Aden 4,302 17% 11,232 38% 1992 Taiz 76 0% 7,441 1% 1982 Hodeidah 6,274 25% 9,109 69% 1982 Mukalla 9,772 39% 10,149 96% 1995 Say’un 2,909 12% 7,540 39% 2001 Qutn-Sayun 106 0% 349 30% 2003 Ibb 31 0% 5,931 1% 1982 Kaida-Ibb 0 0% 681 0% 1999 Haja 12 0% 309 4% 2000 Tihama-Haja 0 0% 72 0% 2003 Zamar 10 0% 2,810 0% 1982 Jhran-Zamar 0 0% 412 0% 2000 Saada 49 0% 427 11% 1985 Ma’reb 88 0% 318 28% 1985 Lahj 536 2% 703 76% 2001 Abyan 420 2% 1,245 34% 2001 Mahwit 0 0% 200 0% 2001 Mahara 123 0% 659 19% 2002 Amran 0 0% 743 0% 2001

Total 24,929 100% 92,549 27%

Source: Survey Authority and Land Registry, 2005 Note: It was not possible to disaggregate the information in this table into urban versus rural. Overall, without accurate inventories of State-owned lands at SLREA, without up-to-date aerial photography, master plans and/or land use classification maps in most Yemeni cities, and without registration of such lands at the SALR (at least to increase the chances that unlawful transactions in these State-owned lands would be spotted at the Registry and/or by the courts if registration or authentication are attempted), it is clearly very difficult to preserve State lands against squatting and encroachment. The absence of efforts to survey and demarcate State -owned lands further compounds the problem. One notable exception is in Hodeidah City, where the Governorate Local Council

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(GLC) has surveyed, registered and demarcated the 28km2 (2,800ha) area earmarked in the future for the Hodeidah Industrial Estate. Such initiative by the Hodeidah GLC may be in part related to the fact that Hodeidah has one of the largest concentrations of squatters in Yemeni cities. Indeed, an estimated 25% of Hodeidah City’s population (estimated at 450,000-500,000 inhabitants) lives in squatter settlements, which were primarily formed during the early 1990s with the return to Yemen of a large number of expatriate Yemeni workers from the Gulf States who were expelled in the aftermath of the 1991 Gulf War (See Table 4.5). The Hodeidah case suggests that the State’s efforts should at least in the short-term be directed towards strategic land parcels, which are instrumental to attract investment and achieve growth.

Table 4.5 Squatter Settlements in Hodeidah City, 2003

Settlement Name Land Squatted upon: Inhabitants Dwellings Area (ha)

Density (inh/ha)

Salakhana Hodeidah Port Authority 9,640 1,250 100 96 Kedf Private & State land 2,76 1 400 17 162 West Jizan street Private & State land 443 60 12 37 Sadekiya & Rabassa Private & State land 102,251 9,200 674 152 Total Hodeidah City * 115,095 10,910 803 143

Source: Wahba, Sameh, 2004a , based on information from Hodeidah Public Works department * The information provided covers Al Houk and Al Haly districts. No data was available for Al Mina

district, which includes some scattered squatter pockets. The Law specifies stringent penalties for the misappropriation, squatting or encroachment on State Lands that include jail sentences of up to 4-5 years (four years if misappropriation, five years if accompanied by the use/threat of use of force or intimidation using one’s position, and two-three years if involving alteration of demarcation boundaries) and fines of YR15,000-20,000 (USD81-108) minimum. Those who misappropriated or squatted on State Lands before the Law was enacted in 1995 would also be liable to such penalties unless if they notified the SLREA (in an ambiguously defined period) and undertook to regularize their situation. Such stringent penalties, however, have not deterred acts of squatting and encroachment on State Lands. According to the SLREA Chairman, in 2004, the authority was involved in approximately 1,200 disputes against ownership claimants and squatters at the different courts of First Instance and Appeals, of which 940 cases were pending in the beginning of 2005. SLREA estimates that these cases represent only a small share of overall cases of encroachment, squatting and contested ownership. The problem is largely due to the lack of a precise State land inventory and absence of incentives needed for SLREA staff to effectively perform their State land monitoring and safeguarding functions. Another key shortcoming is that the SLRE Law (which has not been updated since the enactment of the Law on Local Authorities in 2000) does not provide for local authorities at the Governorate and District level to play a role in safeguarding State lands. Against Speculation: Speculation continues to be one of the major challenges facing State land management in Yemen, especially in Southern cities where all lands have been nationalized during the Socialist rule of the PDRY and where vast amounts of State-owned land have been distributed since the unification of Northern and Southern Yemen in 1990. The massive land distribution that took place in Southern cities occurred for many reasons, including political patronage (especially by Southern authorities in the 1990-1994 period), compensation as part of the restitution process, as well as for speculative purposes including by Northerners who found a unique opportunity to obtain State-owned land (contrary to Northern cities where the State has limited landholdings). Aden and Mukalla were two cities among the worst affected by such massive land distribution including speculative practices in residential and investment land. And while no statistics are

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available as to the amount of land held by speculators, several facts point to the importance of speculation. In Aden (as will be explained later in detail), SLREA’s records indicate that 54% of all sites assigned to investment projects between 1992 and 2002 are still undeveloped to date, that the average duration of tenancy of undeveloped investment lands exceeds 12 years, and that the average undeveloped site is 37% larger than developed ones. In a conservative first estimate of the extent of the problem, SLREA Aden’s investment department has identified 87 projects or 17.6% of all undeveloped sites as unquestionable cases of land speculation. The main cause of speculation is the subsidized administrative price at which land is allocated (this will be discussed later in detail). In addition to land grants which must be authorized by the President, such subsidies by Law could reach up to 50% of market value in the case of land sale (in practice, they may reach up to 75%) and up to 75% of market rents in leases. Such subsidies have a significant distortionary effect on the land market functioning because they encourage speculation while at the same time discourage development/investment (since subsidized land prices do not provide the resources needed to finance the delivery of infrastructure services, which inherently means that the burden is passed on to the beneficiary/investor). Several legal and procedural mechanisms were developed to curb land speculation, although not without problems. The first such mechanism is the maximum timeframe stipulated by Law for the development/valorization of State -owned land or else a lease contract would be considered cancelled. While the Law provided such maximum timeframes in the case of non-urban land (two years for agricultural land and five years for desert land reclaimed for agricultural use), no such timeframes were specified by Law for State Developable Lands (SDL). Nonetheless, such timeframes were subsequently developed by SLREA. The standardized lease contract for a SDL for residential use has a provision allowing SLREA to cancel the lease if the beneficiary has not developed the land within five years (it is unclear, however, if such procedures are considered legal and whether they constitute part of SLREA competences). With respect to investment lands, the SLREA director in Hodeidah mentions that the problem is that investors are held liable to the timeframe for land development/project construction that is stated in the feasibility study submitted to GIA instead of a pre-specified standard timeframe (say 3-5 years). This ambiguity along with the problems of investors’ non-seriousness and speculation on investment land were addressed in April 2002 through decrees issued by the GIA’s Board of Directors (chaired by the Prime Minister), which was acting on instructions from the President. Three decrees were issued as follows: (i) Decree no.158-2002 authorizes the cancellation of all licenses issued to investment projects since 10 or more years but which have not yet been implemented; (ii) Decree no.159-2002 stipulates that investment projects that were licensed for six or more years but which were never built, would be publicly bid among investors, including the licensee; and (iii) Decree no.160-2002 reinforces the 6-year window for implementation by giving a one-year delay to investment projects licensed and/or investment lands allocated in 1997, but which have not yet been implemented. Investors that “began working on their projects” were exempted from the repossession of their sites and revocation of their licenses (although it is unclear whether a fenced parcel—typical of speculators to preserve their land from encroachment—is accepted as a valid launch of project implementation). As follow up, SLREA Aden screened all undeveloped investment projects during 2003, and it prepared a shortlist of 87-90 projects that have been held undeveloped for over 10 years (the list focused on the largest undeveloped projects). A committee for investment land problems was formed, chaired by the Governor. SLREA Aden gave the investors a six months period to start building or else the sites would be repossessed. However, no repossession action has yet taken place to date (nor of any undeveloped parcel for residential use), which may be attributed to an absence of political will. It remains to be seen whether this will change after the completion of the Aden master plan’s revision and updating process (expected in June 2005).

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The second mechanism to curb the rampant speculation on investment land was to develop a two-stage allocation procedure, which has become a commonly used approach to allocate investment land (although it is by no means the standard land disposition method as different branches rely on this method in various degrees). The process has different names that differ from one city to the other and it may also include an additional step (as in Hodeidah), but the essence is the same. The first step of the process would constitute a site handover to the investor through a conditional right-of-use (which does not constitute a transfer of ownership or usufruct rights). A maximum timeframe for the investor to (substantially) complete the land development process is defined. When the condition has been met (i.e. the land development was substantially—usually meaning 75%--completed within the specified timeframe), then the first provisional contract is converted into a lease (in Arabic, Akd Ijar) upon payment of established dues, usually the first three years’ rent. The ownership of State land may only be transferred to an investor if there are Presidential instructions, either through sale (in Arabic, akd tamlik ) upon payment of the required sale price or through a land grant (in Arabic, akd majan). This two-step approach was devised to curb speculators and the so-called “unserious investors,” which were deemed to prevail in most Southern cities according to SLREA and local government officials. In Mukalla and Aden (although the process in Aden is not as widely used as elsewhere), the first step is called “mahdar tasslim” or “mahdar istilam” (i.e. site handover) and is undertaken through a form or notice of site receipt that bears the same name in Arabic. The same process was also applied for the distribution of residential land in some cities such as Hodeidah and Mukalla, with the first step called “Takhssiss” (literally earmarking and carrying the same conditionality as the mahdar tasslim/istilam).22 In Hodeidah, for an unknown reason, the allocation of investment land relies on a three-step approach that aims to achieve the same objective but which results in an additional bureaucratic step. The first step is a “Mahdar tasslim Awaly” (i.e. initial site handover), which is then converted to “akd Takhssiss” once the condition of substantial completion of land development has been met, and then to a “Akd Ijar” when a window for contract conversion is decreed (the last such window ended in 1998) or to “akd tamlik” if Presidential instructions have been issued. The rationale behind the two-step approach is to retain the award of a lease or sale contract until after the land development is (substantially) completed, and as such to prevent speculators from disposing of their investment parcels for windfall profits (which they would have if they had a leasehold or freehold contract). While it is argued that the two-step disposition approach may have succeeded in curbing speculation at least to some extent, in reality, it is unclear whether it could effectively achieve the desired outcome, and it has had unintended consequences. Indeed, the approach is based on the assumption that “mahdar tasslim” cannot be transferred, yet the case of Aden suggests that these types of forms may indeed be transferable. SLREA in Aden has observed transfers of several sites that were initially allocated using the “Hajz” (literally, set aside) and “Ish’aar Tanfiz” (literally, notice of implementation) methods that were mostly used between 1990 and 1994 and which are not unlike the “mahdar tasslim”. The two-step approach also has unintended and perverse consequences in terms of access to finance. The fact that a “mahdar tasleem” or “takhssiss” cannot be registered means that investors cannot have access to collateralized loans with which to finance the construction process. Another problem is that the initial “mahdar tasleem” or “takhssiss” does not contain information on pre-agreed lease rates, which causes much uncertainty to investors. In addition, it is unclear why such an approach was developed since the Law authorizes the cancellation of a lease or sale contract in case of breach of the contract conditions (such as change of land use, land development not launched or completed within a specified timeframe, etc). As such, all that is needed under the current legal framework is the enforcement of the law, which would also be needed in the case of canceling a mahdar tasslim to repossess undeveloped land.

22 Mahdar tasslim (site handover) is also the method (and official contract form) through which SLREA allocates State-owned land to government agencies.

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Finally, against the background of the chaotic land distribution and prevalence of speculation in the urban land markets in Southern Governorates, the President issued instructions to stop the distribution of State-owned land altogether in 2001. In Aden, instructions to stop the distribution of investment lands reportedly date back to 2000. In Aden and Mukalla, there was a significant scaling back of State land distribution, although not a complete stoppage, whereas distribution activities in Taiz came to a halt (which was easier due to the severe shortage of State lands). The third instrument devised to tackle the problem of speculation is the restrictions placed on the transfer of leases to State-owned lands in urban areas (known as SDL). By Law (clause 23), any transfer of a lease to a State-owned urban land must be authorized by the SLREA and the beneficiary must pay a transfer fee equal to 10% of the transfer price received or 25% of the market value of the land at the time of the transaction, whichever higher. These rules apply to all consecutive transfers as well. The rationale behind imposing such a high transfer fee (compared to the 3% ta x on LRE transfer) is unclear, unless perhaps if State policy is to systematically lease urban lands at subsidized prices (the fee would therefore be intended to penalize speculators). If that is the case, the imposition of this fee on all consecutive transfers does not make sense. Instead, the fee should be imposed within a specific timeframe (say 3-5 years) and only applied when State lands were distributed at subsidized prices and. In a similar vein, the SLREA Aden has put forward an idea (possibly an actual practice?) of requir ing investors to submit a Bank guarantee equal to 5% of the investment project value , as a proof of seriousness. If implemented, this measure is indeed likely to achieve its objective of deterring unserious investors (at least many), but it also would impose an additional financial burden on investors. It is also unclear to which extent such an added burden aligns with the policy intent and/or provisions of the Investment Law. Finally, a more sound policy to curb speculation is to price land at its market value, which would eliminate the price subsidies that attract speculation and distort the land market’s efficient allocation mechanisms (this will be discussed later).

4.3.4 Lack of Land Use Planning and Strategies for Sustainable Allocation of Land: The process of allocation of State-owned lands for investment and residential/non-investment purposes requires in each city an up-to-date master plan specifying the different land uses and detailed land subdivision plans, which would be at the basis of distribution efforts. Until 2004 when preparation started for the process of updating master plans in several cities, the main Yemeni cities had significantly outdated master plans dating from pre-unification times. Indeed, the following cities have outdated planning tools:

• Aden: the last master plan was prepared in 1984. An unrelated and schematic land use plan for the Free Zone area was prepared in 1993. The road network component of the master plan was later updated in 1994, 1996 and 2002 (and some land uses changed) but without relation to the Free Zone. Until the process of revising and updating the city’s master plan started in July 2004 under the Bank-financed Port Cities Development Program (PCDP), the city’s most recent aerial photography dated from 1994 and had only partial coverage of Aden. The situation related to detailed plans was much better than in all other cities, although it was incomplete and only related to the road network plan.

• Mukalla : the last master plan was prepared in 1981. Efforts to document the existing

situation were initiated in the end of 2003 due to the significant discrepancies between the plan and the developments actually taking place. In addition, until 2001 when new aerial photography was commissioned for the Bank-financed Urban Water Supply and Sanitation Project (UWSSP), the city relied on outdated cartography. The city also had a major shortage of detailed plans. The process to update and revise the city’s master plan is expected to start in mid-2005 under the Bank-financed PCDP.

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• Taiz : the last master plan was prepared in 1978 and was only updated once in 1984 after the

then new aerial photography was taken. Local Government relied on these outdated planning tools until the beginning of 2005 when it purchased a recent satellite image from the UWSSP. The city also had a significant shortage of detailed plans, although an effort was initiated in the end of 2004 with funds from a private sector grant to Local Council. The process to update and revise the city’s master plan is also expected to start in mid-2005, financed by the Bank-supported Taiz Municipal Development and Flood Protection Project (TMDFPP).

• Hodeidah: the last master plan was prepared in 1978 and was not updated since. The only

effort was to document the implemented road network in 2003. In addition, until 2001 when new aerial photography was commissioned for the Bank-financed UWSSP, the city relied on outdated cartography. Detailed plans were somewhat incomp lete. The process to update and revise the city’s master plan is expected to start in mid-2005 under the Bank-financed PCDP.

As such, until 2004, the allocation of State-owned land in all main cities proceeded on the basis of outdated master plans and incomplete detailed plans, and thus had no foundation in terms of updated land use or accurate subdivision plans. The absence of up-to-date plans has contributed to the chaotic process of distributing State-owned land, which often resulted in conflicting land uses (especially the intermingled industrial and residential developments in Aden, Hodeidah and Mukalla). Such chaotic land use situation in the case of Aden had negative impact on property values (especially along the Aden-Abyan coastal road) and led to the cancellation of previously allocated State -owned investment lands and/or to an ex post restriction on permissible land uses which differed from that for which the sites were initially allocated (See Table 4.17). In Aden, as will be discussed late r in detail, the SLREA branch maintains a database of all 914 sites allocated to investment projects between 1992 and 2002, which include a total of 493 sites/ projects (54%) that were never implemented or remain developed for various reasons. Of these 493 cases, the cause of the problem was provided for 245 projects. It turns out that the lack of detailed area plans or the subsequent modification of the plan’s land use or subdivision 23 explain over 75% of all aborted investment projects. Indeed, of the 245 aborted investment projects for which explanations were provided, 16% had a subsequent land use change from that for which the site was initially given, 5% faced a change in surface area after re-planning, 3% were in non-buildable areas and 19% were in areas that lacked detailed subdivision plans (not including other sites there were cancelled and reattributed for various planning-related considerations). Where detailed planning was undertaken, the existing planning and subdivision standards that are applied especially in coastal and Southern cities where vacant land is available have contributed to sprawl and a wasteful consumption of land. Cities such as Aden, Hodeidah and Mukalla have low residential densities in the newly planned subdivisions (100pp/ha compared to an average of 400-500pp/ha in the built up area), excessive rights-of-ways that reach 90m for arterial city streets in Aden, large land parcel sizes that range between 150 and 600m2 (on average 300-400 m2), and low development densities (the typical residential typologies in newly planned areas are single family housing and low/medium-rise developments for extended families). The lack of up-to-date master plans and absence of appropriate planning standards are not the only planning problems with negative consequences on the State land management process. Another

23 The subsequent modification of approved detailed plans (especially by widening a planned road’s right-of-way, which takes away property or by narrowing the right-of-way, which generates a new row of land parcels in front of previously allocated parcels thereby lowering their property values) represents one of the major problems in the practice of planning in Yemen that causes a general distrust in planners among the public, especially in Southern cities.

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critical planning-related problem, although only applicable to Northern cities such as Sana’a and Taiz where most land is privately owned, is that land readjustment according to the provisions of the 1995 urban planning law is still not being implemented. The Law’s provisions on land readjustment authorize (local) government authorities to undertake the detailed planning process in any given urban area and proceed to re-parcellize private landholdings in the area in question after deducting in equal proportions the land needed for the delivery of public services (roads, schools, etc). According to the Law, no compensation would be paid for expropriation of up to 25% of a given land parcel (the increase in land values as a result of the planning process is deemed appropriate compensation), but if more than 25% of any given land parcel is taken, fair compensation (set at pre-planning land values) must be paid for the additional takings. The problem, according to the Vice Minister of Public Works and highways, is that all attempts to undertake this process in the different cities have failed because landowners generally do not trust that the outcome would be a fair arrangement. They fear that if they hand their basira or proof of land ownership to the authorities, they would be given back restructured land parcels that are significantly reduced in size or in different locations than their initial ones, which would entail losses to their main source of wealth. According to the Vice Minister, landowners in general prefer instead that the detailed planning process would be undertaken without prior assembly of land ownership/tenure documents, and that the land needed for public services would then be expropriated from the unlucky owners whose parcels happen to fall in whole or in part within the planned road alignment or service areas. Not surprisingly, when such a process was applied, its arbitrariness created numerous disputes and planners were accused of corruption and favoritism. This has generally affected the level of service delivery throughout Northern cities and has often meant that the process application was only limited to the primary road infrastructure and most essentia l public services. One of the main impediments to an efficient State land management process is that there is no strategy for the sustainable distribution of State-owned lands in any of the Yemeni cities, which would be prepared primarily as a function of the available stock of State-owned land in a given city. The objective of such a strategy would be to determine an optimal annual volume/rate of distribution of State-owned land for investment and residential/non-investment purposes, which would allow the achievement of local government’s policy objectives (of attracting investment and ensuring equitable access to land) while at the same time preserving the scarce resource that land is for future generations’ use and enjoyment. The cases of Mukalla and Aden attest to the importance of such a strategy and demonstrate the negative implications of its absence. Indeed, after just one decade of chaotic land distribution especially in the early 1990’s, Aden and Mukalla found themselves running out of State-owned land available for distribution to investment and residential/non-investment uses. According to the calculations of the Master Planning Revision and Updating Unit in Mukalla and the SLREA officials, all developable lands within a 40km radius from Mukalla city center and all investment lands within a 100km radius from the center have been allocated. What is worse is that the large majority of these lands remain undeveloped. The same situation is found in Aden where approximately 90% of the developable lands at the city’s disposal have already been allocated, with the majority remaining undeveloped. The only difference is that in Aden approximately 60% of the Governorate’s land area was placed under the control of the Aden Free Zone Authority (AFZA) since 1993, which proved ex post to have been instrumental in limiting the damages of the chaotic land distribution process of the 1990’s. Nonetheless, AFZA found itself in dispute with many housing associations, private individuals and investors who obtained State-owned land within its jurisdiction prior to and at times after 1993. In a few instances, AFZA was forced to release some of its landholdings to such pre-approved projects.

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4.3.5 Absence of Consolidated Institutional Framework for Allocating State Land: By Law, SLREA is the sole agency responsible for the management, utilization and disposition (as well as revenue collection) of State Lands and Real Estate (SLRE), in accordance with State policies and programs (Clause 10). Given the lack of an official State land policy framework or strategy document, SLREA has in the past transferred State lands according to the instructions it received from both central and local government authorities. Today, State lands can only be sold, leased or allo cated through Takhssiss if there are instructions from the President, Prime Minister, the different Governors within their areas of jurisdiction, and/or the SLREA Chairman. Interestingly, the Law (clause 10) also empowered the COM to delegate, where necessary, the authority of managing (on behalf of SLREA) and utilizing selected SLRE to other government entities. The same clause singled out the Ministry of Agriculture as an example of the COM’s delegation of authority over State -owned agricultural lands. The Law stipulated specific constraints for such transfer of authority: (i) that the COM deems that SLREA cannot manage the lands in question itself; (ii) that such exploitation is for a specified period of time; and (iii) that such government entities may not alienate/transfer State lands through sale or other form of transfer of ownership. Even if other entities may operate and utilize SLRE, only SLREA is empowered by Law to transfer ownership or dispose of State lands whether through sale, lease, etc. Despite that the Law consolidated SLREA’s State Land custodianship role (by making it the sole authority responsible for the transfer of ownership of State Lands according to the State’s policy), the situation on the ground was widely different. Many government entities other than SLREA played a major role in the allocation/transfer of State lands, whether in direct capacity by issuing themselves the lease or Takhssiss contracts or indirectly by recommending attribution to SLREA (whether or not such recommendation was permitted by Law). These include:

• The General Investment Authority (GIA): In theory, GIA’s role is to recommend that the SLREA allocates State-owned land for investment projects that have been screened and licensed, and assist investors in identifying appropriate sites based on the general and detailed land use plans (prepared by the deconcentrated offices of the MOPWH’s planning department and in theory available at SLREA). The reality, however, was quite different. The GIA has been directly involved in alienating State-owned lands, especially in the early 1990’s in Southern cities (the establishment of SLREA helped curb such excesses). For example, between 1992 and 1996, the GIA’s Hadramout branch had alone allocated some 6,000-10,000 land parcels (conservatively estimated at 500ha) for investment projects in Mukalla city. These land parcels were for the large part in residential subdivisions and were directly allocated to end-users (rather than to real estate developers/investors). Annex 8 further details the Mukalla experience.

• The Ministry of Agriculture (MOA): Acting on the example set in the Law, the MOA has, in

the past, often granted lease and usufruct contracts for agricultural land, including in urban and peri-urban areas. These contracts were often issued on the basis of a request submitted on the basis of existing possession/use of the land in question for agriculture, supported by testimony from two witnesses. Yet, it was not uncommon that such lands had already been planned for residential or investment land uses on were in the urban/to-be-planned expansion areas of cities, which created many conflicts between planners’ objective and the actual allocation of the same lands for agricultural use by the MOA’s deconcentrated branches.

• Governors or Governorate Local Councils (GLC, headed by the Governor): Governors and

GLCs play a key role in the allocation of State-owned land within their jurisdiction. They typically issue instructions to the SLREA deconcentrated office to allocate State-owned land for residential or investment/non-residential use. Such recommendations influence the land uses in the different cities, as they do not necessarily follow detailed land use plans

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(sometimes, land is allocated in unplanned areas). Governors and GLC’s also play a key role in mediation and resolution of disputes involving State-owned land.

• The President: By Law, only the President can allocate State-owned land in the form of a land

grant (“akd majan”) unless if the project is for the public purpose. Since 2001 when the President ordered restrictions on the distribution of State-owned land (in reaction to the many excesses during the 1990’s), Presidential instructions have become one of the very few channels through which to obtain a lease or Takhssiss of State-owned land for investment or residential purposes (), and the only way to obtain freehold through akd tamlik or akd majan .

• Ministry of Industry and Trade (MOIT): The MOIT’s deconcentrated offices are often

“involved” in the industrial zones in the different cities, although their role is unclearly defined. The MOIT’s involvement may range between administrative, technical and/or managerial oversight, and the deconcentrated offices may also be involved in the State land allocation process in these areas.

• The Ministry of Awqaf (i.e. religious endowments): According to the Ministry estimates, some

75% of urban land in Sana’a is in the form of Waqf (whether in the form of public Waqf , which the Ministry administers or private Waqf , administered by private trustees for charitable purposes) as with significant landholdings in many (Northern) cities. The Ministry is in charge of allocating through leases public Waqf land under its jurisdiction. Waqf land prices are typically less than those acquired on the market (in Sana’a estimated to be about 50%) due to the likelihood of restrictive covenants covering land use or other aspects. The problem, however, is that the Ministry of Awqaf has no comprehensive or accurate inventory of its landholdings (as with SLREA), which curtails the Ministry’s ability to preserve its landholdings against encroachment. The Ministry of Awqaf and SLREA are embroiled together in numerous disputes related to their landholdings (the COM acts as the arbiter in these cases), as well as with other private parties. As part of the public land documentation process, the Ministry of Awqaf was instructed to document its lands with the SLREA to ensure no conflicts occur between both entities, but no progress seems to have been accomplished.

• The Ministry of Public Works and Highways (MOPWH): The relationship between the

MOPWH and SLREA is manifold. The SLREA is placed under MOPWH. In addition, the MOPWH deconcentrated offices in the Governorates, through the urban planning departments, are responsible for detailed land use planning and subdivision, which is at the basis of State land distribution. The MOPWH also assumes the State land valuation function (previously through price lists decreed by the Minister, and currently through committees both for the valuation of State lands to be distributed and for compensation in case of expropriation). In the past, the MOPWH played a direct role in the distribution/ allocation of State lands, especially in the Southern Governorates. In some instances, most notably in Mukalla and other areas of Hadramout during the early 1990’s, much unlawful distribution of State-owned lands took place through corrupt engineering and planning staff. The latter used their official position and knowledge of the detailed plans to directly allocate to individuals/investors land parcels upon receipt of payment. The practice among these corrupt staff was to issue official- looking site distribution forms, which were in fact the same forms used by surveyors to hand over a SLREA-allocated site to the beneficiaries (called in Arabic “istimaret mawqee”). Such excesses, which are explained in detail in Annex 8, contributed to the massive and chaotic land distribution in Mukalla during the 1990’s and have created to a significant volume of land disputes (many land parcels later turned out to have two claimants, one with the site handover form and the other with an SLREA-issued Takhssiss or lease).

• Other entities (e.g. Cleaning and Improvement Fund): In some cities, other entities may also

be involved in the State land allocation process, sometimes without legal or logical rationale

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for their involvement in the process. In Hodeidah, following instruction from the Governor, control over State -owned LRE on the city’s waterfront and which are leased to investors, was handed in 2002 from the SLREA to the Cleaning and Improvement Fund (CIF), which now controls the site allocation and revenue collection process. Such transfer of authority, which was enacted on the basis of allegations over the misallocation of State-owned land in the past, is also an important precedent in the decentralization process in Yemen, especially as Local Councils begin exercising their newly expanded authority. In addition, unlike SLREA revenues which are transferred to the State Treasury, the planning, budgeting and spending of CIF revenues is undertaken at the local level, which means that such a move in Hodeidah boosted local government revenues.

Other entities that play an indirect role in the State land transfer process include:

• Amins: The Amin’s role is to draft land transfer contracts (basira) and act as a first-check in the authentication of land rights in his jurisdiction. SLREA’s Sana’a Branch complains of a handful of Amins who have reclassified marahek slopes into flat buildable lands (in Arabic, “arady salba”) when drafting basiras between two private parties, thereby enabling the misappropriation of State -owned lands by squatters and sanctioning their unlawful transfer from a squatter to another party. Such excesses are grounds for the MOJ to withdraw an Amin’s license (in the past, seven Amins in Sana’a and Taiz were decommissioned by the MOJ, although it is unclear if this was due to land-related excesses). It must be noted that, in Southern Governorates, lawyers play the same function of drafting land transfer contracts (basiras) as Amins in the North.

• Judges: Judges play a key role in resolving disputes involving State -owned lands and in

confirming/reversing land transfers, ownership claims, etc. In addition, courts play a key role in authenticating (in Arabic, “tawssiq”) of the land transfer documents (basira ).

The following diagram summarizes the different entities involved in the land allocation process in Yemen.

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Figure 4.1 Existing Institutional Framework for Allocating State Lands One implication of such a confusing institutional framework is the confusion caused to investors seeking to obtain land for investment purposes. Indeed, investors are unclear whether to obtain investment land in a given city they must approach the Governor, the GLC, SLREA, the GIA, another entity, or if they might as well go to Sana’a and approach SLREA headquarters or senior government officials. The result is that only local investors and a handful of regional investors (especially Saudi investors with Yemeni origins) would be able and willing to navigate such a confusing institutional landscape. And even then, the transaction cost would be high, given the need to appoint lawyers and middlepersons to facilitate the process. Massive Chaotic Land Distribution: the Cases of Mukalla and Aden: The most problematic implication of the multiplicity of institutions that were (and may still be, although in a more restrictive environment) involved in the allocation of State-owned land has been the chaotic distribution of State-owned lands that took place during the 1990’s in cities in Southern Governorates. The cities of Mukalla and Aden were among the worst affected by the implications of such chaotic land distribution, although in Aden the fact that a major share of the Governorate’s vacant (State -owned) land was placed under Free Zone control is considered to have averted the same crisis as in Mukalla. . According to SLREA, as much as 64,052 State -owned land parcels were distributed in Mukalla between 1982 and 2003 (Table 4.6 shows the breakdown of all State-owned land distributed by period). In the four years period between May 1990 and April 1994 when the civil war erupted, land distribution was of such a massive scale and wasteful consequences that it encompassed the distribution of over 36,000 land parcels or 57% of all land parcels distributed between 1982 and 2003.

I N V E S T O R S P U B L I C

L A N D

Presidential Instructions

General Investment Authority (branches)

Governor / Governorate Local Council

Ministry of Public Works & Highways (branches)

Ministry of Agriculture (branches)

Ministry of Industry & Trade (branches)

State Land & Real Estate Authority (branches)

Cleaning & Improvement Fund (branches)

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The trend for wasteful land distribution continued, albeit at a slower scale, between 1995 and 1999 when initial Presidential instructions restricted land sales. Nonetheless, the 1995-1999 period witnessed the distribution of close to 20,000 parcels, which amounts to an additional 31% of all land parcels distributed between 1982 and 2003. It is true that a sizeable proportion of this massive land distribution took place to compensate owners of nationalized housing units in the city (on account of two land parcels were given in compensation for each household). Yet, it is still inconceivable that an investor or household seeking land today in Mukalla City is likely to be allocated a parcel located approximately 50-100km from the city center. It is important to note that the GIA Hadramout branch played a major role in the problem through its distribution of State -owned land between 1992 and 1996 (See Annex 8 for an example of GIA’s involvement in the distribution of the four Rowainat land subdivisions). Today, access to land for both investment and non-investment/residential is a critical problem in Mukalla. Indeed, according to the SLREA Chairman, all investment lands and waterfront sites within 100km to the east and west of Mukalla city center have already been distributed (the city stretches linearly in the west-east direction, bound between mountainous ranges to the North and the Arabian Sea to the South). Similarly, all lands irrespective of use within at least a 50km distance in each direction was distributed. Indeed, according to the Master Plan Revision and Updating Unit (under the Hadramout Public Works Department) calculations, at least 10,000-15,000ha of State-owned land have gone through a detailed planning and distribution process between 1990 and 2003. This is at least 5-7 times larger than the overall inhabited area of the city, which houses a total population of 180,000 inhabitants over about 2,000ha.24 Such western and eastern expansions areas remain for the most part undeveloped to date (the average population density for both areas is estimated at less than 3 pp/ha).

Table 4.6 All Contracts for State -Owned Land Issued in Mukalla City, 1982 -2003 Total Number of Contracts (watha’ek) for State-Owned Land Parcels Distributed b y Period

Number Percent

Pre-unification (1982-1989) 3,534 5.6% 1990 1,606 2.5% 1991 4,099 6.4% 1992 21,112 33% 1993 9,167 14.3% 1994 2,043 3.2% 1995 4,815 7.5% 1996 2,394 3.7% 1997 6,405 10% 1998 5,400 8.4% 1999 657 1% 2000 39 0.1% 2001 69 0.1% 2002 192 0.3% 2003 2,520 3.9%

Total 64,052 100%

Pre Unification 3,534 5.6% Between 1990 & 1994 38,027 59% Between 1995 & 1999 19,671 31% Since 2000 2,820 4%

Source: Wahba, Sameh, 2004a, based on information provided by SLREA Mukalla Branch’s Documentation Center, 01/2004

24 Wahba, Sameh, 2004b.

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Although much of the damage took place in the early 1990’s, especially during the 1990-1994 period, it was not until 2001 that the chaotic State land distribution situation was significantly contained. This followed the President’s orders to place restrictions on land distribution in most cities (including stopping all land distribution in Taiz and the allocation of investment land in Aden, except with Presidential instructions). The situation in Aden is even worse in absolute terms (although when referenced to the city’s population, Mukalla which has one-third of Aden’s population fares much worse). In Aden, 64,075 State-owned land parcels were distributed in merely 10 years between 1990 and 1999, which is the same as was distributed in Mukalla (64,052 State-owned parcels) in over 20 years (between 1982 and 2003), even if it was during the 1990-1999 period that 90% of distribution took place. In Aden, as much 60,074 State-owned land parcels were distributed for residential use between 1990 and 1999, including 24,224 (38%) to individuals and the remainder (39,851 parcels) to housing associations. Of the latter, as much as 17,470 parcels were distributed to housing associations serving the military, including a significant proportion that was distributed in the 1990-1994 period by Southern authorities (See Table 4.7). During the same period, an additional 925 sites were distributed for investment projects (See Table 4.8).

Table 4.7 State Land Distributed for Non-Investment Uses in Aden, 1990-1999 Number of State -Owned Land Parcels Distributed Number Percent

To individuals 24,224 38% To military organizations’ housing associations: 17,470 27% To housing associations 22,381 35% Total State-Owned Land P arcels Distributed 64,075 100% Of which, residential use 60,074 94% Of which, mixed use (residential & commercial) 2,589 4% Of which, commercial, industrial, services use 1,412 2%

Source: Information provided by SLREA Aden, 04/12/2005

Table 4.8 State Land Distributed for Investment Uses in Aden, 1990-1999 Number of State -Owned Investment Land Parcels Distributed

Number Percent

Touristic 130 14% Commercial 146 16% Residential (large projects) 59 6% Residential (small projects) 276 30% Industrial 173 19% Services 141 15% Total State-Owned Land P arcels Distributed 925 100% Of which, 1990-1994 382 41% Of which, 1995-1999 543 59%

Source: Information provided by SLREA Aden, 04/12/2005 Note: The total number of investment lands is slightly higher than that in the comprehensive database

maintained by SLREA Investment department, which is analyzed in a later section. The distribution of State-owned land in Aden was largely contained since 2000-2001 following the Presidential instructions stopping land distribution (See Table 4.9). A total 5,039 State-owned land parcels have been distributed between 2000 and April 2005, mostly for residential use (4,615 parcels or 87% of the total) and primarily in the form of an “Akd Ijar” or leasehold (5,038 parcels or 95% of the total).

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Table 4.9 State Land Distributed for Investment and Non-Investment Uses in Aden, 2000-2005

Number of State -Owned Land Parcels Distributed Number Percent

Residential use 4,615 87% Mixed use (residential & commercial) 528 10% Commercial use 58 1% Touristic use 43 1% Industrial use 31 1% Services use 0 0% Investment (undefined) 34 1% Total State-Owned Land P arcels Distributed 5,309 100% Of which, Akd Ijar (leasehold) 5,038 95% Of which, akd tamlik/Bay’a (freehold/sale) 271 5% Of which, mahdar tasslim * 0 0%

Source: Information provided by SLREA Aden, 04/12/2005 Note: The total number of investment lands is slightly higher than that in the comprehensive database

maintained by SLREA Investment department, which is analyzed in a later section. * No mahdar tasslim has been used since 2000 for investment or non-investment land distribution. It

was only used for site handover to government agencies (not included in the table). The problem of access to land for investment and non-investment purposes in Aden and Mukalla, the two largest cities in the former Southern Republic, owes a great deal to the massive chaotic land distribution that took place during the 1990-1994 period and to a lesser extent until 2000. By comparison to, the situation in Hodeidah (one of the former North’s main cities, which by virtue of its coastal location, has large State-owned desert landholdings for urban expansion) in terms of State-owned land distribution situation is much more under control (See Tables 4.10 and 4.11). Indeed, between 1995 and 2004, only 792 State -owned land parcels were transferred via freehold contracts to individuals, covering a total area of 568.5ha (interestingly, 83% of the total land area was distributed in just one year, 2004). An additiona l 6,838 State -owned land parcels, covering a total area of 181.6 ha, were distributed to members of 12 housing associations (the latter are the primary, if not the only avenue for access to land for residential use in Hodeidah, and the associations are primarily formed of civil servants). State land distribution to housing associations encompasses a mix of tenure/contract forms: akd tamlik (two cases), akd ijar (one case), as well as both methods for conditional site handover (mahdar tasslim, used until 2000 in three cases, and mahdar tahdid awaly , used since then in six cases). Annex 7 provides detailed information on access to land in Hodeidah.

Table 4.10 State Land Distributed as Freehold to Individuals in Hodeidah City, 1995-2004 Total Number of Freehold Contracts for State-

Owned land Parcels Distributed by Year Number % Area (ha) %

1995 24 3% 34.3 6% 1996 20 3% 3.2 1% 1997 55 7% 8.5 1% 1998 34 4% 6.5 1% 1999 6 1% 0.4 0% 2000 12 2% 10.2 2% 2001 525 66% 25.4 4% 2002 60 8% 7.8 1% 2003 14 2% 0.9 0% 2004 31 4% 471.3 83% Total 792 100% 568.5 100% Of which, for compensation purposes 34 4% 41.9 7%

Source: SLREA Hodeidah, 04/10/2005

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Table 4.11 State Land Distributed to Housing Associations in Hodeidah City, 1995 -2004

Total Number of Freehold Contracts for State -Owned Land P arcels Distributed by Year

Associations Number

Beneficiaries Number

Area (ha)

1995 1 471 31.6 1996 0 0 0 1997 3 1,869 58.6 1998 1 1,275 30.0 1999 0 0 0 2000 1 304 11.2 2001 0 0 0 2002 1 298 11.6 2003 2 303 14.7 2004 3 2,219 23.9 Total 12 6,838 181.6 Of which, akd tamlik 2 NA NA Of which, Akd Ijar 1 304 11.2 Of which, mahdar tasslim 3 NA NA Of which, mahdar tahdid awaly 6 2,820 50.2

Source: SLREA Hodeidah, 04/10/2005

4.3.6 Lack of Systematic and Transparent Methods and Procedures for Disposing of State L and The Law regulates the types/forms, methods and procedures (which are mostly detailed in the Executive Decree) of disposition of LRE within the State’s private domain. The problem, however, is that the law does not contain general provisions on the different types/forms of and methods for disposing of State land (references are scattered throughout the law, and often refer to specific categories or classifications of land, as explained earlier). In urban areas, the applicable categories of land within the State’s private domain, and which therefore may be alienated are:

• SDL, i.e. urban/city expansion areas (in Arabic “Arady Mokhassassa,” which are defined as “lands that have been planned, prepared and serviced in view of distribution”); and

• Mountains, hills and slopes which receive and drain rainfall (in Arabic “Marahek,” or public

rainfall paths including the main floodwater channels), provided that these are State-owned (according to the ambiguous and contentious formula for dividing these lands between the State and private adjacent agricultural landowners) and that their public nature has ceased (by State decision, upon the termination of their “commons” and public benefit functions, usually after the conversion of adjacent agricultural lands to urban uses). When Marahek have ceased to be public, they revert as part of the State’s private domain, in which case they are treated as SDL.

Types/Forms of Disposition: There are several types/forms of disposition of State land (and real estate) mentioned in scattered form throughout the law. These are:

• Grant (through a so-called “akd majan”): State land (and real estate) may only be disposed of for free either for the public purpose (including for government agencies’ use) or following Presidential instructions (and which may be for any use). The Executive Decree stipulates that a land grant for residential use shall not exceed 20 lebna (889 m2) whereas for agriculture or any other use, the land area shall not exceed what is needed to support the beneficiary’s household, as determined by SLREA. In addition, no beneficiary is entitled to more than one land grant. A third eligible category for free access to land (both through “akd majan” or

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leasehold without payment) was added by decree No.__ issued in 2002 by the GIA Board of Directors (chaired by the Prime Minister) for investment projects exceeding USD10 million. 25

• Sale (through “akd tamlik”): Even though land sales are authorized by Law, Presidential

instructions have since 2001 become the only de facto way to obtain freehold ownership.

• Lease (through “Akd Ijar”): The duration of a lease contract may not exceed 30 years by Law and it may be subsequently renewed.26 As mentioned earlier, to keep unserious investors and land speculators in check, the Law in some cases stipulated specific timeframes for the land development process to be (substantially) completed, or else the lease would automatically be considered as cancelled.27 Subsequently, the two-step procedure consisting of preliminary site handover (through the so-called Mahdar tasslim) followed by Akd Ijar was developed by the SLREA to achieve the same objective of curbing speculators and non-serious investors.

• Adverse possession: The Law sanctions adverse possession by permitting squatters on State

lands (where the squatting predated the Law) to regularize their situation, provided that they come forth within three months from the date of publication of an announcement by SLREA (it is unclear, however, whether this is the date of SLREA’s establishment or individually announced dates according to the area to be regularized). The Law allows such squatters to purchase or lease the land that they occupy, except if its use contradicts the permissible land use in the approved master/detailed plans, in which case they would be entitled to substitute land parcels within the same area that could accommodate their desired land uses. It is important to note that while the Civil Code sanctions ownership through adverse possession if the possession has been “uninterrupted, visible and undisputed” (Clauses 1104-1111) but it did not provide for a minimum timeframe to exercise the right of prescription (i.e. convert possession into ownership) nor a Statute of Limitations period after which competing ownership claims are considered expired.

What the law did not explicitly provide for are forms of disposition of State LRE ownership to the private sector (e.g. concessions and development/management contracts, etc). The Law lists sale and lease as the options to dispose of State real estate, in addition to placing restrictions in the case of leases on change of use, alteration of property, and transfer of rights (which requires payment of part of the transfer fee to SLREA as explained later) by requiring a priori approval from SLREA. In addition, the law did not authorize the delegation of authority to transfer State land ownership from SLREA to other government entities, namely sub-national governments (governorates and districts) within their jurisdictional boundaries. Indeed, while the Law empowered the COM to delegate to other government entities the authority to manage and utilize/exploit selected SLRE for specified timeframes, it consolidated the power to transfer State land ownership through sale or otherwise with SLREA. The fact that restrictions on the distribution of State-owned land have been increasingly in place since 2000 and that it was altogether stopped in 2001 placed the onus on adverse possession as a means of accessing State -owned land for residential use. In Mukalla, the two forms of access to State-owned

25 In Aden are found land grant contracts offered by the British administration prior to 1967. 26 The Law authorizes “lease-purchase” arrangements for desert lands reclaimed for agricultural use, but this does not apply to urban lands. Longer leases (99 years duration), dating from the British administration times, are found in Aden. 27 Shorter lease periods were stipulated in the case of some non-urban lands, namely five years for desert land reclamation projects for agricultural use and two years for agricultural and uncultivated lands. If the land has been valorized, the lease is converted into freehold ownership upon payment of the sale price established at pre-valorization land value.

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land today are squatting or encroachment followed by regularizing one’s position (these are explained in detail in Annex 8). Dispositio n Methods and Procedures: The methods and procedures to dispose of State lands (and real estate) are stipulated in provisions of the Law and the executive decree that apply only to specific classifications of land and which vary in terms of specificity and methods used from one type to another. The detailed procedures, or, in the case of State -owned lands in urban areas, the entire process are referred to the executive decree. For SDL in urban areas including the applicable marahek, the Law stipulates that “such lands may not be disposed of until they have been planned or prepared and serviced according to the Law”.28 Given that master plans in most Yemeni cities are outdated and the detailed (land subdivision) plans are often incomplete and out of sync with actual city growth and land development patterns, distribution of State-owned land takes place without a planning basis. In addition, in almost all cases, no services are provided prior to State land distribution (and the disposition price often does not take into consideration the cost of service delivery, as will be discussed later). Two SDL disposition methods/systems are applied. These are: (i) direct list-based allocation , which is primarily used for residential and to a lesser extent for investment land allocation; and (ii) direct (sole source) individual allocation , which is often used for investment land allocation and to a lesser extent for residential land. By Law, SDL may be disposed of through sale or lease to individuals (provided these are not speculators as stated in the Executive Decree, although it is unclear what procedures exist to address this problem), investment projects (according to the Investment Law), housing associations and for low-income housing projects. To register for the list-based allocation of residential land requires that the GLC or as is often the case the Governor or Secretary General endorse the request, whereas to register in the list for investment land requires the endorsement of both the GLC and the GIA’s deconcentrated office after it has examined the project feasibility study and gave the go-ahead (in most cases, the objective is to filter serious investor from land speculators and the “non-serious” ones). In the case of residential land (it is unclear if this applies to investment lands as well), another condition is that no other State-owned land was previously given to the applicant (which is very difficult to check since SLREA branches operate on a manual basis) nor to a household member (which is impossible to check). This condition, which was mandated by Law for the disposition of State Lands at below -market prices (no less than 50% of market-price for land sales and 25% of market rent in leases), applies across-the-board since almost all SDL are de facto sold at below-market price (even after accounting for the fact that no services are provided a priori). Once an area becomes available for distribution (usually after it has been planned and subdivided, although not necessarily provided with services), allocation takes place on a first-come-first-serve basis either from pre-existing waiting lists or following the order in which responses to sale/lease advertisements were received (in the few instances where no pre-existing waiting lists are found). The direct individual allocation takes place at the applicant’s initiative and typically with high-level endorsement (usually from the President, Prime Minister, the concerned Governor and/or the SLREA Chairman), and is the typical approach for allocating large investment lands and/or sites that either have not yet been planned or whose use and area may differ from the plan. A third legally authorized disposition method is the use of public auctions , although it is only specified in the Law for use in non-urban lands, namely agricultural and uncultivated lands, or land reclamation projects for agricultural use taking place on desert lands. The use of auctions was

28 Clause 22. It is unclear, however, whether reference is to the current law or the Urban Planning law

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broadened in the Executive Decree to all State Lands (and real estate) but only if suc h State property could not be sold through the direct approach (as a residual method). The Executive Decree provides for the detailed procedures for disposition of State-owned lands to use in each land classification, including the advertisement and allocation procedures. Even though recent awards of State-owned lands and real estate are issued standardized sale or lease contracts, yet according to SLREA, there are over 30 different contract forms/formats that exist today (including those for the disposition of State lands from pre-unification times), and which need to be unified and standardized.

4.3.7 Lack of Systematic and Transparent Methods for Valuing State L and According to the Law, State land should be sold/rented at market value, except in some narrowly defined cases that are listed in the executive decree (discussed later) or in the cases of land grants, which can only be accorded if the project is for the public purpose, by Presidential instructions or for investment projects exceeding USD10 million (as per the GIA Board of Directors’ decree No. __ of 2002). 29 In determining market prices/rents for the disposition of State-owned land, one major problem is that public auctions are not used for the disposition of State-owned land in urban areas. Auctions are only authorized by Law in non-urban settings (it is only defined for use in agricultural land and uncultivated/desert land used for agricultural reclamation). The Executive Decree states that auctions may be used for all types of State -owned lands and real estate (i.e. including in urban areas) but only if these could not be sold through the direct approach. In the absence of auctions, the burden falls on the State to evaluate the market price for land or to establish an administrative price (i.e. State -decided, and often subsidized). According to the Law, sale and rental values of State-owned lands in urban areas (SDL and marahek) are set by a COM decree on the basis of assessments prepared by technical valuation committees.30 Assessments are reviewed in case of appeals by another committee, called the High Committee for the Review of Land Prices and Rents, which is also set up by SLREA.31 According to the Executive Decree (clause 2), the valuation of prices/rents of SDL and buildings in urban areas should be based on the following criteria: (i) location, access road and façade width; (ii) surface area and shape; (iii) use; (iv) relationship between sale and rental prices and those of comparable properties; (v) building condition and floor number; and (iv) other factors. The problem is that these criteria never developed into a systematic valuation methodology that could be applied by the committees. The committee in each city usually proceeds to determine general land price categories for the different areas, which are adjusted according to the access street width and a premium is added for corner lots. In cities where there is fewer State -owned land disposition, the valuation committee would meet to determine the prices on a subdivision-by-subdivision or even case-by-case basis. The basis for this valuation is supposedly comparable property prices. Yet, in the case of SDL in the urban fringe, determining the value of comparable properties is not straightforward

29 In land grants for other than public purposes, the Law imposed the following restrictions: no more than one land grant per person, a parcel for residential use may not exceed 20 lebna (889 m2), and an agricultural parcel may not exceed what the grantee needs for sustaining his/her household as determined by SLREA. 30 According to the Executive Decree, valuation committees are set up by SLREA Chairman based on the recommendation of SLREA branch directors. Each committee should comprise 5-7 members including a representative from the Governor’s office. The detailed composition of these committees is not specified in the decree, but it usually includes a representative of the Ministry of Finance and other departmental heads. 31 The high Committee is chaired by one of SLREA Chairman’s deputies and includes representatives from the Ministries of Agriculture, Public Works and Highways, and Finance, and two SLREA staff.

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and at times unfeasible (how to price unserviced desert/fringe land, when there is limited or no market/trading of comparables?). And assuming that the comparables’ price/rent could be determined, the committee often sets the administrative price/rent as a fraction of market prices (usually 50-75% of the “price of time and place,” although in some cases prices as low as 25% of comparables were mentioned). Whether this is done to make prices more affordable or to reduce the likelihood of appeals is unclear. In addition, in basing their estimates of prices/rents, valuation committees were instructed by law not to charge beneficiaries for the cost of the land earmarked for the delivery of public services and utility projects (clause 44 of the Executive Decree). Once the committee has prepared the list of land price categories, it then meets on a weekly or biweekly basis to determine the applicable pricing for unclear cases and to undertake individual assessments for the different/non-conforming cases. In most cities, such valuation committees have been in place since 1997. In Hadramout Governorate, however, the valuation committee was only established in 2000. Prior to that, urban land across the Governorate was leased at an extremely low flat rate of YR0.65 per m2 (USD0.0035 per m2). This price as with all State land prices established prior to the enactment of the Executive Decree in 1996 was determined by the MOPWH, which encompassed the land departments until SLREA was created (although SLREA is also affiliated with MOPWH). Once the valuation committee has prepared a list of land price categories, it is unclear how often this list gets updated to account for inflation and other factors. This issue may not thus far have been critical to address due to the restrictions on the distribution of State-owned lands that have been in place since 2001. The Law authorizes the use of below-market/administrative land pricing in specific cases and with specific thresholds.32 By Law, State-owned land cannot be sold for less than 50% of its market price (as measured through the price of “time and place,” i.e. comparable properties) and rent levels could not be less than 25% of market rents (also measured through the rent of “time and place”). The Law restricts land sales at subsidized prices to the following cases: (i) for the use of cooperatives, unions, and organizations whose assets revert back to the State if dismantled; (ii) to the families of the deceased/wounded in military operations; and (iii) for low -income groups’ use in housing (these are also authorized to pay the price in installments). As for rental, below-market prices are only used: (i) in arrangements where the lessor would return the improvements to the State upon the expiration of the lease and these are deemed worthwhile by SLREA; (ii) for the use of charitable and social organizations; (iii) in cases where State -owned land not known to SLREA was brought to its attention by the beneficiary (squatters are covered under this category); and (iv) in cases determined by the President or COM. Nonetheless, where State-owned land is sold or rented at below market prices, restrictions apply concerning the surface area (for SDL used for residential purposes, the land area shall not exceed five lebna or 222.3 m2).33 Another problematic issue with the law is that a lessor of State-owned land may not dispose of his/her parcel until after obtaining SLREA approval and paying transfer fees equal to 10% of the amount received or 25% of the actual land value, whichever higher (clause 23 of the Law). This transfer fee applies to all consecutive transfers as well. The rationale behind imposing such a high transfer fee

32 Additional restrictions are placed on beneficiaries of low-income housing units financed in whole or in part by the State (including where State-owned land is granted for free) or through external financing. The beneficiary must: be Yemeni; have lived in the city in question for no less than two years; not own other housing in the city (including by the spouse); have not received other State-owned land for residential use or State-sponsored housing unit. Priority is given to the lowest income groups (if civil servants, then lower grade employees have priority). 33 A lebna equals 44.45 m2. Other maximum land areas are: no more 20 lebna (889 m2) for agricultural lands; no more than 30 lebna (1,333.5 m2) for uncultivated lands; no more than 50 lebna (2,222.5 m2) for desert lands.

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(compared to the 3% tax on LRE transfer) is unclear (unless perhaps if the State’s policy is to dispose of such lands at subsidized prices and the objective of this charge is to curb land speculation) and cannot be expected to achieve the desired objective (more sound policy in this case would include eliminating and/or better targeting land price subsidies and establishing a specific timeframe in which such a clause applies). One major problem with committee-determined prices/rents appears in the case of investment lands with the use of the two-step disposition procedure (the initial mahdar tasleem, followed by the lease or sale contract only after the land development process is substantially completed). While the latter method may prove useful in achieving its intended policy objective of curbing speculation, it certainly causes much uncertainty and has led to problems for many investors. Indeed, the initial “mahdar tasleem” or “takhssiss” contract does not contain any information on land lease rates or sale prices. These rates are known to investors only after they complete 75% or more of project construction, by which time they cannot opt out in case of disagreement over land prices. This means that investors prepare their project feasibility study without accounting for the price of one of the key inputs: land. Officials in SLREA Aden claim that lease rates are informally communicated to investors upon signing the mahdar tasleem to reduce uncertainty. However, there are also known cases in which lease rates were not known in advance and had to be negotiated ex post. In Mukalla, one investor was quoted an annual rent of YR50 per m2 after he had finished building 75% of a fish-processing plant. Negotiations with SLREA did not yield a mutually agreeable compromise for over two years. It was not until the project was inaugurated by the President that the investor was finally able to sign the lease contract at the much reduced rate of YR3 per m2 per year. This example suggests that committee prices are indeed subject to negotiations between investors and SLREA (officially through the High Committee for appeals and unofficially through informal appeals to senior government officials) and that they are often reduced. The lack of systematic and transparent valuation mechanisms is a key constraint to a stable and effective investment climate. In Southern and coastal cities such as Aden, Hodeidah and Mukalla, the norm in disposing of State-owned land for residential use is to apply highly subsidized price/rental rates (even after accounting for the fact that no charge for service delivery is factored in the cost, which implies that the burden is passed on to the beneficiary). Such subsidized pricing encourages speculation (annexes 7 and 8 detail the process of access to State-owned land for residential use in the two cities of Hodeidah and Mukalla as well as the valuation process). In addition, the use of such subsidized pricing of residential land does not generate enough funds to provide services a priori. New land subdivisions are therefore almost always unserviced, which further delays population settlement.

4.3.8 Lack of Strategy to Leverage State Lands Finally, in addition to the absence of an overall land policy framework, there is no strategy to date as to how to leverage State -owned lands with the aim of attracting investments and contributing to growth and economic development. Most local government officials in the past mistakenly expected that an updated master plan for their cities would fulfill this function. However, this physical planning-centered mindset is gradually changing in several major cities since 2003. Indeed, the introduction of participatory city development strategy formulation processes in the port cities of Aden, Hodeidah and Mukalla (revolving around a Local Economic Development-centered strategy) and in the city of Taiz (revolving around an urban poverty alleviation strategy), and the requirement that such stakeholder-developed city development strategies be at the basis of the master planning revision and updating process has introduced a new approach to strategic planning and de velopment, which is gaining grounds in other Yemeni cities (Sana’a municipality is taking similar steps). The next step is to develop in these cities strategies to leverage State -owned lands and assets to contributing to economic development and poverty alleviation.

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4.3.9 The Implications of Poor State Land Management on Economic Development and Growth: the Cases of Mukalla and Aden One of the most problematic implications of inefficient State land management in Yemen is the negative effect on the investment climate and in hindering growth and economic development. In the Investment Climate Assessment Study undertaken in Yemen in 2002, 7.2% of 947 surveyed firms ranked access to land as the main obstacle to investment, and 48.8% found it a moderate to ve ry severe constraint.34 Interviews with local and regional/foreign investors in Yemen and city-based competitiveness assessment reports35 also confirm that access to investment land as one of the most severe constraints to attracting investments and enabling private sector development, job creation and growth. The private sector’s viewpoint is reinforced by the results of two in-depth monitoring efforts of investment projects/lands in Aden and Mukalla, which pointed to a highly inefficient use of State land earmarked for investment projects and the extent to which access to land explains the large ratio of investment projects that were not completed/implemented. The Case of Mukalla: Indeed, a detailed study by the GIA’s Hadramout Branch in 2003 examined all 518 investment projects licensed by the GIA between 1992 and 2002 in Hadramout Governorate, including the port city of Mukalla. The GIA study classified all projects according to their current status—completed and operating; under implementation/construction; or projects not implemented/unbuilt (either never started or implementation interrupted)—and examined the reasons for projects not implemented, including site visits and discussions with the investors in question. Table 4.12 provides a classification of all licensed investment projects by status and includes a breakdown by sector.

34 Banerji and McLiesh, 2002. Note that the problem of access to land tends to be underreported in surveys of established firms, since it does not take into account the cases where access to land aborted firm establishment, and it may be omitted in cases of management change or short institutional memory in long-established firms. 35 In the context of three Bank-financed projects: (i) Yemen PCDP, which focuses inter alia on developing participatory City Development Strategies in the three main port cities of Aden, Hodeidah and Mukalla, and promoting Local Economic Development and public-private partnerships; (ii) Taiz Municipal Development and Flood Protection Project, which focuses inter alia on strengthening municipal ma nagement and promoting public-private partnerships; and (iii) the present project—Yemen Urban Land Policy and Administration, which involves extensive discussions with the private sector.

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Table 4.12 Licensed Investment Projects in Hadramout and Mukalla City by Sector and Status,

1992-2002

Projects in Operation

Projects under Implementation

Projects not Implemented

Total

Sector Num % Num % Num % All licensed investment projects in Hadramout

181 35% 53 10% 284 55% 518

Of which in Mukalla City 94 33% 25 9% 162 58% 281 Total expected job opportunities in Hadramout 4,617 33% 1,304 9% 8,042 58% 13,800

Of which in Mukalla City 2,702 31% 521 6% 5,511 63% 8,734 Total investment value expected in Hadramout (USD million)

151 26% 19 3% 417 71% 587

Breakdown by sector

1. Transformation, Processing Number of projects 70 39% 12 7% 97 54% 179 Of which in Mukalla City 37 32% 7 6% 73 62% 117 Labor force 1,385 37% 162 4% 2,205 58% 3,772 Of which in Mukalla City 969 37% 78 3% 1,559 60% 2,606 Investment value (USD million) 21 37% 4 7% 31 56% 56

2. Extraction, building material

Number of projects 18 21% 10 12% 58 67% 86 Of which in Mukalla City 6 16% 5 13% 27 71% 38 Labor force 274 20% 183 13% 907 66% 1,364 Of which in Mukalla City 88 15% 75 13% 412 72% 575 Investment value (USD million) 5 16% 4 13% 19 70% 27

3. Fishing, fish processing, agriculture Number of projects 31 29% 18 17% 57 54% 106 Of which in Mukalla City 13 36% 3 8% 20 56% 36 Labor force 681 29% 570 24% 1,102 47% 2,350 Of which in Mukalla City 215 30% 72 10% 429 60% 716 Investment value (USD million) 14 31% 7 16% 23 53% 43

4. Tourism, services Number of projects 62 42% 13 9% 72 49% 147 Of which in Mukalla City 38 42% 10 11% 42 47% 90 Labor force 2,277 36% 389 6% 3,828 61% 6,314 Of which in Mukalla City 1,430 30% 296 6% 3,111 64% 4,837 Investment value (USD million) 112 24% 5 1% 343 75% 460

Note: Some of the projects that were not implemented did not have data concerning the location of a project and labor force number, especially older licenses and in the extractive sector

Source: Wahba, Sameh (2004b) based on reports prepared by the GIA, Hadramout Branch, 21/12/2003 Of a total of 518 GIA-licensed investment projects in Hadramout Governorate between 1992 and 2002 (with a total estimated investment value of USD 587 million and expected to create 13,800 jobs), only one-third of the projects are operational (181 projects) whereas 55% have not been implemented/were not completed (284 projects). As a result, a total of 8,042 planned jobs (58% of total) and USD417 million (71% of total) of expected investments did not materialize throughout Hadramout Governorate. In the case of Mukalla port city, of 281 GIA-licensed investment projects in the 1992-2002 period (which were expected to create 8,734 jobs), only one -third of projects are operational (94 projects) whereas 58% (162 projects) have not been implemented or were aborted (the remainder are under construction). As a result, a total of 5,511 jobs did not materialize, or 63% of the expected total job creation (See Table 4.13).

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Table 4.13 Licensed Investment Projects in Mukalla City by Current Status, 1992 -2002

Licensed Investment Projects in Mukalla, 1992-2002

Number Percentage Expected Job Creation

Total number of licensed projects, of which: 281 100% 8,734 Completed/operational 94 33% 2,702 Under implementation 25 9% 521 Not implemented/aborted 162 58% 5,511

Source: Wahba, Sameh (2004b) based on reports prepared by the GIA, Hadramout Branch, 21/12/2003 A detailed analysis by the GIA of the non-implemented/not completed projects reveals that land-related problems are the leading cause of non implementation/completion of investment projects in Mukalla City, underlying 47% of all problem projects (See Table 4.14). As much as 41% of all incomplete projects have access to land problems, mainly because the ownership of or control over the site allocated to the investor is disputed with other private or tribal claimants, which meant that the investor could not take control of the designated site (this category also includes disputes over the site’s location and boundaries). For the remaining investors who managed to take control of the allocated site but whose investment project was not implemented due to land problems, 3% found that the lack of infrastructure services and/or poor site location (including site accessibility problems, difficult access to markets or labor force, and site located in non-buildable zones such as over instable sand dunes, within the coastal protection zone, etc) while the GIA observed that the other half (3%) were likely to be land speculators. The second set of factors explaining 22% of incomplete/non-implemented projects are investor-related problems, including investors facing unexpected financial problems, inability to access finance (including the so-called “non-serious” investors who undertake projects without concrete business plans), dispute between partners, investor’s death, and most importantly the investor’s absence (a large number of land parcels are designated to expatriate Yemenis, mostly in neighboring Gulf states, who are retaining the investment land parcel until they return home).

Table 4.14 Reasons for Non-Implemented Investment Projects in Mukalla City, 1992-2002 Land access/designation problems (unc lear site designation, disputed site) 41% Land location problems (non-serviced site, poorly located site) 3% Land speculation problem (as per GIA observation) 3% Investor problems (financial problems, investor death, absence or disputes) 28% No apparent problem and GIA license expired 22% Project license cancelled or to-be-cancelled at investor’s request 3%

Note: Investor-provided reasons and GIA observations Source: Wahba, Sameh (2004b) based on reports prepared by the GIA, Hadramout Branch, 21/12/2003 In summary, land-related problems are the main explanation for the failure/abortion of 47% of all licensed investment projects in Mukalla City, which meant that 2,590 job opportunities were not created as per plan due to land problems. In other words, approximately 30% of all anticipated new jobs expected to be created as a result of investment incentives did not materialize due to land problems. The Case of Aden: The case of Aden reveals similar results, namely a highly inefficient use of State lands distributed for investment projects. The monitoring study, undertaken by the Investment Project department of the SLREA Aden branch, examined all 914 land parcels distributed for investment projects in Aden between 1990 and 2002. The SLREA Aden study found that of a total of 914 land parcels distributed between 1990 and 2002 for investment projects and totaling in area 1,003 hectares, a total of 493 sites/projects (54% of total) remain undeveloped or incomplete with the total area of investment land not put to productive use amounting to 743 hectares (74% of total).

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The total area distributed for investment projects between 1990 and 2002 is certainly significant. Indeed, it amounts to 20.6% of the total built up area of Aden Governorate (4,878ha) and about 77.8% of the total residential built up area (1,289ha). If such land were instead allocated for residential purposes, it could have accommodated 467,000 inhabitants or about 78% of Aden’s estimated population in 2004.36 Tables 4.15 and 4.16 list the status of all lands allocated for investment projects by type of contract and by land use/investment sector. Residential and mixed use (residential-commercial-tourism) real estate developments represent the most common investment sector with 52% of all projects allocated a land parcel. The majority of undeveloped sites were allocated through two land allocation procedures known as Hajz and Ish’aar Tanfiz. Today, 88% of all Hajz and 65% of all Ish’aar Tanfiz-authorized projects are not operational because development either never started or remains unfinished in over a decade of site occupancy on average. Yet, until today, SLREA has still not initiated any motion to cancel the unproductive Hajz and Ish’aar Tanfiz allocations, even though these two procedures were introduced to curb speculation and ensure seriousness of investment projects. Indeed, the Hajz and Ish’aar Tanfiz procedures grant investors site control and permission to develop the project for which the allocation was made and they may only be converted into leases (Ijar) if the land development process is substantially (usually 75%) completed within a specified period of time.

Table 4.15 Status of All Lands Allocated for Investment Projects in Aden 1990-2002, by Contract Type

All Sites Incomplete Projects/Undeveloped Sites *** Sites Area Sites Area

Contrac t (Akd) Type * Num. % (m2) (ha) % Num. % (m2) (ha) % Akd Ijar 286 31% 621,499 62 6% 53 19% 131,437 13 21% Akd majan 33 4% 440,892 44 4% 8 24% 252,595 25 57% Akd tamlik 24 3% 578,522 58 6% 1 4% 14,616 1 3% Hajz 272 30% 6,840,403 684 68% 240 88% 6,169,851 617 90% Ish’aar Tanfiz 289 32% 1,346,525 135 13% 187 65% 856,761 86 64%

NA/other ** 10 1% 198,484 20 2% 4 40% 3,572 0 2%

Total 914 100% 10,026,325 1,003 100% 493 54% 7,428,831 743 74%

* Ijar (lease); Majan (freehold/land grant); Tamlik (freehold); Hajz (literally earmarking) and Ish’aar Tanfiz provide conditional site handover, subject to conversion to Akd Ijar/tamlik when project construction is substantially completed within the specified time. ** Other with mixed contract/tenure type *** Includes problem projects identified by SLREA with stated reason or Hajz/Ish’aar Tanfiz that has not been converted to Akd Ijar/Tamlik for over 10 years Source: Authors’ calculation based on data provided by SLREA Aden, Investment Department, 2003

36 Halcrow, Inc. 2004, p.40. Residential population calculated bas ed on the average residential density in Aden of 466pp/ha.

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Table 4.16 Status of All Lands Allocated for Investment Projects in Aden 1990-2002,

by Project Type/Land Use All Sites Incomplete Projects/Undeveloped Sites

Sites Area Sites Area

Num. % (m2) % Avg (m2)

Num. % (m2) % Avg (m2)

Tourism 90 10% 1,144,814 11% 12,720 27 30% 736,986 64% 27,296

Residential 272 30% 5,725,087 57% 21,048 190 70% 5,176,246 90% 27,243

Commercial/Retail 110 12% 1,165,946 12% 10,600 73 66% 367,331 32% 5,032

Manufacturing/Storage 175 19% 848,234 8% 4,847 119 68% 404,821 48% 3,402 Services 51 6% 459,937 5% 9,018 32 63% 379,685 83% 11,865

Mixed use: Commercial/residential 151 17% 337,765 3% 2,237 39 26% 127,668 38% 3,274 Tourism/residential 47 5% 268,670 3% 5,716 6 13% 220,506 82% 36,751 Commercial/Tourism 3 0% 7,100 0.1% 2,367 2 67% 4,600 65% 2,300 Office space 10 1% 20,461 0.2% 2,046 5 50% 10,989 54% 2,198

Unspecified 5 1% 48,311 0.5% 9,662 0 0% 0 0% NA

Total 914 100% 10,026,325 100% 10,970 493 54% 7,428,831 74% 15,069

Source: Authors’ calculation based on data provided by SLREA Aden, Investment Department, 2003 Note: Numbers may not add due to rounding Even though the SLREA database of investment projects in Aden did not assess the extent of la nd speculation, several factors indicate that speculation may be an important factor in explaining the prevalence of incomplete investment projects. In effect, the average duration of site tenancy by the beneficiaries/investors for the 493 undeveloped sites/problematic investment projects exceeds 12 years. In addition, the average area of the undeveloped/unused investment land parcels (at about 1.51 ha) is 37% larger that the average parcel distributed for investment purposes (1.1ha). The investment sector which has arguably witnessed the highest incidence of land speculation is residential real estate development, either via the construction of apartment building complexes or luxury single family housing projects. It is the sector which has received the largest share of investment lands in Aden (with 30% of all distributed parcels and 57% of the total surface area of land allocated for investment projects), and it is also the sector which by and large tops the list of incomplete investment projects and unused sites (with 70% of all sites in this category and 90% of the total surface area allocated for residential real estate investment still undeveloped). What is also interesting is that the average parcel allocated for residential real estate investment is twice the average area for all investment sectors combined including manufacturing and tourism. The argument that speculation and/or unserious investment projects played an important role in explaining the situation in Southern cities (notably in Aden and Mukalla) is further reinforced by the fact that restrictions were imposed on the maximum area of State -owned land that could be acquired for residential (non-investment) uses. Except for compensation arrangements (which on average distributed two parcels or 1,000m 2 per case), each individual is by Law entitled to only one State-owned land parcel when such land is priced at below-market value (which is the norm for residential/non-investment land distribution). This restriction, coupled with high demand for land in Southern cities (both by Northerners who were faced with a situation of land scarcity in Northern cities and found a unique opportunity for land acquisition in Southern cities after unification, and due to the chaotic distribution of land by authorities in the South during the 1990-1994 period) led many to seek to obtain large land tracts for residential and speculative purposes hidden under an investment guise.

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The SLREA database nonetheless provided an explanation or comment in about 50% of the cases of undeveloped sites/incomplete projects (See Table 4.17). Planning considerations were the major factor underlying undeveloped sites/incomplete projects. The land use for 16% of all previously allocated investment land parcels was subsequently modified, mainly by restricting investment projects along the coastlines to tourism-related developments (prior distributions included many residential developments). The absence of detailed neighborhood plans was the main reason why 19% of undeveloped sites remained as such due to the absence of infrastructure services and given that building permits cannot in theory be issued in unplanned areas. In some cases, sites were given in non-buildable zones including four cases where it turned out that the allocated site was within the sea (other cases were close to historic sites or military camps), which required that investors be compensated with replacement sites. In 34% of the cases, the original sites given to investors were cancelled whether due to a change in land use after the area was planned or simply because the site was later given to another entity after compensation of investors with other land parcels. Disputed ownership of/control over land is another key explanation for undeveloped projects. As much as 25% of all undeveloped projects turned out to be controlled by or disputed with another entity, namely with the Aden Free Zone Authority (the 1993 Prime Ministerial decree that placed land under the control of Aden Free Zone Authority overrode several previously allocated parcels for investment projects—10% of sites), the Ministry of Awqaf (whose undocumented land holdings are a major problem across Yemen, although much more so in Sana’a and northern cities—5% of sites) or with private, ma inly tribal claimants and/or squatters (in 12% of cases).

Table 4.17 Causes of Undeveloped Investment Sites and Problem Projects, Aden, 1990 -2002 Stated Reasons Num. % 1. Site controlled by or disputed with other entity a. Free Zone Authority 24 10% b. Awqaf 13 5% c. Other private party 24 10% d. Site not received by beneficiary (e.g. occupied by squatters or other entities) 4 2% 2. Site/site characteristics changed (in whole, in part or land use change) a. Land use changed by Presidential or Public Works decision 40 16% b. Site cancelled (whether reattributed or not) 83 34% c. Site area changed (due to neighborhood re -planning, apportioning, etc) 13 5% d. New site allocated due to problem with previous site 8 3% 3. Unplanned neighborhood 46 19% 4. Unserviced neighborhood/site 2 1% 5. Site transferred to other entity by beneficiary 6 2% 6. Other problems (e.g. building on different site than that allocated, building stopped) 4 2% Total number of sites (for which problem explanation available at SLREA) */** 245 100%

* SLREA Aden branch maintains a database of a total of 914 allocated sites for investment projects. Of these, 493 are undeveloped sites and/or problematic investment projects in Aden. Of these, SLREA Aden database provided explanations for the reasons underlying the problems for 245 projects. ** Totals add up to more than 100% (109%) because some cases stated multiple reasons Other Cities: In the case of Sana’a and Taiz, access to land is one of the most severe problems facing investors and the general public due to very high land prices on the market, and unclear and undocumented property rights. The shortage of State-owned land in Sana’a and Taiz (which are mostly limited to marahek and disputed with private landowners) further exacerbates the problem. In the case of Taiz, between 1997 and 2001 (when Presidential instructions called for stopping the distribution of State land altogether in the city), the SLREA branch has only managed to allocate five State-owned land parcels for investment projects, mostly to large established investor groups such as Hail Saeed Group. And to date, not one of these five investors has managed to take hold of the assigned State -owned land parcel due to ownership disputes and site occupancy by squatters and other claimants.

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4.3.10 Implications of Poor State Land Management on Service Delivery: the Case of Taiz The case of Taiz is particularly illustrative of the implications of poor State land management on local government’s ability to deliver municipal services. The large majority of State-owned land in Taiz is in the form of marahek , whose ownership is highly contested with private landowners (only 50% of the disputes were resolved through apportionment and the remaining cases are with the courts, as explained earlier). This means that the Taiz GLC has had to purchase land from private landowners to provide any needed public services, including schools, healthcare centers, etc. According to the Governor and the head of Local Council’s planning, development and finance committee, this has severely affected Local Government’s ability to deliver public services. For example, in an attempt to expand the current severely overloaded municipal dumpsite (the current site area is 1 ha and is reported to have reached its maximum capacity reached a height of 12m), the Taiz GLC has been negotiating for over two years with adjacent landowners to purchase 11ha, but the two parties have not yet agreed on a price. The acquisition of the necessary land to build an improved runway for the Taiz airport faced similar problems, with the result that the Airport authority could not afford but purchase a 300m wide slice of land to extend the airport (and even then, the acquired land is still not free from disputes and there are currently five households living within the airport perimeter). Finally, the IDA-financed TMDFPP faced significant delays caused by land ownership disputes in the marahek and flood channels which have caused work stoppage in most flood structure sites. In addition, it took over one year for Local Government to secure a parcel of land for the construction of the resettlement housing for the 240 families that lived in the flood channels. Even then, construction work was delayed and the site layout had to be reconfigured through densification due to the emergence of other ownership claims over parts of the site. The other problem is that in Taiz as with other Northern cities, land readjustment is still not being implemented except in such limited and badly needed interventions as widening of a street. And even the most minor street widening project typically requires that the Governor of Taiz, the head of Local Council’s planning, development and finance committee (who is a member of the widely respected Hail Saeed family) or any other public figure would personally intervene to pledge to the landowner who would be expropriated that he/she would be fairly compensated. Only then can the work proceed.

4.4 State Land Management in Yemen: Recommendations and Ongoing Efforts During the first workshop on urban land policy and administration, which was held on February 20-21, 2005 and attended by 42 key stakeholders in Yemen including senior government offic ials, and members of the House of Representatives, the judiciary, and the private sector, all stakeholders have all emphasized the need to address the critical issues and challenges facing State land management in Yemen. They have also underscored the importance and urgency of such an undertaking to tackle one the key constraints to investment (that is access to land) and unlock the potential of such key assets as State-owned lands to contribute growth. Achieving an efficient State land management process in Yemen requires addressing the major bottlenecks and challenges presented in the previous section. The following is a summary of the key recommendations:

(i) Need to clearly define State-owned lands in the Law and undertake selected pilot projects in strategic locations to achieve conflict-free, properly registered State-owned lands;

(ii) Need for a comprehensive and centralized inventory of State-owned lands; (iii) Need to (better) enforce existing measures to curb widespread land speculation and

introduce additional and effective mechanisms; (iv) Need for improved land use planning instruments and the introduction of

planning/regulatory growth management tools;

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(v) Need for a consolidated institutional framework for the management and disposition of State-owned lands, with clarification of roles and responsibilities among the different involved stakeholders;

(vi) Need to identify and apply standardized and transparent procedures for the disposition of State-owned lands;

(vii) Need to develop and apply standardized and transparent valuation methods for State-owned lands; and

(viii) Need to formulate an overarching policy framework for State land management, with a focus on policies for the strategic utilization of State -owned land assets.

Overall, there is a pressing need to revise the legal framework governing State-owned lands (and real estate) in Yemen. Indeed, the shortfalls in the legal framework are one of the main causes of the problems, especially the high volume of contestation of State land ownership, which makes it imperative to revise the SLRE Law of 1995. To its credit, the SLREA has recently embarked on this important and timely undertaking. The revised draft law prepared by SLREA, which was submitted to Cabinet and the House of Representatives’ review has indeed tackled some problems of the existing the Law. Yet, there are still several issues in the law that were not yet tackled, which requires a more thorough revision of the Law. Finally, it must be reminded that a revised legal framework is not in of itself a panacea or solution to existing problems; instead, it is the enforcement of the Law that would make a difference. The following sections address the proposed recommendations in detail.

4.4.1 State Lands Clearly Defined by Law and Conflict -Free in Strategic Pilot Locations The revision of the 1995 Law must, among other things, ensure that State lands are defined in an unambiguous and comprehensive way. The revision of the SLREA law (and in minor aspects the Civil Code to ensure harmonization) should particularly address the key problem underlying most tribal and private claims, namely the confusion between ancillary use rights such as for grazing, logging, etc or water rights with the right to land ownership. This would address the problem of marahek as well as that of tribal ownership claims. The latter issue would also be contained with the introduction in the Law (or more appropriately in the Civil Code) of a statute of limitations period (e.g. 20-30 years), after which old and unexercised ownership claims are considered expired. Indeed, marahek are ultimately communal lands with shared water rights to all owners of adjacent and nearby agricultural lands benefiting from the rainfall. The concerned agricultural landowners also have the right to be consulted and their approval would be required for any development of the marahek that might affect their water rights. The case of Marahek , however, does not satisfy the test of ownership through what is known as “ihya’a arady mowat” (i.e. valorization of “dead” or non-valorized land), which is sanctioned by the Shari’a and codified in the Civil Code, nor does it satisfy the test of ownership through prescription/adverse possession37 since in neither cases did the adjacent landowners valorize the marahek land. As such, concerned agricultural landowners should in theory only be able to exercise their rights vis-à-vis the marahek for as long as the latter still serve the purpose of channeling rainwater to their land. It is only logical that such rights should expire when landowners subdivide and sell their landholdings for conversion to urban use, in which case the public nature of the marahek would cease according to the existing SLREA Law, and the marahek—or the eligible portion—would thus automatically convert as part of the State’s private domain (access to water for the new landowners would then be 37 Incidentally, the Civil Code is confusing in that it sanctions ownership by prescription “unless if proven otherwise” [article 1111] does not specify a prescription period (e.g. 15 years) after which “overt, peaceful and uninterrupted” possession (i.e. hiyaza ) would convert into ownership.

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secured through municipal distribution systems). Yet, the draft submitted by SLREA adopted a conciliatory approach in its attempt to sort out the problem of marahek ownership by granting adjacent landowners the ownership of an area of the marahek that is equivalent to their agricultural landholdings’ surface area (incidentally, nearby agricultural landowners whose lands receive rainfall and who thus have as much water rights were excluded from this deal, which would be in continuation with the existing Law). This way, the proposed draft Law will have managed to resolve the ambiguity of the 20 degrees slope, 20 percent share and the vaguely defined “neck” of the marahek. Yet, this will have established a dangerous precedent of caving in to special interests and of recognizing ancillary use rights as ownership rights (which would cause numerous problems to investors in the future). However, since the marahek debate represents a very contentious issue and a frequent source of disputes between the State and tribes/individuals, the resolution of this problem would need to be perceived as fair and impartial. This requires that the Cabinet and/or the Higher Judicial Council (HJC) establish a committee of senior and highly respected judges, Ulama and legal (including Shari’a ) scholars to develop a consensual and systematic interpretation of the basic rules and procedures governing the issue of marahek ownership in accordance with the Shari’a. The committee would also formulate the basic rules governing the different real and ancillary property rights claimed by tribes/individuals such as land ownership, right-of-use, right to a protection zone (in the adjacent areas to privately owned land where authorization is needed before any development/possession could take place), rights to grazing or logging, etc. Once the Committee has developed consensual legal recommendations conforming to the Shari’a, these could then be vetted in broad-based consultation and dissemination campaigns prior to their inclusion into the revised law and executive/administrative decrees. Based on such foundations, the MOPWH’s planning department would develop procedures for the reclassification of marahek land from their public/communal function into State -owned land (part of its private domain) and/or other land use classification recommended by the committee, after the conditions for reclassification have been met. Such reclassification would then need to be piloted in selected areas and, once established, systematically implemented across Yemeni cities. Similarly, local authorities would then have the foundation needed to initiate a fair and Shari’a-compliant conflict resolution process to resolve outstanding tribal claims. It is also advisable that the MOJ and the HJC form a legal/judicial Task Force, which would be mandated with preparing reference/procedures manuals and legal casebooks for the information and use by judges in the resolution of land and property-related disputes. Such manuals would cover the major areas of land disputes (Marahek , proofs of ownership, etc) and the casebooks would include landmark cases, which could serve as precedent to judges. These manuals and casebooks in conjunction with specialized training in land and property disputes would provide critical knowledge sharing and dissemination and would better equip judges to resolve land disputes expeditiously. Finally, it is strongly advisable to implement pilot projects for the adjudication and registration of State-owned Lands in strategic locations, namely in areas earmarked for investment purposes and where there is existing or potential demand for investment land. Such selected strategic locations would include Aden (e.g. selected areas under Free Zone control, including coastal areas in little Aden, Ras Fuqum and Ras Amran), Mukalla (in sites adjoining the two existing industrial zones, areas under consideration for industrial uses, and in Burum), Hodeidah (coastal area between the Port and planned industrial estate and the development corridor along Sana’a road) and Socotra (the areas identified for tourism and other investment projects in the ongoing master plan). Other potential sites for the adjudication and registration of State land would include urban expansion areas in the main cities, especially port/coastal cities (e.g. Aden, Hodeidah and Mukalla) with the highest potential for growth and where land is available to accommodate population growth. The adjudication process in such pilot projects would test alternative dispute resolution mechanisms (especially the mediation role that is usually played by the governor, elected local councilors and tribal/community leaders) and

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community participation in the aim of making available conflict-free State -owned land for investment or urban expansion.

4.4.2 Comprehensive and Centralized Inventory of State -Owned Lands In line with the President’s instructions, it is imperative for SLREA to accelerate the preparation of an inventory of State-owned lands in urban areas that is comprehensive, accurate (i.e. reflects the existing situation rather than what is in the plans) and centralized (at SLREA and mirrored by registration at SALR, as opposed to the fragmented). As seen from the past three years’ experience, such an endeavor cannot be completed unless if the necessary resources (updated maps and land use plans made available by SALR and MOPWH, funds for surveying State-owned lands and providing incentives to staff, equipment, training of staff, etc) were made available to SLREA. It is therefore critical that the revised Law enables SLREA to retain part of the revenues it collects from the sale or lease of State-owned lands, which would be spent on financing this long-term undertaking. Currently, under Law no.21 of 1995, SLREA is only allowed to retain 25% of the fines it collects, but none of the sale or lease revenues. SLREA’s proposed draft Law addresses the key issue of financial sustainability in an adequate and reasonable way. The new draft provides for the following:

• 10% of the revenues collected from the sale or lease of State-owned lands and real estate (as well as a charge of 15% of value to approve subsequent transfers of leased SLRE) are retained by SLREA to support its activities; and

• In the case of expropriation of private lands for public use, 1% of the funds earmarked for compensation of expropriated owners would be earmarked as administrative fees for SLREA to cover the costs of surveying, etc.

The preparation of the State lands inventory requires that the concerned planning departments in the different cities in Yemen along with SALR branches produce updated land classification and planned land use maps, which would identify among other things marahek and other existing and potential (subject to adjudication) State-owned lands according to the law and existing land use plans, Waqf lands, investment lands by sector (tourism, industrial, etc), non-investment lands by use (residential, mixed residential and commercial, etc). These maps would be disseminated to all key concerned stakeholders including: (i) SLREA (which would proceed to settle State land ownership in the potential areas); (ii) GLCs (to base allocation decisions in non-investment lands); (iii) GIA (to assist investors in identifying suitable investment locations and base land allocation decision in coordination with the concerned deconcentrated sectoral ministries and local authorities); (iv) the Amins or certified real estate lawyers and brokers (to refrain from enabling transactions on classified State or Waqf lands); and (v) other concerned entities including possibly the courts, local entities maintaining land information systems (Governor’s office, etc).

4.4.3 Improved Mechanisms for the Preservation of State Lands Against Encroachment and Speculation Against Encroachment: Addressing encroachment on the State’s public domain, including streets, public spaces, and lands earmarked for services, requires a series of planning and implementation measures that include the following:

• Develop clear rules and procedures governing the administration of the procedure known as Taadil (which is prevalent in Mukalla among other places) to ensure transparency/fairness and eliminate abuses. This procedure permits owners to legalize their encroachments on the State’s public domain (especially streets and public spaces) by annexing the portions that they

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have squatted on (usually to build courtyards or shop fronts) upon payment of the assessed land value/rent. This procedure, which becomes de facto if one precedent is established in a given street or area, is particularly prone to corrupt practices, especially among urban planning staff and district officials in charge of permitting;

• Develop clear rules and procedures governing the prevailing practice of subsequently

amending detailed neighborhood plans (also called Taadil) to ensure transparency/fairness and eliminate abuses. Typical examples of re-planning include : (i) the reduction of planned right-of-ways (ROW), which therefore creates a new set of land parcels that are subsequently distributed at the expense of the property values of initial beneficiaries; (ii) the revisiting of planned street realignments in order to avoid taking given properties; and (iii) the expansion of planned ROW, which results in taking some propert ies and valorizing others’ property values. It is especially critical to set limitations to the widespread practice of amending detailed plans, and well defined procedures such requiring amendments to be discussed and approved in public hearings, setting up a planning board of appeals, etc.

• Implementing the master plan’s recommendations, especially the road network and land

earmarked for public spaces, swiftly by: (i) expropriating private lands designated for the public purpose immediately after the approval of the master or detailed plans (otherwise, existing landowners often preempt the authorities by starting construction to reduce their chances of being expropriated and/or increase their compensation package); (ii) tracing, grading and leveling all major roads (major and minor arterials, and possibly collectors) in the master plan to prevent encroachment on their alignment (especially in light of the lenient treatment usually accorded to squatters, which are usually compensated even if their squatting was recent and deliberate to obtain compensation); (iii) gradually paving the roads starting from the outside as recommended by the Taiz master plan of 1978 (rather than building the two first lanes in the center of the road as is often the case, the idea is to build the two outer lanes and expand the road gradually towards the median island, as this would reduce the chances of the gradual encroachments on both sides).

• Addressing the encroachments on the State’s private domain—land which may be alienated—

requires that (at least) the strategic parcels be walled off or appropriate signage put in place, in addition to the need for enforcement of the preservation of such lands. Given that walling such parcels is a costly solution, an alternative approach is to identify alternative short-term land uses until it is time to dispose of such parcels. This approach was used in the Netherlands where the urban expansion areas in the new town of Almere were allocated for agricultural use for periods ranging between 5, 10 and 15 years depending on the expected time in which such lands were expected to be released for development. Strategic land parcels within the urbanized area can also be leased on short-term basis to the private sector for use in such projects as parking, etc.

• Finally, the equitable enforcement of the Law, which calls for swiftly removing

encroachments on State-owned lands, is particularly important. The experience of Aden is quite telling in this regard. In its first effort to remove encroachments on State-owned land in the late 1990’s, the Aden Public Works department started by the one property whose owner was well connected (it was a case of fencing off a few meters from the ROW; the authorities demolished the existing fence and rebuilt it at the right alignment). Other people who encroached on public land, upon seeing fair law enforcement, complied without causing problems. Since then, the level of the population’s compliance with law enforcement related to encroachment on State -owned land in Aden is said to be exemplary, unlike the resistance that authorities meet elsewhere (and which forces conciliatory treatment). Clearly, the issue of making incentives available to poorly paid civil servants is critical to ensure proper enforcement, especially since removing squatters and demolishing encroachments may entail violence.

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Against Speculation: The most effective way to address the problem of speculation is to introduce market-based land allocation mechanisms (namely public auctions) , which would ensure that State-owned lands are allocated to those who value it the most. It is also important to ensure that the land price charged would cover most if not all of the cost of infrastructure services delivery, namely water supply, electricity and paved access roads. Even though most large investors in Yemen opt to purchase their own power generators given electricity’s high cost (YR15-17 per kwh compared to YR10-11 from diesel-powered generators38) and unreliable service, yet it can hardly be expected from (all) investors to provide all necessary services. Administrative remedies to speculation, including the two stage land transfer process (an initial site allocation to investors through Mahdar tasslim or Takhssiss followed by Akd Ijar or Tamlik at pre-determined prices after project completion or upon substantial progress of construction) do not effectively address the problem, since land can still be allocated inefficiently to those who do not necessarily value it the most. In addition, the Law authorizes the cancellation of leases and even sale contracts if the land has not been developed within a specified timeframe or in case of any other breach of contract conditions (e.g. land use). What is really needed is the capacity and willingness at the local level to enforce the law rather than introduce a new two-stage procedure, which only adds an extra administrative step to “serious” investors without added value in the case of speculators or unserious investors. The President’s instructions of 2001, followed by the GIA Board of Directors’ decree in 2002 to repossess State -allocated investment lands that remained undeveloped and unutilized for 10 or more years have heralded the necessary political will to address th is serious issue. The problem, however, is the choice of a 10-year timeframe (i.e. covering projects licensed on or before 1992 when the decree was issued) restricted from the onset remedial action to a very small portion of the problem since speculation and unserious investors only became a real issue after unification in 1990 (the GIA was also established following the enactment of the Investment Law in 1991). As such, what is needed is to determine a reasonable timeframe after which unutilized/undeveloped investment land parcels would be repossessed. In Egypt, for instance, industrial projects in new towns are allowed a two-year delay to wall off the parcel and a maximum five-year window to complete construction, or else the parcel would be repossessed. Repossession of undeveloped industrial land takes place systematically, at least in certain new towns, given the high demand for land. Such timeframes are also reasonable since infrastructure services are available in most industrial zones and land prices recover only 50% of the cost of service delivery. In Yemen, it may be reasonable to impose, say, a 3-5 year window from the date of service delivery or from the date of unserviced land allocation if a very low administrative land price was charged on the assumption that investors would be responsible for service delivery. Such procedures would need to be clearly specified in the lease contract with SLREA. What is also needed is to develop standardized/predictable, transparent and fair implementation procedures to repossess unutilized investment lands. This is critical to alleviate any potential concerns among investors that their land might be repossessed arbitrarily or for reasons outside of their control, which would have a detrimental effect on the investment climate. Procedures would need to be targeted at unserious investors and speculators only, whereas project implementation obstructed for such reasons as disputed land ownership, undue administrative delays in obtaining a building permit or other exogenous factors would be addressed differently. Such procedures would also need to take into account the fact that some investors are likely to initiate construction (e.g. a perimeter wall) to prevent their land from being repossessed despite lack of intention of completing the project. Repossession procedures would also need to compensate investors for improvements they 38 This comparison is mainly skewed by the diesel subsidy, which reaches 50% of its cost.

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have undertaken. Finally, such measures would not be needed if land is allocated at market prices. In the event that no land price subsidies were involved but where the land remains unutilized, a tax on vacant land may be used to encourage land development and putting it to productive use. The transfer fee called “rasm ma’zouniya ,” which is imposed by Law on any transfer of a lease to a State-owned land parcel (without time limitation and applicable to all subsequent transfers), needs to be revised. The existing law imposes a transfer fee equal to 10% of the transfer value or 25% of assessed value, whichever higher (in case transfer values are underreported). The revised draft law submitted by SLREA proposes a standard amount equal to 15% of the assessed transfer value. Such transfer fee should instead be eliminated altogether where State land allocation takes place through market-based mechanisms. It should only be used in the cases where State land is leased at subsidized prices (in which case, the State may want to ensure that the subsidy extended to specific target groups, e.g. investors or low-income groups , serves its intended policy objective or else it would be recaptured, at least in part). It is also unreasonable that the transfer fee would apply indefinitely across the life of the project/beneficiary, let alone to all subsequent transfers. Instead, transfer fees should only be applied for a specific duration depending on the size of the subsidy (e.g. 5-10 years of investment project operation or low-income housing tenancy), after which beneficiar ies should be entit led to transfer the land without being penalized (unless if such a transfer fee is imposed in lieu of the property transfer tax of 3% of value). Finally, it may be desirable to apply a phased out subsidy recapture schedule wherein, say, 25% of the value would be due if the transfer takes place in less than 5 years, which is then gradually phased out over the next 5 years. The question is whether a simple schedule would be easier to administer.

4.4.4 Land Use Planning and Growth Management In the areas of land use planning and growth management, four main recommendations stand out. The first is the importance of revising and updating existing cities’ master plans, most of which are seriously outdated. Fortunately, the year 2004 heralded significant inte rest in urban planning and the master plans of four major Yemeni cities (Aden, Hodeidah, Mukalla and Taiz) are currently in the process of being revised with funding from PCDP and TMDFPP. PCDP has introduced four important “good practice” elements in the case of Aden, Hodeidah and Mukalla that should feature in future planning efforts:

• The decentralization of the master plan revision process to the Governorate level, which was made possible due to adequate capacity at the local level. Prior to the enactment of the Local Authorities Law of 2000, master plans were all prepared in Sana’a. The situation was not expected to change after the decentralization law as it was argued that the necessary capacity was still unavailable at the local level;

• The revis ion of the master plan is primarily informed by the recommendations of the Local

Economic Development (LED) strategy, which was developed within the framework of a participatory City Development Strategy (CDS);

• The process emphasizes on-the-job capacity building of the local planning staff and the

transfer of knowledge from the international experts commissioned with the assignment, to ensure that the Governorate planning department is prepared to regularly update (each 1-2 years) and revise (every 5 or so years) the master plan subsequently; and

• The process emphasizes the importance of developing an implementation strategy, which

assigns roles, responsibilities and financial commitments among the different stakeholders, and which recommends/develops the necessary implementation tools (regulatory, institutional, financial, etc).

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The second recommendation is the implementation of growth management mechanisms in selected Yemeni cities, namely Aden and Mukalla, which have been subject to massive State land distribution and the ensuing low-density sprawl, as well as cities such as Taiz and Sana’a whose limited available water resources would not be able to accommodate sustained population growth. One important such mechanism is the formulation and enforcement of clear boundaries for future service delivery. Such boundaries would be prepared following a predetermined planning and consultation process and enacted by Governor’s decree. No service delivery/utility connections would be permitted beyond the boundaries for the predetermined duration (5-10 years until the boundaries are formally revised). The decision on what constitutes an appropriate service delivery boundary towards a given target year would be based on the existing characteristics and coverage of the utility networks, the expected development/growth of the city (itself a function of anticipated economic development, projected population growth, availability of State-owned lands, and the potential for densification of the existing urbanized area and for infill development). Clearly, updated master plans would greatly facilitate the determination of appropriate service delivery boundaries. The third (and closely related) recommendation is the need to revise planning standards to limit sprawl and reduce what many stakeholders view as a wasteful land consumption (this point is well developed in the Aden master plan revision and updating process). This is particularly the case in coastal cities where State-owned land for urban expansion exists. What is needed in the detailed neighborhood/subdivision plans is to use higher gross residential density than 100pp/ha (which is typically used in new area planning in Aden and Hodeidah), possibly 200-250pp/ha. This will require the use of reduced ROW, reduced building setbacks, higher permissible land coverage and development potential (which combined would increase the permissible Floor-Area-Ratio), smaller parcel sizes and more efficient parcel configurations. The revision of planning standards requires the reconsideration of the urban planning reference manual used by many planners in Yemen (called “Urban Planning Guidelines for Yemen,” and developed through the cooperation of the MOPWH and GTZ in 1995). Local planners who received training in Sana’a since 1995 are likely to have a copy of this manual, which they would strictly follow when preparing detailed plans to maximize the chances that their plans would be approved in Sana’a (the book is widely used at the MOPWH). What is interesting is that the reference manual’s content in terms of planning standards is less deterministic than the way it is used by planners (e.g. many alternatives in terms of density are presented), which suggests misinterpretation of its intentions. Also needed is capacity building of local planning staff. The fourth and final recommendation revolves around the land readjustment process, which is stipulated in the Urban Planning Law. The overall distrust among landowners of government “planners” is the main reason underlying the failure of implementing the planning and service delivery process along the peri-urban fringe in most cities. Several factors, it is hoped, would help facilitate the implementation of the process including: (i) the involvement and mediation of elected local councilors, trusted local officials, respected public figures and community leaders; (ii) extensive community involvement in the planning process through visioning exercises, public hearings, etc; (iii) solid communication and information campaign on the benefits of planning and service delivery on the valorization of land prices and transparent communication channels; (iv) predetermined compensation terms that have been discussed with the community. The success of this process will nonetheless differ from one place to the other (it is said to have succeeded in Ibb City due to extensive involvement and commitment of local authorities). Yet, in the long term, the distrust of planners will only subside when such practices as Taadil, amendments of detailed plans, etc, are well governed while such good practices as public hearings for master/detailed plans are instated.

4.4.5 Standardized and Transparent State Land Disposition Methods and Procedures One of the most important measures to enhance the efficiency of State land management is the need to switch from the currently used administrative/discretionary methods to allocate State -owned lands

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(direct allocation on sole source or list basis at administrative or State-determined land prices) to market-based allocation methods, namely the use of public auctions. Market-based allocation should be the basis for the disposition of all State-owned lands (including for investment and commercial purposes, and market housing), whereas administrative allocation would be restricted to targeted narrowly defined policy objectives such as low-income housing. Allowing the market (rather than the State) to determine the price of State-owned land would be the most efficient instrument to curb the widespread land speculation on both investment and non-investment lands, as it would ensure that those (investors) who value a given land parcel most would obtain it. In addition, the proceeds from the sale of State land in auctions would cover the cost of service delivery and would allow for targeted subsidies to low-income households according to the State’s policy objectives. Another approach, which is used in several US cities such as Boston to allocate strategic publicly-owned land parcels, is adapted from the “Request for Proposals” bidding method. This approach is particularly relevant when the State or local government owns strategically located parcel(s) of land which could accommodate various development proposals and where government objective is to ensure both high-quality/technically viable development and an appropriate return from the land sale/lease. As such, developers are invited to bid for the parcel(s) in question, based on the specified technical requirements (permissible land uses, height and Floor-Area-Ratio, developer past experience, volume of work, experience in similar developments, development preferences and criteria such as quality of architecture, public spaces, etc), the evaluation weighting of the technical criteria, and the relative weights of the technical and financial proposals. Proposals are then evaluated based on the predetermined criteria and the parcel is allocated to the developer with the best mix of technical and financial proposals. This approach poses an administrative burden of local authorities, and as such it should be used in exceptional cases (e.g. strategic land parcels in the city center, large scale developments, developments with potential for inner-city revitalization regeneration, etc). It would also be useful to predetermine the share of State-owned lands that would be allocated using market-based versus administrative allocation methods (percentage of parcels or land area to be allocated through each method). Such figures would stem from and reflect the land policy objectives of the State and local governments, balancing such different objectives as leveraging State land assets to enable investment, curbing speculation, maximizing land sales revenues, and facilitating access to land to the urban poor. How such figures would be developed is beyond the scope of this study, but these will be useful from a policy and planning perspective and will serve to enhance transparency and accountability. Equally important for a transparency and accountability perspective is for the SLREA to submit an annual report on activities to the House of Representatives, which would allow for the review of the authority’s performance against existing strategies and plans. The report would include information on the total number of State-owned land parcels and surface area that were allocated in the year, classified by location, disposition method (market-based versus administrative) and disposition form/type (land grant, sale, lease, Takhssiss, etc), revenues collected, etc. The public disclosure of such reporting (e.g. on SLREA website) would also further enhance transparency. Table 4.18 provides a comparison of currently and proposed State-owned land disposition methods.

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Table 4.18 . Comparison of State-Qwned Land Allocation Methods

Direct Individual (Sole Source) Allocation

Direct List Based Allocation Request for Proposals Public Auctions

Objective

Target specific investors or developers with specific expertise

Achieve State’s specific social development objectives

Get optimal development ideas in strategic land parcels

Get max price for predefined land use and development potential

Criteria for Selection

Reputation, expertise, financial depth

First-come-first-serve; following predefined criteria for inclusion in list

Best mix of technical proposal and financial bid according to pre-established criteria and weights listed in bid documents

Highest price

Transparency Least transparent (deal behind closed doors)

Transparent but prone to rent-seeking behavior

Transparent Transparent

Administrative Burden/Ease

Easiest method to administer

Straightforward but burden of maintaining lists

Difficult to administer Easy to administer

Current Use

Typically used for investment lands and large land allocation for special projects

Main method for disposing of land (investment and non-investment/ residential uses)

Not used

Authorized by Law for non-urban lands only and in Executive Decree for all land where direct allocation did not work

Proposed/ Desirable Use

Should be discontinued or used in v ery limited cases

Non-investment lands (low-income housing)

For strategic land parcels only

Investment lands and non-investment lands (market housing)

Least Market-based allocation Most Most Administrative/discretionary allocation Least Finally, the question of foreign ownership of State-owned land must be addressed. The proposed draft Law by SLREA, in addition to acknowledging existing regulations governing ownership by foreigners of residential land or buildings (it is unclear what laws and restrictions are imposed on foreigners), imposes further burdensome restrictions on foreigners in the case of populated and unpopulated islands. The draft proposed law requires any individual or corporation to obtain the approval of the Minister of Public Works (per the recommendation of SLREA chairman) before transferring ownership or even leasing any land located on an island to a non-Yemeni. The draft law also requires approval of the COM before leasing more than 2% of the total State-owned lands area on islands to any one individual or investment projects. The se clauses suggest that islands represent a particularly sensitive issue (possibly due to their strategic military importance, history, or simply to control the over-exploitation of such unique islands as Socotra and Kamaran with potentially negative social and environmental impacts). Yet, such clauses also represent undue restrictions on investors, especially foreign investors and large -scale projects, which contradict with the Investment Law. These clauses should therefore be removed.

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4.4.6 Consolidate d Institutional Framework for the Disposition of State Lands with Clear Division of Roles and Responsibilities It is especially important that any remnants of the past prevailing practice of multiple government entities directly allocating/disposing of State-owned lands be immediately discontinued and that the role of sole custodian of State-owned LRE be consolidated with SLREA as per the provisions of the Law. As the sole custodian of State -owned lands, SLREA would process the disposition/transfer of State lands based on an allocation decision/recommendation from the authorities that are empowered to make such a decision, as follows:

• Investment lands: SLREA would allocate land to investors in the available location that is most suited to their projects based on the recommendation of the GIA (which by Law must approve investment project proposals and extend investment incentives such as tax and customs exemptions). As part of its one -stop shop services, the GIA would obtain the GLC’s endorsement on the proposal. Depending on the investment sector in question, the GIA would coordinate with the concerned deconcentrated line ministries (e.g. tourism, agriculture, industry, etc). In the case of where an investor directly approaches a deconcentrated line ministry, the case is referred with the recommendation of the concerned entity to the GIA, which would continue the process

• Non-investment/residential lands: SLREA would allocate land for market housing, mixed use

development or commercial/non-investment purposes through auctions. The decision to release State-owned land and how much land to dispose of would be taken by the GLC. In the case of administrative allocation for low-income housing, SLREA would allocate land to the target groups (in available locations that balance their needs and affordability level) based on the recommendation of the GLC and after screening applicants against the criteria for allocation (e.g. not having received other State-owned lands, etc).

• Exceptional cases: SLREA would allocate land for investment and non-investment purposes

acting upon Presidential instructions. Presidential instructions are de jure the only way to obtain a land grant (for projects other than for the public purpose) and de facto the only way to obtain freehold ownership through akd tamlik since 2001. Prior to the Presidential orders that restricted State land distribution in 2001, the President’s involvement in the State land allocation process has been relatively limited to specific cases of large-scale local, regional or foreign investors and for several housing associations that involve civil servants, especially the military.

Such consolidation is essential in the initial stages until an accurate and comprehensive inventory of State-owned lands is completed and until cities have determined their urban growth/municipal boundaries based on revised and updated master plans. Figure 4.2 illustrates the consolidated process of State land allocation. Once master plans are revised (which would determine the expected urban expansion areas within an applicable timeframe), it would be preferable that SLREA delegates to the GLC’s its authority over State lands within municipal/city boundaries and their direct expansion area, including the power to dispose/transfer State-owned lands and retain the sale/lease proceeds. This requires that GLC’s formulate land management strategies that are tailored to local priorities and needs (within the framework of the SLRE Law), including management, utilization/exploitation and leveraging strategies, allocation decisions, preferred disposition methods, etc. The SLREA would retain the administrative and regulatory oversight functions through the issuance of freehold/leasehold contracts and contract administration (collection of sale/lease proceeds in return for a collection fee).

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Figure 4.2 Proposed Institutional Framework for Allocating State Lands

Non-investment land allocated through GLC instructions Investment land allocated through GIA instructions (with GLC endorsement) Investment/non-investment land allocated through Presidential instructions

Similarly, upon the completion of the inventory of State -owned lands and their classification into land uses/types, SLREA may then delegate (based on a COM decree) its authority over specific State-owned lands to special-purpose entities to allow for a streamlined land allocation process (similar to the case of the Aden Free Zone Authority, which has control over State-owned land designated for this purpose by a COM decree). Candidates for such transfer of authority include the GIA in certain predetermined investment sites or the Tourism Development Authority in certain coastal or touristic areas, etc. However, to prevent the same excesses and confusion that emerged in the past as a result of such delegation of authority, it is essential that the inventory of State -owned lands be completed in advance with clearly defined lands for delegation, and that SLREA undertakes regular documentation and monitoring/oversight of other entities’ work. Finally, the contractual forms/types of disposition of State-owned lands need to be simplified and standardized into four basic forms: (i) land grants; (ii) land sales (there are currently akd bay’a and akd tamlik ); (iii) land leases (which would consolidate the Akd Ijar, akd intifaa’ or usufruct, etc); and

L A N D

President

General Investment Authority (branches)

P U B L I C

Governor / Governorate Local Council

State Land & Real Estate Authority (branches)

I N V E S T O R

Ministry of Public Works & Highways (branches)

Ministry of Agriculture (branches)

Ministry of Industry & Trade (branches)

Ministry of Tourism (branches)

Other sectoral line ministry (branches)

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(iv) Mahdar tasslim (which would be used only to allocate land to government entities). The two-step process for investment land would not be needed if there is appropriate enforcement of the law, which stipulates that leases would be automatically cancelled if there are breaches to the conditions of contract (concerning land use, payments, and completion of construction within a specified period of time). As such, the Hajz, Takhssiss, Mahdar tasslim and/or Ish’aar Tanfiz would not be needed. Standardized contracts for these disposition forms (which currently exist) would need to be applied systematically across all SLREA branches, and old contracts converted.

4.4.7 Standardized and Transparent Land Valuation Methods and Application of Market Pricing The use of public auctions for the disposition of State-owned lands, as a recommended market-based allocation mechanism, would put in place an effective instrument to assess market value and would thus remove from the State the burden of determining market/comparable prices for administrative allocation. The allocation of State -owned lands at market prices would also help to achieve important objectives including: (i) recovery of service delivery costs (which would allow land subdivisions to be serviced a priori); (ii) discontinue the practice of imposing a fee on all transfers of leases of State land; (iii) curb land speculation and consequently discontinue the need for all administrative procedures such as Mahdar tasslim that were developed to address the problem. Yet, developing expertise in land/property valuation would still be important in many situations such as for assessing fair compensation to expropriated landowners and for use as the basis for administrative allocation, even when subsidies are involved. In the latter case, subsidies would be based on clearly defined State policy objectives (e.g. low-income housing, revitalization of marginalized or underprivileged areas, etc) and eligibility conditions. The subsidy program’s design would ensure proper (geographic or individual) targeting and would rely on well defined subsidies (time-bound, one -off discounts based on market values) with mechanisms in place for subsidy recapture if the policy objective was not achieved. The development of land and property valuation expertise would require training and capacity building of government staff currently involved in the process and the development of systematic and transparent pricing/valuation methods, as well as, over the medium/long-term, encouraging private sector development of professional valuation expertise. In terms of valuation methods, it is advisable to use forward looking “earnings -based” valuation methods such as discounted future cash flow or earnings multiplier as opposed to past looking “asset-based” valuation (e.g. asset value, book value, liquidation sale value, etc). Finally, an important related undertaking is to facilitate the collection and dissemination of information on the urban LRE market in Yemen, which is critical for the development of accurate/well-informed land and property valuation.

4.4.8 Policy Framework for Management and Strategic Utilization of Stat e Lands The current policy note’s approach involved broad-based consultations with all key stakeholders (senior government officials from all concerned ministries and agencies, and representatives of the private sector, the House of Representatives, the judiciary and civil society) in the diagnostic of key problems and issues affecting land administration and State land management in Yemen and for the formulation of preliminary policy recommendations and action plans. The resulting note is thus an outcome of a participatory national land polic y formulation process in Yemen. The next steps would include the formulation of a national strategy for the utilization of State land assets and their leveraging to attract investment and contribute to growth, as well as local land management strategies. The current policy process also led to the establishment of a Land Policy Task Force (LPTF), following the first workshop. The LPTF is chaired by the Ministry of Planning and International Cooperation and includes all key stakeholders (SLREA, SALR, Ministries of Finance, Justice, Awqaf , Legal Affairs and Public Works and Highways, as well as designated members from the House of

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Representatives, the judiciary, the lawyers’ association, the private sector, and the Amins). Since its establishment, the LPTF has been working effectively in assembling all available data for the policy note, and reviewing the diagnostic and recommendations, as well as proposing improvements to the draft proposed legislation on land registration. The next step would involve the formalization of the LPTF through a COM decree and the expansion of its mandate to include the review and approval of detailed and follow up policy and legislation proposals , including the draft proposed law on SLRE and for Awqaf.

4.4.9 Revision of the Legal Framework Governing State Lands and Real Estate Overall, there is a pressing need to revise the SLRE Law of 1995. SLREA should be commended for launching the process of revising the law through the proposed draft law that it has prepared. Some of the key changes that the SLREA draft introduces, and which should be retained in subsequent drafts unless otherwise noted, include:

• Resolving the ambiguity surrounding marahek ownership by providing a simple and clear (even if technically complicated) method to subdivide the ownership of marahek land between the State and adjacent private landowners. The problem is that the selected approach does not seem to stem from legal reasoning but rather from an attempt to find a politica lly acceptable solution;

• Enabling SLREA to retain a portion of the revenues from the State-owned lands’ sale or lease, which would be used to improve performance, incentivize staff, and cover costs including of such critical efforts as the State land inventory;

• Expanding, defining and further clarifying the categories of land that are considered State-owned;

• Requiring the approval of GIA and “proof of seriousness” (it is unclear why both requirements are there) as a condition to allocate investment lands . The problem, however, is that the procedures to be used for the dispos ition of investment lands (and probably the required proofs of seriousness) are referred to the Executive Decree, which was not updated. It is important , in its efforts to curb speculation, that SLREA does not impose additional administrative burdens on investors nor that it attempts to duplicate GIA’s role in investor screening.

• Tackling the problem of State-owned lands allocated for investment purposes as follows: (i) for projects where the construction is completed or at least half way, their provisional contracts would be converted into leases; (ii) for investment projects where the land has not yet been developed despite the passage of a three year period, the land parcels would be repossessed. The problem is that there is no mention of how to deal with the projects that have been started but which are less than half way completed, especially in dealing with the issue of compensation on improvements undertaken in case of repossession. The other major problem is that the SLREA draft law does not deal with the problem of the undeveloped investment projects which are subject to a subsequent change of land use as a result of a later master/detailed planning revision effort. One idea is to grant investors a specified timeframe in which to either submit a revised investment proposal for the site in question (wither by bringing in new partners or identifying another solution) or to sell the site in question to an interested investor or to SLREA according to predetermined rules for compensation.

Some of the issues that the proposed SLREA draft law did not address and the problems that have been identified include:

• The proposed law did not address the issue of State-owned lands distributed for residential purposes, but which remain undeveloped as a result of a combination of speculation and inability/unwillingness to build in the absence of infrastructure services;

• The proposed law did not address the issue of infrastructure service delive ry and its importance/relation to the land development process and to the pricing of State-owned land;

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• The proposed law stipulates that in agricultural lands awarded for non-investment projects, the surplus (defined as “lands beyond what beneficiaries need to sustain their household, as determined by SLREA”) would be repossessed. This article promises to be a major source of social problems and court disputes, in addition to the detrimental impact on the perception of security of property rights. In the absence of clearly determined criteria of what is surplus, such a provision would place too much discretion in SLREA’s hands, which is likely to lead to rent-seeking behavior; and

• With respect to Yemeni islands, the proposed law contains two requirements that restrict foreign ownership (requiring non-Yemenis seeking to buy or lease land, including from the private sector, to obtain prior approval from the Minister of Public Works and Highways) and restrict large scale land acquisition (requiring that investment projects or individuals seeking to buy or lease State -owned lands that exceed 2% of the total area of State -owned land in the island obtain prior approval from the COM). These two restrictions should be removed as they contradict with the Investment Law.

Several important issues still need to be addressed in further revisions of the Law, which should be undertaken within the framework of the land policy framework and with the involvement of the LPTF. One the key considerations in future efforts to revise the SLREA Law is to ensure its harmonization with two important laws that were enacted subsequently: (i) Investment Law (initially No. 22 of 1991, amended through the Republican Decree No. 14 of 1995 and Law No. 29 of 1997); and (iii) Local Authorities Law No. 4 of 2000. It is important to ensure that the revised SLREA Law would not contain provisions that are contrary to or deter investment or progress towards decentralization. In addition to the abovementioned issues that were not addressed and which should therefore be resolved in subsequent revisions of the SLREA Law, the following issues should be taken into account:

• Mainstreaming the use of public auctions for the disposition of all State -owned lands and real estate irrespective of classification (rather than restricting it to non-urban uses or as a back-up disposition method to lands that are not distributed through direct allocation);

• Authorizing the delegation of authority over State-owned lands and real estate within the (administrative and/or urban growth) boundaries of municipalities (cities and villages) to GLCs, as part of the expanded drive for decentralization and the increased involvement of local authorities in economic development planning and implementation within the framework of the new Local Authorities Law of 2000;

• Consolidating the many existing forms of disposition of State-owned lands into few standardized contractual forms that are clearly stated in the Law (e.g. land grant, sale, lease and mahdar tasslim) and introducing/allowing for various approaches of private sector participation (e.g. concession, management contracts, etc);

• Removing restrictions and administrative barriers to foreign ownership of State -owned lands and real estate;

• Standardizing the channels and procedures through which State-owned lands and real estate are allocated. Currently, only the President is clearly stated (in the context of land grants). The idea is to consolidate the investment land allocation process on the basis of GIA recommendation/endorsement, as stipulated in the revised draft by SLREA (GIA would ensure coordination with local authorities and the concerned deconcentrated line ministries). As for non-investment lands, the allocation process would need to be consolidated through the GLC.

• Identifying a process to deal with investment or non-investment lands that were allocated in the past and remain undeveloped, but whose land use or other characteristics were modified as a result of a new/ revised master plan.

• Integrating the recommendations of the proposed legal/judicial committee on the question of ownership of marahek land (and where necessary on addressing tribal claims);

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• Formulation a transparent, predictable and fair process and set of procedures for dealing with problems of speculation and unserious investors without alarming or scaring away prospective investors and taking into account the existing situation relating to existing level of service delivery and administrative barriers. The proposed procedures should govern the repossession of undeveloped State lands after a predetermined timeframe and include measures to provide just compensation for improvements.

4.4.10 Priority Actions Finally, of the many recommendations to improve the efficiency of State land management in Yemen, the priorit ies and most critical elements are the following:

• Consolidation of the institutional framework for the allocation of State-owned lands by centralizing disposition/custodianship at SLREA (as per the existing Law) based on the recommendations of GIA (for investment lands) and GLC (for non-investment lands);

• Switch from administrative allocation to dispose of State-owned land (through direct individual or list-based allocation) to market-based allocation (through auctions);

• Disposition of State-owned land (for investment, market housing, and commercial/non-investment uses) at market prices, which would eliminate speculation incentives and market/allocation distortions, allow to recover the costs of service delivery;

• Revision of the SLRE Law of 1995 taking into account the abovementioned recommendations; and

• Completion of the inventory and registration of State-owned land (and real estate) assets.

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Section 5. Summary of Key Findings and Recommendations

The following is a summary of the key findings and recommendations of the Policy Note .

5.1 Administration of Land Tenure Security (Land Registration and Land Dispute Resolution)

5.1.1 Key Issues Overall, there is a very limited utilization of the land registry in Yemen. Since the establishment of the first registry branch in Sana’a in 1977, only 240,000 transactions in privately-owned LRE were recorded across Yemen. The capture rate of the land registry is estimated to be no more than 20% of all annual land and property transactions in Sana’a. In Taiz and Ibb Governorates, the land registry’s capture rate is estimated to be, respectively, 18% and 22% of all transaction deeds authenticated at the courts (this implies an even smaller capture rate of actual transactions, since not all transactions go through the conveyance and authentication processes). Registration activities also appear to be largely concentrated in Sana’a Municipality (which alone accounts for 61% of all recorded transactions until 1999 and 47% of all registrations since 2000) and the urban areas of Taiz, Aden, Hodeidah, Ibb and Hadramout Governorates. Overall, it is estimated that no more than 5-10% of urban lands in Yemen are registered at the Land Registry. The limited use of the land registry is attributed to both limited demand for registration and the inadequate supply/quality of services provided by the Registry. Low demand for registration is mainly due to the lack of perceived benefits from the act of registration (relative to the service’s cost), which is due to several factors. First, according to the existing registration law, the act of registration is not legally conclusive. In addition, there is little legal/judicial involvement in the registration process, which is why it is perceived with low confidence by the courts. High cost (especially when past land transfers have been unregistered) and a bureaucratic process are also major issues. Most importantly, the procedure of authentication of transfer deeds at the court is widely perceived by the public as an “alternative form of land registration” that provide s them with the same added value in terms of “obtaining land tenure security”. Indeed, of 100 surveyed land buyers, 60% find that court authentication is as important as registration, and an additional 21% find authentication more important. The general public perception that authentication is an equivalent (and cheaper) form of securing property rights effectively undermines the process of deed registration. On the other hand, the inadequacy of supply and quality of conveyancing and registration services results from inadequate regulation governing conveyancing. In particular, regulatory oversight of the Amin activities, inadequate registration and registry maintenance procedures, and an inadequate legal and technical framework accompanying the transition from the former person-based to the new parcel-based deed registry system are areas requiring some attention. In addition, there is a large volume of land disputes that clogs the judicial system and cases take a long time to resolve at the courts. This is coupled with weak enforcement of judicial verdicts. These issues are further elaborated as follows:

Widespread public perception that court authentication of transfer deeds is as effective or more effective in securing property rights than deed registration : Of 100 surveyed buyers of land, 76% indicated that the authentication of the previous transfer deed (or basira as it is known in Arabic ) for a given parcel of land is an “important/very important” factor in influencing their decision to buy. In addition, 28% of the respondents believe that registration at the land registry is not important because it is the court authentication that effectively guarantees their land property rights. As such, it is obvious that there exists a discrepancy between the intent of court authentication (as a check and record of the activities performed by the Amin) and the public’s perception of its role . This suggests that this otherwise redundant procedure (since it may very well be performed at the LR) gives an “appearance of registration” to land transactions that may not have been registered. The fact that court

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authentication is perceived by the public as a viable alternative method of obtaining land tenure security severely undermines the deed registration process.

Concerns about land registration costs further limit demand : While the added value from the utilization of the land registry is already undermined by widespread perception of alternative forms of obtaining land tenure security, the financial burden incurred by those seeking to register their property and perceived administrative barriers further sways the equation towards the perceived competing forms of securing property rights (i.e. conveyance and court authentication). While the basic unitary financial burden itself may not be different from international practices (estimated at 3.5-3.9% of value, which includes a transfer tax of 3% of value and relatively small flat charges for surveying and registration), the requirement that landowners pay the accumulated taxes on all past unregistered transactions is certainly onerous and drives many people out of the formal registration system. Survey respondents in Sana’a add that the surveying charges (some YR4,000-6,000 per lebna or 44.45 m2) far exceed the Survey Authority’s officially published rates. Another requirement—a penalty on delays equal to 2% of the transfer tax amount per month of delay—appears to be misperceived amongst several interviewed public sector officials and survey respondents as an additional 2% of value (which would clearly be burdensome). The registration process is also bureaucratic and time consuming, including the apparent duplication of authentication and registration procedures. In addition, 29% of surveyed respondents (50% of Aden respondents and 15% of Sana’a respondents, which suggests regional differences) add that the bureaucratic nature of the registration process makes it prone to rent-seeking behavior.

Limited degree of judicial/legal involvement in registration decisions : The existing deed registration system as practiced in Yemen is based on an insufficient level of judicial/legal decision-making. The existing system overemphasizes the technical aspects (surveying issues and the drive to automate registry services) relative to the legal aspects (settlement/adjudication and registration of property rights). This contradicts international practice where the act of registration of land and property rights is viewed as a predominantly legal matter, which therefore entails a heavy emphasis on legal issues and procedures. In particular, it is typical that the authority making the final registration decision has a clear legal standing and/or that the process is le gally flavored and colored by consideration of rights.39 The limited emphasis on the legal/rights dimension a priori in the deed registration process practiced in Yemen today is one of the main causes of the large number of land disputes and the relatively low confidence of the judiciary in the deed registration process, both of which would inhibit further expansion of registration.

Inadequate regulation of conveyancing and monitoring of Amin activities: A conveyance system acts as the de facto mode of securing interests in land in Yemen. Conveyancing is performed by the Amin in Northern and Western Governorates and mostly by lawyers/ brokers in Southern and Eastern Governorates. Despite the predominance of conveyance activities, there are no explicit la ws or related by-laws and formal decrees governing its

39 For example, in Lebanon, Jordan and Palestine, the registrar is a lawyer with authority over all aspects of the process including cadastral surveying and mapping issues. In Lebanon, the registrar has an equivalent standing as that of a judge, but clearly his decisions are subject to legal challenge for sufficient cause. This heavy legal emphasis/nature of the registration process has a historical legacy. In Europe, where modern land registration systems have their roots, the technical orientation of land registration was heavily resisted by the courts and the legal community as a whole, which resulted in either land registration being given a heavy legal emphasis (i.e. high legal standing of the authority making the registration decision) or becoming a totally legal matter (e.g. in the Ministry of Justice) which is supported technically. What is advisable is that the legal and technical aspects remain linked to ensure coordination, but within an overall legally flavored framework. This matter is still being politically contested in some countries where the two agencies of registry and cadastral survey are under different ministries (e.g. Egypt and Bulgaria).

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conduct and practical implementation. In addition, while the 1991 Authentication Law governs Amin activities, it does not offer them any guidance on procedures and practical implementation of the conveyancing process. The Law also provides minimal guidance on Amin appointment (the process was only spelled out in a Minister of Justice decree in 2001, but without specific skill requirements or detailed examination procedures) and the monitoring of Amin work and their license renewal are not addressed in detail. Monitoring by the MOJ is especially critical to ensure that Amins perform their functions only within the geographic jurisdiction determined in their license. Simultaneously, the Law should be revised to restrict property conveyancing activities only to Amins. What is interesting is that, in the absence of guidance, the Amins have developed methods of performing their functions that are based on the Shari’a. Other procedures related to the conduct of property transactions evolved from norms rather than laws or regulations, such as the use of ground breaking. Yet, despite all the shortcomings in the conveyance process as practices by the Amin, the great importance that most landowners attach to the process suggests that this historical institution is a fixture of the institutional landscape that should be kept and strengthened/enhanced, in order to address the mounting criticism of the deficiencies in the current practices.

Inadequate registration and registry maintenance procedures: The first problem is the inadequate legally unique parcel identification system (the concept was first introduced under the sejel ainee system in 2000, but it is implemented in an ad hoc way without a legal basis to assign ID numbers and updated maps, which threatens to undermine the system). Such a system is critical to the proper implementation of the registry’s most basic function of detecting conflicts between incoming and recorded transactions. The second problem is the inadequate maintenance of information linkages between the indices of deed, parcels/tracts and liens/notations. The land disputes profiled in this study indicate that the process of checking for ownership conflicts and upholding the rights of mortgage providers is simply not working. This is because the linkages between deed registration (the land registry’s primary function) and the registries of mortgages, parcels and legal notations are not properly maintained, which makes it difficult to determine if a land parcel has been subject to a mortgage or a law suit. Inadequate legal/technical framework accompanying the transition from the person-based deed registry to the parcel-based deed registry : In 2000, a switch from sejel shakhsee (i.e. person-based deed registry) to sejel ainee (i.e. parcel-based registry with site inspection and survey) was undertaken in Yemen. This is similar to the trend observed in several Latin American countries of moving from a person-oriented (folio personal) to a parcel-based (folio real) deeds system. The problem, however, is that this switch is equated in Yemen to moving from a “declarative” to a “substantive” land registration system. Yet, property rights in a declarative system (as in Yemen) reside in the contracts/deeds that are registered and not in the act of inscription in the registry, as would be the case in a title registration system. More importantly, a substantive system would only recognize property rights if they were inscribed in the registry, whereas in a declarative system, unregistered deeds/contracts hold between the parties, but are only secure against third parties if they are publicly (i.e. based on the publicity principle) registered in the registry. It is therefore important to underline that a parcel-based deed registry system is still a deed registry. This does not mean that a deed registry is by definition ineffective. Quite the contrary, many Western countries effectively operate similar systems with very low levels of land disputes. In the Netherlands, almost all conveyances are performed by the notaries and registered at the land registry (which is effectively a parcel-based deed registry). The effective implementation of these systems in Western countries is based on implementing certain legal principles which are implicit in the deed registration system, namely the chain of evidence as basis for land rights and a sunset clause on how far back evidence would be considered. Both of these aspects appear to be missing in Yemen. In other words, while Yemen’s move to a parcel-based deed registration system was in the right

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direction, the corresponding changes in the system that would be needed to ensure its effectiveness have not yet taken place.

Land disputes represent a signific ant portion of overall court cases and take a long time to resolve: The few available statistics suggest that land-related disputes represent 30-50% of all civil cases at the Primary District Courts, depending on the Governorate and Court District. Most land disputes at the courts concern property ownership, while some relate to Shufaa (exercise of right of preemption) among other causes. In Taiz Governorate, the situation is even worse since in 2001-2002 land ownership disputes alone constituted 35.5% of all civil cases at the Appeals Court (which implies an even higher volume at the Primary Courts). The volume of land disputes clogs the court system according to interviewed judges. The large volume of disputes also suggests that, instead of being an arbiter of last resort, the judiciary is in fact heavily relied on to bring about land tenure security, and as such effectively substituting for the administrative mechanism of the land registry. The data from Taiz Appeals court also suggests that 75% of land ownership disputes take more than one year in the Appeals process, and that 65% take more than two years in the process. The combination of Primary Court plus Appeals process implies that the majority of land ownership cases take at least 3-4 years to resolve. The sheer volume of land cases, in addition to the courts’ (consequent) inability to process land disputes expeditiously, represents a severe constraint to the investment climate. In addition, the perception that courts are unable to resolve land disputes expeditiously (and fairly, according to some survey respondents) may be seen as a threat to stability as more land disputes are resolved violently outside of the realm of the Law. Ineffective enforcement of judicial decisions : In addition to the fact that it takes several years on average to resolve a land dispute through the judicial process (District, Appeals and possibly the Supreme Court), the enforcement of the verdict is far from certain. As seen in the documented case studies, even the Supreme Court’s verdict appears not to have resulted in the enforcement of the judgment, which suggests an ineffective system of implementing court rulings. Thus, while many turn to the courts as a means of assuring their tenure security, it is also obvious that court judgments do not carry the weight and force of law. The overall enforcement system appears powerless to administer court judgments on individuals despite a legal process. Rectification of this issue is fundamental to a properly functioning land tenure security system.

5.1.2 Key Recommendations Improving the administration of land tenure security requires addressing the key bottlenecks hindering the effective functioning of the land registration and land dispute resolution systems. Increasing the use of the land registry requires addressing the key obstacles that are limiting demand for registration (including the problem of public perception that there are alternative formal means to obtain land tenure security) and hindering the quality/efficiency of supply of registration services. A more effective land dispute resolution system requires that the courts be better equipped to manage the large volume of disputes as well as effective enforcement of judicial decisions. These recommendations are elaborated in the following sections:

Activating demand for use of land registry services by removing incentives/mechanisms for using authentication as an alternative to registration: The first critical requirement to activate demand for the land registry services is to revise the LRL of 1991 to give the act of registration conclusive power. This change , coupled with measures to eliminate the incentives and mechanisms that led to the perception of court authentication as an alternative “formal channel” of obtaining land tenure security, would put in place an appropriate legal framework and establish land registration as the sole and definitive form of securing property

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rights. In addition, increasing the volume of registration would require an (temporary) amnesty on payment of back taxes. Two other measures would play an important role in reducing the steps and uncertainty associated with registration. The first is to build upon the conveyancing role played by the Amins and the lawyers to transform these private, properly incentivized and (as is direly needed) properly regulated actors into a type of one-stop shop for conveyancing and registration services, wherein for a small fee they would complete the act of registration on behalf of the transacting parties. This would be especially useful since it appears that the Amin is generally trusted by the public with their original deeds/basiras. The second measure would bring about the consolidation of the two procedures of authentication and registration at the Land Registry, which would eliminate basira authentication at the Courts as a separate step and a proxy to land registration. Alternatively, if consolidation of authentication and registration is not politically feasible or advisable for some reason, it would then be recommended to add to the courts’ authentication stamp the following disclaimer: “authentication does not confer ownership.” In addition, the introduction of different color-coded official documents (e.g. basira on blue paper, which at registration would be stamped with the registry’s official red stamp, while the Wathiqa or equivalent of a title deed/original property document would be issued on green paper). Such color coding would be coupled with a widespread public awareness campaign conveying the message that property rights can best be protected through land registration (and that “buying a non-registered property—i.e. without the green document—is risky”). Ensure judicial/legal involvement in deed registration decision-making: It is important that the individual making the registration decision (i.e. the registrar, or in Arabic Ma’amour Tasjeel) has legal/judicial standing, either by appointing a lawyer or a judge for the job. Develop laws or by-laws governing the conveyance process and regulating/monitoring Amin activities: The existing authentication law should be amended through the introduction of an executive decree/by-law that governs the whole land conveyance process in detail. In addition, an amendment of the Minister of Justice’s executive decree No. 200 of 2001 is needed to: (i) further expand on the skills required of the Amins and their admissions’ examination process; (ii) establish detailed procedures governin g Amin activities; and (iii) provide for detailed procedures for Amin monitoring/regulation. In light of the widespread reliance/use of the conveyancing process, these measures are critical to address its shortcomings. Improve the registration process and registry maintenance: The first step is to put in place a well functioning tract index system that enables the registry to detect conflicts on the same parcel of land. This requires: (i) the improvement and across-the-board utilization of the unique parcel identification system that was first introduced in 2000; and (ii) a legal process to assign parcel identification numbers to registered land. The first ensures that all parcels registered are unique and the second guarantees that no parcel is subdivided and legal unless it has a number assigned by a single entity. The legally binding nature of the indexing process and an easily searchable and transparent lineage “tree” to trace parcel history are two key aspects of this system. The second step requires the design of an adequate information linkage system among the indices/registries of deeds, or parcels/tracts and of liens/legal notations. The ease of access of the parcel/tract index and its integration with the other indices would enable efficient and effective tracing of rights among these registries, which is absolutely essential to the proper functioning of the registry.

Establish the legal/technical framework accompanying the transition from the sejel shakhsee to the sejel ainee system of deed registration: Two critical measures must be introduced: (i) the legal notion that it is the chain of evidence that establishes conclusive ownership not only the act of deed registration; and (ii) the sunset clause for how far back the chain of evidence must be considered.

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Reduce the volume of land disputes at the courts and ensure an expeditious and efficient land dispute resolution process: In addition to the effect expected of an improved land registration system (both legally and technically) in terms of reduction of the volume of land disputes, several actions would improve the efficiency and expediency of the courts’ handling of land disputes and would reduce the volume of claims. The establishment of legal/judicial task force of senior and highly respected judges, Ulema and legal scholars to develop basic consensual procedures/rules that are Shari’a-compliant to deal with the contentious sources of disputes (e.g. ownership of mountain slopes channeling rainfall and called in Arabic Marahek, adverse possession, etc) and the provision of specialized training and support in technical matters (e.g. in apportionment and boundary disputes) to judges in court districts with a high frequency of land disputes would greatly reduce the time to resolve disputes. The introduction/strengthening of alternative dispute resolution mechanisms (e.g. reliance on field adjudication in mandatory registrations with local community involvement; expanding semi-formal/formal involvement of elected local officials and such local community figures as Akel Al Hara in mediation and dispute resolution; expanded use of formal arbitration as a fast-track low-cost dispute resolution channel) would play an important role in alleviating the burden on the judicial system. The discouragement of frivolous disputes could possibly benefit from the imposition of stricter penalties and/or larger fines. Strengthening the enforcement regime of judicial decisions is another key requirement if the administration system of land tenure security is to be effectively improved, even if this is a challenge that goes beyond the scope of this study.40

5.2 Reforming the Legal Framework for Land Registration

The existing LRL No. 39 of 1991 is very rudimentary and limited. By-laws that could have compensated for the lack of detail in the law, especially on processes, have not been issued. Until 2000, deed registration was still based on the personal registry rather than the parcel registry. Since then, the Land Registry has been commissioning one of its technical staff to inspect any real estate intended for registration and to submit a report prior to proceeding. How effective this is, when updated and detailed maps are absent, is questionable. In addition, many registrations currently undertaken are based on inaccurate previous registrations, and there is no evidence that these investigations explore these issues. Stated simply, the investigation as currently conducted is not an adequate basis for providing conclusive legal effect to registration. The Government’s decision to replace the 1991 Law is to be commended. A first draft law was prepared by SALR in 2001 and was followed by a second and improved draft by the MOLA in 2004. While there are a few important divergences between both drafts (related to the legal conclusiveness of registration and the role of the courts in settlement of land disputes related to registration), both drafts have introduced substantial and important improvements over the existing law. The main areas of improvement that are commonly addressed in both drafts are:

• Provision for both mandatory (systematic) registration and voluntary registration (in areas where mandatory titling has not begun);

40 To improve the enforcement regime against established standards for implementation of judicial decisions requires devising: (i) “stick” measures to increase the likelihood of the enforcement regime’s compliance (e.g. verdicts shall be enforced within 60 days from their date of issue; failure to do so shall be punishable by …); and (ii) “carrot” measures to incentivize the enforcement regime into compliance (although this could have the perverse outcome of ensuring that “only those who pay would be efficiently served by the system”). Perhaps part of the fines/damages charged to those who lost the case (which, it is suggested, should be high enough to deter frivolous lawsuits) could be made available to incentivize the enforcement regime into (expeditious) compliance.

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• In the case of a voluntary registration, a field inspection is provided for, similar to that under the previous law, but spelled out in greater detail, with specific instructions on the handling of contested registrations;

• Provisions for systematic registration deal in considerable detail with the processes to be followed to ensure transparency and public confidence in the results;

• There is an attempt to strengthen the probative effect of registration, an issue neglected entirely in the current law;

• A Real Property Registry is provided for, with a registry for each parcel, and each parcel identified by a unique identification number, consistent with the best practice in title/land registries; and

• There are provisions for subsequent transaction registrations (subsequent to mandatory, systematic registration) in the registry, to be distinguished from “voluntary registrations” in that some of the procedural precautions for voluntary registrations (most importantly, the field inspection) are not required for subsequent registrations, consistent with practice elsewhere.

The following are additional recommendations pertaining to the discrepancies between the two drafts or issues which the revised law should take into account.

Financial sustainability of the registry system: To ensure the financial sustainability of the registry system, the revised law should take into consideration the following issues: (i) late fees, while appropriate, should not be a percentage of value of the land; (ii) there should be no imposition of penalties for failure to register previous transactions on those seeking to register a current transaction; (iii) the registering agency should be allowed to retain all recording and registration fees for its support, as well as a modest percentage of the property transfer tax for collection services; and (iv) generally, fee structures should seek to cover costs of services, not raise general revenues. Improved process of registration: In terms of improved process in registration, leading to more reliable results and allowing more conclusive legal effect, the following measures are required: (i) more effective publicity procedures for systematic registration; (ii) for subsequent and voluntary registrations, the role of the Amin should be reformed and reinforced to ensure a higher quality of documentation entering the registry system; and (iii) the role of the courts in authentication of land transfers must be reexamined, and either ended or substantially reformed. Legal effect of registration: The legal effect given to registration should be strengthened, and the law should provide for: (i) priority of registered transfers over unregistered transfers; (ii) inability of unregistered transactions/inheritances to transfer title; and (iii) most importantly, legal conclusiveness of registration. Mistakes and corrections: The law should provide that: (i) mistakes affecting the interests of parties should only be correctable through a court proceeding; (ii) technical errors, not affecting those interests, should be correctable by the Registrar; and (iii) staff should not be held financially responsible for good faith errors, but in case of intentional mistakes, they should be both financially responsible for damages caused, and where appropriate, as in a case of participation in a fraud, subject to criminal penalties. Private sector involvement: The law should be amended to permit the assignment, when and if this is considered appropriate, of certain functions to the private sector and civil society agencies. These functions would include surveying, public information and other functions, but not including adjudication. Titling settlement process: Reliance on a TSC to settle land disputes in relation to land registration is appropriate, but should be supplemented by a provision allowing for field

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mediation by staff of the registering agency. The draft provisions on the relationship between the courts and the TSC are generally appropriate but: (i) while ongoing cases concerning a parcel should not be transferred to the TSC in the case of voluntary registration, this is appropriate in the case of systematic registration; and (ii) in the case of mandatory registration, court cases concerning ownership or other property rights in parcels in the area of mandatory registration should not be accepted as of the date of publication of the announcement of the date in which registration works start. Eliminating conflict between the mandatory system and voluntary registration: To reduce conflicts between the mandatory system and voluntary registrations, the law should provide for: (i) careful collection of data on prior voluntary registrations in mandatory registration areas prior to mandatory work being undertaken; (ii) limiting probative value accorded to those earlier voluntary registrations to being only persuasive, not conclusive; and (iii)suspension of applications for voluntary registrations in the area of mandatory registration.

Finally, and most importantly, there has been a debate concerning the institutional framework for land registration, with a proposal of splitting the legal function of registration (which would be under the MOJ) from the technical function of surveying. This is not advisable. International experience strongly suggests that the current combination of registration and surveying functions in a single agency greatly facilitates effective registration implementation. The current structure (where both functions are combined in SALR) should be retained as is at present, with the single agency SALR reporting to the Presidency of the COM (or the President). The second suggestion currently being debated—consolidating urban planning with the registration and surveying functions under one roof—would have the merit of improved coordination (especially between planning and surveying, as the former relies on the latter’s mapping services), but such consolidation would not be particularly critical for the proper functioning of the registry system (planning is a user of surveying services).

5.3 State Land Management

5.3.1 Key Issues The main issues and problems of State Land Management in Yemen are summarized as follows:

Legal ambiguities surrounding State Lands and ensuing conflicts over ownership: In the SLRE Law No. 21 of 1995, the definition of what constitutes State-owned land proved to be ambiguous in two land classifications, with ensuing disputes over ownership by private and tribal claimants based on their ancillary use rights. The first issue concerns public “marahek” (i.e. mountain slopes channeling rainfall), whose vague definition and lack of clarification in the by-law have resulted in major disputes between the State and private landowners who formerly owned adjacent agricultural lands but who subdivided and sold their land for urban use. The second concerns State ownership of uncultivated, forest and desert lands (which inherently include the urban expansion areas of most cities especially in coastal and desert areas) “unless proven to be privately owned.” The lack of definition of what constitutes proof of private ownership has triggered a large number of disputes over land ownership with tribes whose claims cover all extension lands in such cities as Aden and Mukalla. Overall, SLREA has been involved in 1,200 disputes in 2004, which they think is only the tip of the iceberg. Such problems have meant that in cities such as Aden, Mukalla, Sana’a and Taiz, investors and citizens who purchased land from the State have often had to pay for it again to settle with the tribal/private claimants. Lack of comprehensive and accurate inventory of State-owned lands: The absence of a comprehensive and precise inventory of State lands has limited government’s ability to preserve its land assets from encroachment. Despite Presidential instructions in 2001 to undertake this inventory, progress in the documentation process has been very limited due to

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the lack of resources needed to undertake (lack of funds, absence of up-to-date mapping, aerial photography or land surveying) and the lack of cooperation from most government agencies. As a result, where the process has started, the documentation produced was largely inaccurate (especially in documenting the public domain on the basis of the outdated master/detailed plans without site inspection/survey).

Inability to preserve State Lands against encroachment and speculation: The lack of a complete and precise inventory of State lands and updated land classification maps has led to significant encroachment on State lands. In Hodeidah city, for example, 25% of the total population are squatters, mostly on State-owned land. But the more important problem is the widespread land speculation especially in cities in Southern and Eastern Governorates (namely Aden and Mukalla), which is mainly due to the administrative (as opposed to market-based) allocation of State lands at subsidized prices and the failure of existing legal and operational remedies (e.g. the two-stage allocation process, where the lease/sale contract is only given upon substantial completion of the construction). It is particularly the rampant speculation on State land that prompted the President to put a halt on State land distribution in 2001. Lack of land use planning and strategies for sustainable allocation of land : One of the main causes of the inefficiencies of the State land management process is the lack of updated land use plans in cities, coupled with the lack of appropriate legal, institutional and financial instruments to implement and enforce plans, and the lack of strategies for sustainable utilization/exploitation of State Lands.

Lack of a consolidated institutional framework, and systema tic and transparent methods and procedures for allocating State-owned land: In the past and until the President issued instructions in 2001 that stopped (or largely restricted) the distribution of State land, a large number of government entities were distributing State land often without mandate and with little, if any, coordination. Such entities included the SLREA’s branches (SLREA, which by law should be the sole custodian of State lands), the GLCs, the deconcentrated branches of the GIA, the Ministries of Public Works and Highways, Agriculture, and Awqaf , Presidential instructions (which by Law are needed for land grants), among other entities. The lack of jurisdiction and coordination resulted in a chaotic and massive distribution of State-owned lands, especially during the 1990s in urban areas in the Southern and Eastern Governorates. In Mukalla, for example, between 1990-1999, some 57,698 State-owned land parcels were distributed, enough land capacity to accommodate twice as much as the city’s current population. In Aden, during the same period, another 64,075 State-owned land parcels were distributed, enough to accommodate 467,000 inhabitants or about 87% the current population of Aden, based on the citywide average residential density. Most of these lands, whether in Aden or Mukalla, remain undeveloped. Lack of systematic and transparent methods for valuing/pricing State-owned land: By Law, State land should be sold or rented at market value, except for land grants (which require Presidential instructions) and certain cases eligible for discounts. Yet, the main problem in determining market values is that auctions are not authorized by Law for the disposition of State urban land, except if the direct (individual or list-based) allocation method fails to dispose of available land (which is impossible given the high demand).41 In the absence of a market-based allocation method, the burden thus falls on the State, through special technical committees, to evaluate the market price for land, which would be used to establish the administrative allocation price (usually subsidized to the tune of 25-50% of price in the case

41 By contrast, public auctions are the main mechanism authorized by Law for the disposition of State-owned agricultural land and uncultivated/desert land used for agricultural reclamation.

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of sale and up to 75% in the case of rental). The problem is that, while the Executive Decree provided criteria for use in land valuation, these never developed into a systematic valuation methodology that could be used by the committees. The lack of professional valuation expertise within the public sector (which currently is responsible for valuation) and the private sector’s absence from the process further adds to the problem. What is interesting is that, in its effort to curb speculation, itself a direct result from the prevailing practice of disposing of State land at below market prices, the Law requires that any transfer of a lease to a State land parcel be authorized by SLREA and be made to pay 10% of the transfer value, ad infinitum. Thus, the legal/institutional framework that was responsible for creating the problem (of subsidized disposition of land) has devised an even more problematic solution to the issue (a transfer charge that applies indefinitely on all subsequent transfers).

Lastly, lack of a strategic framework for leveraging State land assets to achieve economic development objectives and maximize private participation in development and growth.

The inefficient management of State lands has had many negative implications, particularly on the investment climate and government’s ability to deliver services. In particular, two detailed studies in Aden and Mukalla have shown that land-related problems underlie a significant share of non-implemented or non-completed investment projects and, as such, represent a significant loss to the economy by constraining investment and job creation. In the case of Mukalla, of all 281 investment projects licensed there by the GIA in the 1992-2002 period, 58% (162) projects were non-implemented/aborted. Land problems turned out to be the number one explanation of projects’ failure to materialize, underlying 47% (76) of aborted investment projects. According to GIA records, this means that 2,590 planned jobs (30% of 8,734 jobs that were hoped would be created as a result of investment incentives) did not materialize. In Aden, 54% of all investment projects allocated a site between 1990 and 2002 have also never materialized. SLREA records indicate that for 25% of the undeveloped projects, the sites were disputed with another entity (Aden Free Zone, Ministry of Awqaf and private claimants) while planning problems, namely subsequent land use change and absence of detailed subdivision plans, account for at least 35% of undeveloped projects. And in spite of the President’s instructions in 2002 to repossess unutilized investment lands that have been held for over 10 years (by speculators and non-serious investors), no action has yet taken place.

5.3.2 Key Recommendations Achieving an efficient State land management process in Yemen requires addressing the major bottlenecks and challenges affecting the process. The following is a summary of the key recommendations:

Consolidated institutional framework for the disposition of State lands with clear division of roles and responsibilities: It is especially important that any remnants of the (past) prevailing practice of multiple government entities directly allocating/disposing of State -owned lands be immediately discontinued and that the role of sole custodian of State lands be consolidated with SLREA as per the provisions of the Law. As the sole custodian of State-owned lands, SLREA would process the disposition/transfer of State lands based on an allocation decision or recommendation from the authorities that are empowered to make such a decision. In the case of investment lands, the recommendation would come from the GIA (endorsed from the GLC) after coordination/consultation with the deconcentrated branches of the concerned line ministries (e.g. tourism, industry, agriculture, etc). In the case of residential/non-investment lands, the recommendation to allocate would come from the GLC. In the case of land grants, the allocation would follow Presidential instructions. It is only after master plans have been updated and order restored in the land allocation system that SLREA could delegate its authority of control over State lands fo llowing a COM’ decree in such cases as: (i) to GLCs for State land located within municipal boundaries; and (ii) to special purpose authorities (e.g. Special Economic Zone Authority, Tourism Development Authority, etc) in clearly defined

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areas (e.g. a stretch of coastal lands designated for investment projects) to allow for streamlined operation, in the same vein as with the Aden Free Zone Authority. Standardized and transparent State land disposition methods and procedures: Enhancing the efficiency of State land management requires the switch from the current administrative and discretionary methods to allocate State -owned lands (direct allocation on sole source or list basis at administrative/State-determined land prices) to market-based allocation methods, namely auctions. Market-based allocation should be the basis for disposal of all State lands (including for investment and commercial uses, and market housing), with administrative allocation restricted to targeted/narrowly defined policy objectives such as for low-income housing. Allowing the market (rather than the State) to determine the price of State-owned land would be the most efficient instrument to curb the widespread land speculation on both investment and non-investment lands, as it would ensure that those (investors) who value a given land parcel most would obtain it. In addition, the proceeds from the sale of State land in auctions would cover the cost of service delivery and would allow for targeted subsidies to low-income households according to the State’s policy objectives.

State Lands clearly defined by Law and conflict-free in strategic pilot locations : There is a pressing need to clarify legal ambiguities surrounding the definition of State -owned lands (this requires that the law be revised, which is an important and timely effort that has only recently started taking place). It is recommended that the government establishes a legal/ judicial committee comprised of senior judges, respected Ulemas, legal scholars and key public figures, to come up with Shari’a-compliant solutions to the contentious problem of “marahek” ownership. Another function for a legal/judicial committee would be to develop manuals of procedures/operations and legal casebooks to support judges in their resolution of land disputes. It is also particularly important for the government to undertake selected pilot projects in strategic locations to achieve conflict-free, properly registered State -owned lands (especially in key investment sites or certain urban expansion areas for the main/fast growing cities). Completion of a comprehensive, accurate and centralized inventory of State-owned lands: For this effort to be properly undertaken, there needs to be a provision in the revised Law draft that would empower SLREA to retain a portion of the revenues it collects (it is only allowed to retain 25% of fines under the existing Law). The revised draft Law proposed by SLREA provides for 10% of sales/rental revenues collected, which would be essential to fund such an expensive and critical undertaking. Land classification/use maps also need to be prepared in cities, highlighting State -owned lands, the public domain, classifying investment land by sector, etc. These maps would be widely disseminated to the GLCs, the different deconcentrated government entities, GIA (to assist investors in site selection), and the Amins (to refrain from conveyancing transactions on State-owned land).

Improved mechanisms to preserve State-owned land from speculation: The most effective way to address the problem of speculation is to put in place market-based land allocation mechanisms (namely public auctions), which would ensure that State lands (for investment, market housing, and commercial/non-investment uses) are allocated to those who value it the most. It is also important to ensure that the land price charged in would cover most if not all of the cost of infrastructure services delivery, namely water supply, electricity and paved access roads. Administrative remedies to speculation, including the two-stage land transfer process—initial site allocation to investors through Mahdar tasslim or Takhssiss procedures followed by a lease (Akd Ijar) or sale (Akd tamlik ) at pre-determined prices upon substantial progress of construction do not effectively address the problem and should be scrapped since land can still be allocated inefficiently to those who do not necessarily value it the most. In addition, the existing law stipulates that lease/sale contracts are considered cancelled in case of breach of the contract conditions (construction within a certain timeframe), which means that proper enforcement is the necessary solution. All what this two-stage method does is to

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add is another bureaucratic step to (serious) investors/land beneficiaries. What is also needed is to implement the Presidential instructions of repossessing investment land left unutilized after 10-plus years of tenancy, but this requires developing transparent, fair and standardized/ predictable implementation procedures to alleviate potential concern among investors that their site might be repossessed arbitrarily or for reasons beyond their control (e.g. in case of bureaucratic delays in obtaining a building permit). In addition, the 10% charge imposed indefinitely on any transfer of lease of State-owned land—another administrative and inefficient measure to curb speculation—needs to be revised. Proper land use planning and growth management : There is pressing need for improved land use planning instruments (especially revising the mostly outdated city master plans) and the introduction of planning/regulatory growth management tools, including clear boundaries for future service delivery for a given target year. An important complementary action to urban planning and growth management is the urgency of revising the prevailing and inappropriate planning standards (especially low residential densities and overly generous ROWs), which encourage sprawl and have produced a pattern of wasteful land consumption. It is also recommended to find a solution to implement the land readjustment clause, stipulated in the urban planning law of 1995, to allow for the delivery of services to newly planned areas. The overall failure to do so (especially in a city like Taiz) has made planning a largely irrelevant exercise that produces maps totally unrelated to the land tenure/development patterns taking place on the ground, with the result that most newly planned areas are without services.

Standardized and transparent land valuation methods and application of market pricing: The use of public auctions to dispose of State lands, as a recommended market-based allocation mechanism, would put in place an effective instrument to assess market value and would thus remove from the State the burden of determining market/comparable prices for administrative allocation. Yet, developing expertise in land/property valuation would still be important for use in assessing fair compensation for expropriated landowners and as the starting point for administrative allocation involving subsidies. The latter would be based on clearly defined policy objectives (e.g. low-income housing), eligibility conditions and the program’s design would be such as to ensure proper targeting and well defined transparent subsidies, as well as mechanisms for subsidy recapture if the policy objective was not achieved. The development of property valuation expertise would require both the capacity building of government staff currently involved in the process (and development of systematic and transparent valuation methods) and encouraging private sector development of professional valuation expertise. Need to formulate an overarching policy framework for management and strategic utilization of State-owned land assets.

Overall, there is a pressing need to revise the legal framework governing State-owned lands (and real estate) in Yemen. Indeed, the shortfalls in the legal framework are one of the main causes of the problems, especially the high volume of contesta tion of State land ownership, which makes it imperative to revise the SLRE Law of 1995. To its credit, the SLREA has recently embarked on this important and timely undertaking. The revised draft law prepared by SLREA, which was submitted to the Cabinet and the House of Representatives for review, has indeed tackled some problems of the existing Law. Yet, there are still many issues that have not yet been tackled, which requires a more thorough revision of the Law.

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Annexes

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Annex 1. Survey questionnaire

Name of interviewer: ---------------------------------------------------- Name of interviewee: ---------------------------------------------------- Date and time of interview: --------------------------------------------- Location of interview: -------------------- Amin office, --------- City Q1. Has the land subject to today’s transaction been traded before (i.e. purchased by the seller)?

- Yes - No

Q2. What proof of land ownership is available?

? Recently issued title deed by the land registry ? Historical Wathiqa/title deed (available at the registry) and proof of inheritance ? Court-sanctioned Hiyaza (adverse possession) and proof of inheritance if any ? Other form of document (unregistered) and proof of inheritance if any ? No proof but community-sanctioned/witness testimony of Hiyaza ? Other (please add: ------------------------------------------------------------------------------)

Q3. Was the transaction deed (basira ) authenticated (tawssiq) at the court?

?Yes ?No

Q4. Was the fact that the previous basira was authenticated in court a factor in your decision to buy?

?Very important ?Important ?Moderately important ?Not important

Q5. Was the fact that the previous basira was drafted by the Amin in question a factor in your decision to buy?


Q6. Was your knowledge of the buyer in person or by reputation a factor in your decision to buy?


Q7. Do you think that registration (tasjeel) of the basira at the land registry (sejel akary) is an important step?


Q8. What is more important in your opinion: Authenticating the basira at the court or registering the basira at the land registry?

?Authenticating the basira at the court ?Registering the basira at the land registry ?Both are equally Important

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Q9. Was the previous basira for the land registered at the land registry? ?Yes ?No ?Don’t know

Q10. Was the fact that the basira/land was registered in the land registry a factor in your decision to buy?


Q11. Do you think it is important to register the basira at the land registry?

?Yes (if yes, go to Q12) ?No (if no, go to Q13) ?Don’t know

Q12. Registering the basira at the land registry is important because: (check one or more boxes)

?It protects my rights to the land against other claimants and encroachments ?It ensures that I can receive a good compensation if it is expropriated by the State or encroached upon by others ?It just makes the transaction “official” but does not serve an extra purpose since my rights to the land are protected anyway ?It will increase the land value when I decide to sell it ?Other factors (please add: ----------------------------------------------------------------------)

Q13. Registering the basira at the land registry is not important because: (check one or more boxes)

?The Amin who drafted the basira guarantees my right to the land ?The court where I authenticated the basira guarantees my right to the land ?My social network (connections, tribal affiliation, etc) and I are capable of guaranteeing my right to the land ?I know and trust the seller ?The witnesses to the basira will testify in court ?The parcel’s neighbors will testify in court ?I don’t intend to sell ?Other factors (please add: ----------------------------------------------------------------------)

Q14. Are you planning to go to register the basira at the land registry?

?Yes ?No (if no, go to Q16)

Q15. When are you planning to register the basira at the land registry?

?Tomorrow ?Sometimes this month ?Sometimes next month ?Don’t know

Q16. Which of the following statements concerning registration at the land registry applies in your case (check one or more boxes):

?Registration is important but the problem is that the cost (tax) is excessive ?Registration is important but the problem is the back payments required for previous non-registered transactions ?Registration is important but the problem is the penalties for delays in registration ?Registration is important but the problem is dealin g with civil servants (corruption) ?The cost of registration is not worth the benefits ?Authentication at the court is enough proof/guarantee of land ownership ?The cost of registration is not a problem but I don’t have money now/I have other more important obligations

137

?I don’t see what are the benefits of registration Q17. To register your land at the registry, you have to pay a tax on land transfers (daribet al-mabi’aat al-aa’kariyah). Do you know how much is this tax (check one box):

? Equal to 4% of land price ? Equal to 3% of land price ? Equal to 2% of land price ? Equal to 1% of land price ? Don’t know

Q18. The land transfer tax is in effect 3% of the price. Do you think it is (check one box):

? Excessive ? High ? Acceptable (if so, go to Q20)

Q19. What in your opinion is a reasonable tax rate for land transfer? (check one box)

? Equal to 2% of land price ? Equal to 1% of land price ? Equal to 0.5% of land price ? Land transfers should not be taxed

Q20. By law, transactions must be registered at the land registry within 15 days from the date of the transaction, which means the land transfer tax has to be paid by then. Do you know the penalty for delays in tax payment and registration? (check one box)

? An additional 2% of tax per month ? An additional 1% of tax per month ? An additional 0.5% of tax per month ? Don’t know

Q21. The penalty for delay in tax payment and registration is in effect 2% per month. Do you think this is (check one box):

? Excessive ? High ? Acceptable (if so, go to Q23) ? Don’t know

Q22. What in your opinion is a reasonable timeframe for tax payment and registration without penalties? (check one box)

? Within 15 days from the transaction date ? Within 1 month from the transaction date ? Within 2 months from the transaction date ? Within 3 months from the transaction date ? Within 6 months from the transaction date ? Don’t know

Q23. What in your opinion is a reasonable penalty payment for delays in registration from the transaction date and penalty for delay? (check one box)

? An additional 1% of tax per month

138

? An additional 0.5% of tax per month ? An additional 1% of tax within first 3-months of delay and another 1% afterwards ? Other (please add: --------------------------------------------------------------------------------) ? Don’t know

Q24. Do you know whether, during the registration process, you need to pay the tax on land transfers for previous unregistered transactions in the land? (check one box)

? Yes, I need to pay accumulated unpaid taxes ? No, I don’t need to pay accumulated unpaid taxes ? Don’t know

Q25. In effect, accumulated unpaid taxes must be paid for as a condition for registration. Which statement do you agree with (check one box)

? Collection of back taxes is reasonable and should be enforced ? Collection of back taxes is reasonable but should be discounted to encourage people to register ? Collection of back taxes is unreasonable/unfair and should be eliminated altogether if you want to encourage people to register ? Don’t know

Q26. In the registration process, the cost of surveying the land is as follows:

• In Lebna (Sana’a, Taiz): (i) A 10-lebna parcel costs about YR1,500; (ii) A 20-lebna parcel costs about YR2,700; (iii) A 30-lebna parcel costs about YR4,000; (iv) A 50-lebna parcel costs about YR6,700; etc.

• In Kassaba (Sana’a, Taiz): (i) A 20-kassaba parcel costs about YR1,500; (ii) A 30-kassaba parcel costs about YR1,850; (iii) A 50-kassaba parcel costs about YR3,050; (iv) A 100-kassaba parcel costs about YR6,100; etc.

• In square meters (Aden): (i) YR1,500 for parcels up to 400m2; (ii) YR3/m2 for parcels between 401-4,000m2; (iii) YR2/m 2 for parcels between 4,001-10,000m2; (iv) YR1.5/m2 for parcels between 10,001-25,000m2; etc.

Do you think this is (check one box):

? High ? Acceptable ? Low

Q27. Would you like to add any comments? ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

139

Annex 2. Land Registration Survey Results

Sana’a average

Aden average

All sample average

1. Land subject to today’s transaction traded before (percent) 63% 50% 58% 2. Available proof of land ownership: - Recently issued title deed by the land registry 37% 30% 34% - Historical Wathiqa /title deed (available at the registry) and proof of inheritance 35% 23% 30%

- Court-sanctioned Hiyaza (adverse possession) and proof of inheritance if any 18% 3% 12%

- Other form of document (unregistered) and proof of inheritance if any 5% 8% 6% - No proof but community-sanctioned/witness testimony of Hiyaza 3% 3% 3% - SLREA 0% 8% 7% - Ministry of Construction (Public Works) or other government entity 2% 18% 8% - Waqf 2% 0% 1% 3. Transaction deed (basira) authenticated ( tawssiq) at the court (percent) 83% 73% 79% 4. That the previous basira was authenticated in court was -------- in the decision to buy

- Very important 72% 58% 66% - Important 7% 15% 10% - Moderately important 13% 0% 8% - Not important 3% 25% 12% - Not applicable 5% 0% 3% 5. That the previous basira was drafted by the Amin in question was ------ in the decision to buy

- Very important 42% 43% 42% - Important 32% 25% 29% - Moderately important 12% 10% 11% - Not important 10% 20% 14% 6. Personal or reputational knowledge of the other party in the transaction was ----------- in the decision to buy

- Very important 62% 60% 61% - Important 18% 10% 15% - Moderately important 10% 10% 10% - Not important 10% 20% 14% 7. Do you think that registration (tasjeel) of the basira at the land registry (sejel akary) is an important step?

- Very important 62% 78% 68% - Important 23% 15% 20% - Moderately important 5% 3% 4% - Not important 8% 3% 6% 8. What is more important: Authenticating the basira at the court or registering the basira at the land registry?

- Both are e qually Important 62% 58% 60% - Authenticating the basira at the court 22% 20% 21% - Registering the basira at the land registry 13% 23% 17% 9. Was the previous basira for the land registered at the land registry? - Yes 50% 40% 46% - No 47% 60% 52% - Don’t know 2% 0% 1% 10. That the basira/land was registered in the land registry was -------- in the decision to buy

- Very important 35% 33% 34% - Important 12% 20% 15% - Moderately important 23% 5% 16%

140

Sana’a average

Aden average

All sample average

- Not important 28% 35% 31% 11. Do you think it is important to register the basira at the land registry? - Yes 75% 85% 79% - No (Go to 13) 10% 15% 12% - Don’t know 12% 0% 7% 12. Registering the basira at the land registry is important as: - It protects my rights against other claimants and encroachments 63% 68% 65% - It ensures that I can receive a good compensation if it is expropriated by the State or encroached upon by others 32% 28% 30%

- It just makes the transaction “official” but does not serve an extra purpose since my rights to the land are protected anyway 17% 13% 15%

- It will increase the land value when I decide to sell it 20% 15% 18% - Other factors: You can obtain a copy of the deed if original is lost 2% -- 1% - Other factors: Registration is required to obtain a building permit 2% -- 1% - Other factors: Registration transfers ownership -- 5% 2% Sample size 53 35 88 13. Registering the basira at the land registry is not important because: - The court where I authenticated the basira guarantees my right to the land 33% 20% 28%

- I don’t intend to sell 22% 0% 13% - The Amin who drafted the basira guarantees my right to the land 18% 15% 17% - My social network (connections, tribal affiliation, etc) and I are capable of guaranteeing my right to the land

12% 3% 8%

- I know and trust the seller 3% 8% 5% - The witnesses to the basira will testify in court 5% 5% 5% - The parcel’s neighbors will testify in court 2% 5% 3% - Other factors (please add: --------------------------------------)∗ 5% 10% 7% Sample size 46 14 60 14. Are you planning to go to register the basira at the land registry? - Yes 75% 83% 78% - No (Go to 16) 17% 15% 16% When are you planning to register the basira at the land registry? - Tomorrow 17% 15% 16% - Sometimes this month 12% 15% 13% - Sometimes next month 7% 5% 6% - Don’t know 42% 45% 43% 16. Which of the following statements concerning registration at the land registry applies in your case?

- Registration is important but the problem is that the cost (tax) is excessive 32% 33% 32%

- Registration is important but the problem is dealing with civil servants (corruption) 15% 50% 29%

- Registration is important but the problem is the back payments required for previous non-registered transactions 10% 3% 7%

- Registration is important but the problem is the penalties for delays in registration 3% 5% 4%

- The cost of registration is not worth the benefits 2% 8% 4% - Authentication at the court is enough proof/guarantee of land ownership 15% 13% 14%

- The cost of registration is not a problem but I don’t have money now/I have other more important obligations 20% 18% 19%

- I don’t see what are the benefits of registration 12% 3% 8% 17. To register your land at the registry, you have to pay a tax on land transfers (daribet al-mabi’aat al-aa’kariyah). How much is this tax?

- Equal to 4% of land price 0% 0% 0% - Equal to 3% of land price 33% 35% 34% - Equal to 2% of land price 5% 10% 7% - Equal to 1% of land price 0% 3% 1%

141

Sana’a average

Aden average

All sample average

- Don’t know 62% 53% 58% 18. The land transfer tax is in effect 3% of the price. Do you think it is? - Excessive 52% 55% 53% - High 37% 35% 36% - Acceptable (Go to 20) 12% 10% 11% 19. What would be a reasonable tax rate for land transfer? - Equal to 2% of land price 8% 0% 5% - Equal to 1% of land price 17% 23% 19% - Equal to 0.5% of land price 23% 25% 24% - Land transfers should not be taxed 45% 48% 46% 20. By law, transactions must be registered at the land registry and the land transfer tax paid within 15 days from the date of the transaction. What is the penalty for delays in tax payment and registration?

- An additional 2% of tax per month 18% 8% 14% - An additional 1% of tax per month 2% 5% 3% - An additional 0.5% of tax per month 0% 0% 0% - Don’t know 78% 80% 79% 21. The penalty for delay in tax payment and registration is in effect 2% per month. Do you think this is?

- Excessive 68% 58% 64% - High 18% 25% 21% - Acceptable (Go to 23) 2% 8% 4% - Don’t know 10% 10% 10% 22. What would be a reasonable timeframe for tax payment and registration without penalties?

- Within 15 days from the transaction date 0% 5% 2% - Within 1 month from the transaction date 2% 3% 2% - Within 2 months from the transaction date 3% 5% 4% - Within 3 months from the transaction date 20% 10% 16% - Within 6 months from the transaction date 40% 50% 44% - Don’t know 33% 23% 29% 23. What would be a reasonable penalty payment for delay in registration from the transaction date and penalty for delay?

- An additional 1% of tax per month 3% 8% 5% - An additional 0.5% of tax per month 17% 18% 17% - An additional 1% of tax within first 3-months of delay and another 1% afterwards 27% 25% 26%

- Other factors (please add: --------------------------------------)∗ 17% 15% 16% - Don’t know 37% 35% 36% 24. Do you know whether, during registration, you need to pay the tax on land transfers for previous unregistered transactions in the land?

- Yes, I need to pay accumulated unpaid taxes 33% 45% 38% - No, I don’t need to pay accumulated unpaid taxes 18% 25% 21% - Don’t know 48% 28% 40% 25. In effect, accumulated unpaid taxes must be paid for as a condition for registration. Which statement do you agree with?

- Collection of back taxes is reasonable and should be enforced 3% 3% 3% - Collection of back taxes is reasonable but should be discounted to encourage people to register 38% 33% 36%

- Collection of back taxes is unreasonable/unfair and should be eliminated al together if you want to encourage people to register 45% 58% 50%

- Don’t know 13% 8% 11% 26. In the registration process, the cost of surveying the land is: In Sana’a (Lebna): (i) A 10-lebna parcel costs about YR1,500; (ii) A 20-lebna parcel costs about YR2,700; (iii) A 30-lebna parcel costs about YR4,000; (iv) A 50-lebna parcel costs about YR6,700; etc. In Aden (m2): (i) YR1,500 for parcels up to 400 m2; (ii) YR3/m2 for parcels between 401 -4,000m2; (iii) YR2/m2 for parcels between 4,001-

142

Sana’a average

Aden average

All sample average

10,000m2; (iv) YR1.5/m2 for parcels between 10,001-25,000m2; etc. Do you think this is ? - High 12% 53% 28% - Acceptable 40% 33% 37% - Low 22% 3% 14% - Don’t know 27% 13% 21% 27. Additional comments?∗ 40% 40% 40% Note: Numbers may not add due to rounding

143

Annex 3. Registration and surveying fee schedule in Yemen

Schedule of fees for land/real estate registration, Yemen SALR Fees Service categories YR USD Recordation/registration of contracts/basiras Land/real estate value <=YR0.5 m 500 2.7 Land/real estate value >YR0.5m and <=YR1.0m 1,000 5.4 Land/real estate value >YR1.0m and <=YR5.0m 2,000 10.8 For every YR1.0m of additional value over YR5.0m +200 1.1 Maximum fee collected 20,000 108.1 Recordation/registration of property amalgamation/subdivision 1,500 8.1 Recordation/registration of wills/grants/giveaways 1,000 5.4 Recordation/registration of final court decision on property ownership 1,500 8.1 Recordation/registration of subdivision contracts: Between heirs 2,000 10.8 Between partners 5,000 27.0 Property mortgage contract 500 2.7 Recordation/registration of mortgages: For commercial use 2,000 10.8 For non-commercial use 500 2.7 Proces -verbal for documentation of squatting/wada’ yad 5,000 27.0 Advertisement of lost document to issue replacement 1,000 5.4 Issue of copies/information on location of registry and documents 1,000 5.4 Identification of land classification (flat versus marahek) 3,000 16.2 Recordation/registration of freehold contracts from SLREA: Area <=450m2 1,000 5.4 Area >450 m2 and <=900 m2 3,000 16.2 Area >900 m2 and <=3,00 m2 5,000 27.0 Area >3,000 m2 and <=10,000 m2 10,000 54.1 Area >10,000 m2 20,000 108.1 Recordation/registration of leasehold/usufruct contracts from Awqaf / SLREA: Area <=450 m2 500 2.7 Area >450 m2 and <=900 m2 1,000 5.4 Area >900 m2 and <=3,00 m2 2,000 10.8 Area >3,000 m2 4,000 21.6 Occupational license for real estate brokers 5,000 27.0 Renewal of occupational license for real estate brokers 2,000 10.8

Note: Official exchange rate LCU/US$1 (2004 average): 185.5 As of FY2002, all land/real estate registration/recordation fees are transferred to Local Councils. Source: Survey Authority and Land Registry, 2004 (Schedule applied since December 29, 2001)

Schedule of fees for cadastral surveying, Yemen SALR, 2004 Fees Property area YR USD$ 1-400m2 1,500 8.1 401-4,000m2 3/m2 0.016 4,001 -10,000m2 2/m2 0.011 10,001-25,000m2 1.5/m2 0.008 25,001-50,000m2 1.25/m2 0.005 50,001-100,000m2 1.0/m2 0.004 100,001-250,000m2 0.75/m2 0.003 250,001-1,000,000m2 0.50/m2 0.001 Over 1,000,000m2 0.25/m2 0.016

Source: Survey Authority and Land Registry, 2004 (Schedule applied since January 2, 2001

144

Annex 4. Breakdown of Appeals and Primary Court Cases, Ibb Governorate, April 2000-March 2001

Primary and appeals courts caseload statistics, Ibb Governorate, April 2000-March 2001 (1421 hijri)

Total caseload Cases resolved at year end Pending cases at year end Pending as %

Prev. year

New Total % of total

Prev. year


Prev. year


of total caseload

Ibb Appeals Court (population covered: 1,939,000)

Total civil caseload of which 1,225 508 1,723 355 49 404 870 459 1,329 77% Shufaa 140 50 190 11% 31 2 33 8% 109 48 157 12% 83% Rent 51 29 80 5% 15 5 20 5% 36 24 60 5% 75% Property ownership dispute 73 31 104 6% 19 2 21 5% 54 29 83 6% 80% Total Ibb Primary Courts (population covered: 1,939,000)

Total civil caseload of which 544 1,499 2,043 345 898 1,243 199 601 800 39% Shufaa 100 224 324 16% 48 125 173 14% 54 97 151 19% 47% Rent 49 112 161 8% 27 64 91 7% 22 48 70 9% 43% Property ownership dispute 65 184 249 12% 44 120 164 13% 21 64 85 11% 34%

Breakdown of primary court caseload statistics, Ibb Governorate, April 2000-March 2001 (1421 hijri)


Prev. year


Prev. year


Prev. year


of total caseload

West Ibb Primary Court (~155,000) Total civil caseload of which 33 131 164 30 87 117 3 44 47 29% Shufaa 3 7 10 6% 3 3 6 5% 0 4 4 9% 40% Rent 2 19 21 13% 2 12 14 12% 0 7 7 15% 33% Property ownership dispute 0 0 0 0% 0 0 0 0% 0 0 0 0% NA Eat Ibb Primary Court (~155,000) Total civil caseload of which 9 71 80 6 54 60 3 17 20 25% Shufaa 0 6 6 8% 0 6 6 10% 0 0 0 0% 0% Rent 1 14 15 19% 1 13 14 23% 0 1 1 5% 7%

145


Prev. year


Prev. year


Prev. year


of total caseload

Property ownership dispute 1 2 3 4% 1 1 2 3% 0 1 1 5% 33% Yarim Primary Court (185,000) Total civil caseload of which 29 128 157 26 106 132 3 22 25 16% Shufaa 2 18 20 13% 2 16 18 14% 0 2 2 8% 10% Rent 0 3 3 2% 0 2 2 2% 0 1 1 4% 33% Property ownership dispute 4 42 46 29% 3 36 39 30% 1 6 7 28% 15% Nadera Primary Court (71,000) Total civil caseload of which 19 80 99 19 65 84 0 15 15 15% Shufaa 3 14 17 17% 3 10 13 15% 0 4 4 27% 24% Rent 0 0 0 0% 0 0 0 0% 0 0 0 0% NA Property ownership dispute 4 5 9 9% 4 4 8 10% 0 1 1 7% 11% Zi Sofal Primary Court (155,000) Total civil caseload of which 238 202 440 68 29 97 170 173 343 78% Shufaa 65 45 110 25% 14 8 22 23% 51 37 88 26% 80% Rent 32 19 51 12% 11 3 14 14% 21 16 37 11% 73% Property ownership dispute 25 14 39 9% 6 3 9 9% 19 11 30 9% 77% Mokhader Primary Court (99,000) Total civil caseload of which 33 103 136 32 61 93 1 42 43 32% Shufaa 3 7 10 7% 2 4 6 6% 1 3 4 9% 40% Rent 3 5 8 6% 3 5 8 9% 0 0 0 0% 0% Property ownership dispute 2 3 5 4% 2 1 3 3% 0 2 2 5% 40% Odayn Primary Court (122,000) Total civil caseload of which 9 28 37 9 17 26 0 11 11 30% Shufaa 1 4 5 14% 3 1 4 15% 0 1 1 9% 20% Rent 0 7 7 19% 0 4 4 15% 0 3 3 27% 43% Property ownership dispute 3 9 12 32% 3 6 9 35% 0 3 3 27% 25% Gabala Primary Court (137,000) Total civil caseload of which 6 72 78 5 23 28 1 49 50 64% Shufaa 1 17 18 23% 0 4 4 14% 1 13 14 28% 78% Rent 0 5 5 6% 0 2 2 7% 0 3 3 6% 60% Property ownership dispute 1 9 10 13% 1 2 3 11% 0 7 7 14% 70% Boadan Primary Court (116,000) Total civil caseload of which 19 92 111 19 50 69 0 42 42 38%

146


Prev. year


Prev. year


Prev. year


of total caseload

Shufaa 2 14 16 14% 2 8 10 14% 0 6 6 14% 38% Rent 0 7 7 6% 0 4 4 6% 0 3 3 7% 43% Property ownership dispute 2 15 17 15% 2 5 7 10% 0 10 10 24% 59% Qafr Primary Court (88,000) Total civil caseload of which 18 45 63 12 28 40 6 17 23 37% Shufaa 1 7 8 13% 0 2 2 5% 1 5 6 26% 75% Rent 4 6 10 16% 3 6 9 23% 1 0 1 4% 10% Property ownership dispute 1 8 9 14% 0 6 6 15% 1 2 3 13% 33% Sadda Primary Court (79,000) Total civil caseload of which 14 71 85 12 47 59 2 24 26 31% Shufaa 4 23 27 32% 4 20 24 41% 0 3 3 12% 11% Rent 0 0 0 0% 0 0 0 0% 0 0 0 0% NA Property ownership dispute 0 2 2 2% 0 0 0 0% 0 2 2 8% 100% Radma Primary Court (69,000) Total civil caseload of which 10 153 163 6 102 108 4 51 55 34% Shufaa 1 14 15 9% 1 10 11 10% 0 4 4 7% 27% Rent 0 9 9 6% 0 3 3 3% 0 6 6 11% 67% Property ownership dispute 1 9 10 6% 1 4 5 5% 0 5 5 9% 50% Shaar Primary Court (41,000) Total civil caseload of which 23 62 85 21 49 70 2 13 15 18% Shufaa 0 3 3 4% 0 2 2 3% 0 1 1 7% 33% Rent 0 0 0 0% 0 0 0 0% 0 0 0 0% NA Property ownership dispute 9 17 26 31% 9 14 23 33% 0 3 3 20% 12% Siany Primary Court (106,000) Total civil caseload of which 52 110 162 48 85 133 4 25 29 18% Shufaa 10 31 41 25% 10 25 35 26% 0 6 6 21% 15% Rent 6 2 8 5% 6 2 8 6% 0 0 0 0% 0% Property ownership dispute 9 15 24 15% 9 15 24 18% 0 0 0 0% 0% Sabra Primary Court (66,000) Total civil caseload of which 5 31 36 5 26 31 0 5 5 14% Shufaa 0 2 2 6% 0 2 2 6% 0 0 0 0% 0% Rent 0 1 1 3% 0 1 1 3% 0 0 0 0% 0% Property ownership dispute 0 4 4 11% 0 4 4 13% 0 0 0 0% 0%

147


Prev. year


Prev. year


Prev. year


of total caseload

Hobeish Primary Court (101,000) Total civil caseload of which 11 21 32 11 11 22 0 10 10 31% Shufaa 1 5 6 19% 1 1 2 9% 0 4 4 40% 67% Rent 1 2 3 9% 1 0 1 5% 0 2 2 20% 67% Property ownership dispute 1 1 2 6% 1 1 2 9% 0 0 0 0% 0% Hazm odayn Primary Court (71,000) Total civil caseload of which 5 17 22 5 5 10 0 12 12 55% Shufaa 1 3 4 18% 1 0 1 10% 0 3 3 25% 75% Rent 0 1 1 5% 0 0 0 0% 0 1 1 8% 100% Property ownership dispute 2 7 9 41% 2 1 3 30% 0 6 6 50% 67% Mezekhra Primary Court (74,000) Total civil caseload of which 1 40 41 1 25 26 0 15 15 37% Shufaa 0 2 2 5% 0 1 1 4% 0 1 1 7% 50% Rent 0 12 12 29% 0 7 7 27% 0 5 5 33% 42% Property ownership dispute 0 2 2 5% 0 2 2 8% 0 0 0 0% 0% Fare’ odayn Primary Court (79,000) Total civil caseload of which 10 42 52 10 28 38 0 14 14 27% Shufaa 2 2 4 8% 2 2 4 11% 0 0 0 0% 0% Rent 0 0 0 0% 0 0 0 0% 0 0 0 0% NA Property ownership dispute 0 20 20 38% 0 15 15 39% 0 5 5 36% 25%

148

Annex 5. Revenues from Land and Real Estate Registration, Surveying and Taxation of Property Transfers

Total Revenues from Land Real Estate Registration, Surveying and Taxation of Property Transfers in Yemen, 2000-2004

2000 2001 2002 2003 2004

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000 )

% change

YR (m)

US$ (,000)

% change

A. Revenues of surveying and registration activities:

40.4 249.6 NA 62.4 370.0 48% 92.0 516.0 39% 116.6 635.7 23% 133.9 722.0 14%

Cadastral surveying & other fees*/** 23.9 147.5 NA 41.3 244.6 66% 65.3 366.0 50% 84.8 462.1 26% 96.1 518.2 12%

Registration fees 16.5 102.1 NA 21.2 125.4 23% 26.8 150.0 20% 31.9 173.6 16% 37.8 203.8 17% B. Revenues of registered property transfer tax

425.4 2,630.3 NA 572.9 3,396.1 29% 683.1 3,830.7 13% 1,078.3 5,878.1 53% 1,568.0 8,453.0 44%

Total revenues associated with registration (A+B)

465.7 2,879.9 NA 635.3 3,766.1 31% 775.1 4,346.8 15% 1,195.0 6,513.8 50% 1,702.0 9,175.0 41%

Treasury’s share ** 445.5 2,754.9 NA 604.1 3,581.2 30% 702.3 3,938.5 10% 1,104.8 6,022.1 53% 1,597.2 8,610.1 43% SALR’s share 20.2 124.9 NA 31.2 185.0 48% 46.0 258.0 39% 58.3 317.8 23% 67.0 361.2 14% Local councils share*** -- -- -- -- -- -- 26.8 150.3 NA 31.9 173.9 16% 37.8 203.8 17%

Note: Official exchange rate: YR/US$1 (period average): 161.72 (2000); 168.68 (2001); 178.31 (2002); 183.45 (2003); 185.5 (2004). Source: SIMA/EIU * Other fees include revenue from sale of maps and other miscellaneous fees (e.g. purchase of tender documents) retained by SALR ** 60% of cadastral surveying revenues are retained by SALR and 40% are forwarded to the Treasury (which also collects property transfer tax revenues). *** As of FY2002, all property registration/recordation fees are transferred to Local Councils. Source: Survey Authority and Land Registry, 2005

149

Total Revenues from Land and Real Estate Registration, Surveying and Taxation of Property Transfers in Sana’a Municipality, 2000-

2004 2000 2001 2002 2003 2004

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000)

% change

YR (m)

US$ (,000)

% change

A. Revenues of surveying and registration activities

18.6 115.0 NA 24.8 147.0 28% 31.8 178.3 21% 40.3 219.7 23% 52.0 280.3 28%

Cadastral surveying & other fees*/**

10.3 63.7 NA 14.8 87.7 38% 20.9 117.2 34% 26.7 145.5 24% 34.6 186.5 28%

Registration fees 8.3 51.3 NA 10.0 59.3 16% 10.9 61.1 3% 13.6 74.1 21% 17.4 93.8 27% B. Revenues of registered property transfer tax

259.3 1,603.4 NA 314.4 1,863.9 16% 408.5 2,291.0 23% 751.1 4,094.3 79% 1,080.3 5,823.7 42%

Total revenues associated with registration (A+B)

277.9 1,718.4 NA 339.2 2,010.9 17% 440.3 2,469.3 23% 791.4 4,314.0 75% 1,132.3 6,104.0 41%

Treasury’s share ** 268.6 1,660.9 NA 326.9 1,938.0 17% 413.5 2,319.0 20% 757.7 4,130.3 78% 1,088.9 5,870.1 42% SALR’s share 9.3 57.5 NA 12.3 72.9 27% 15.9 89.2 22% 20.1 109.6 23% 26 140.2 28% Local councils share*** -- -- -- -- -- -- 10.9 61.1 NA 13.6 74.1 21% 17.4 93.8 27%

Note: Official exchange rate: YR/US$1 (period average): 161.72 (2000); 168.68 (2001); 178.31 (2002); 183.45 (2003); 185.5 (2004). Source: SIMA/EIU * Other fees include revenue from sale of maps and other miscellaneous fees (e.g. purchase of tender documents) retained by SALR ** 60% of cadastral surveying revenues are retained by SALR and 40% are forwarded to the Treasury (which also collects property transfer tax revenues). *** As of FY2002, all property registration/recordation fees are transferred to Local Councils. Source: Survey Authority and Land Registry, 2005

150

Distribution of Revenues from Land and Real Estate Registration and Taxation of Property Transfers in Yemen by Governorate, 2002-

2004 2002 (YR m) 2003 (YR m) 2004 (YR m)

Survey/

other revenue

Registry revenue

Property transfer tax rev.

Total revenue (1+2+3)

% of total

Survey fees

Registry fees



% of total

Survey fees

Registry fees



% of total

Sana’a-HQ 15.7 10.2 408.5 434.4 57.1% 32.6 13.6 751.0 797.2 66.7% 74.0 17.4 1,080.3 1,171.7 67.7% Aden 8.5 4.0 40.4 52.9 6.9% 8.9 3.5 39.3 51.7 4.3% 6.3 0.4 43.3 50.0 2.9% Taiz 4.5 1.8 87.4 93.7 12.3% 6.2 3.1 99.2 108.5 9.1% 9.8 4.3 158.1 172.2 9.9% Hodeidah 2.8 0.9 27.7 31.4 4.1% 2.1 0.9 40.8 43.8 3.7% 3.3 1.2 46.5 51.0 2.9% Ibb * 2.9 2.1 70.1 75.1 9.9% 3.0 1.2 90.1 94.3 7.9% 4.0 2.9 147.6 154.5 8.9% Mukalla 4.9 2.4 17.2 24.5 3.2% 6.3 2.5 18.9 27.7 2.3% 5.5 4.9 31.3 41.7 2.4% Sa’yun * 4.8 1.9 15.0 21.7 2.9% 14.3 5.7 11.4 31.4 2.6% 13.3 3.3 25.7 42.3 2.4% Zamar * 1.2 0.5 6.0 7.7 1.0% 2.3 0.9 11.8 15.0 1.3% 2.5 1.0 16.0 19.5 1.1% Lahj 3.2 0.5 3.7 7.4 1.0% 2.0 0.8 2.4 5.2 0.4% 3.1 0.4 1.5 5.0 0.3% Abyan 3.8 0.4 0.5 4.7 0.6% 2.0 0.8 0.8 3.6 0.3% 0.7 0.1 0.4 1.2 0.1% Shibwa 0.3 0.1 0.2 0.6 0.1% 0.8 0.3 0.1 1.2 0.1% 0.2 0.0 -- 0.2 0.0% Amran 0.2 0.1 1.4 1.7 0.2% 0.0 0.0 2.0 2.0 0.2% 0.3 0.5 4.3 5.1 0.3% Hajja * 0.1 0.0 0.9 1 0.1% 0.3 0.1 1.4 1.8 0.2% 0.9 0.1 1.3 2.3 0.1% Mahwit 0.0 0.0 0.1 0.1 0.0% 0.2 0.1 0.2 0.5 0.0% 0.1 0.1 0.7 0.9 0.1% Maareb -- 0.0 1.1 1.1 0.1% 0.0 -- 1.0 1.0 0.1% 0.0 0.1 1.4 1.5 0.1% Saada 0.1 0.1 1.5 1.7 0.2% 0.2 0.1 0.2 0.5 0.0% 0.3 0.0 0.1 0.4 0.0% Dhalee 0.2 0.1 1.3 1.6 0.2% 0.6 0.2 1.6 2.4 0.2% 0.8 0.3 3.3 4.4 0.3% Other branches * 1.0 0.4 6.0 7.4 0.6% 1.0 0.8 6.2 8.0 0.5%

Total 53.2 25.1 683.0 761.3 100% 82.5 34.2 1,078.2 1,194.9 100% 125.8 37.8 1,568.0 1,731.6 100%

Source: Based on data provided by Survey Authority and Land Registry, 2005 * In 2003, the follo wing branches were added: Mahara, Bayda and Jawf. In addition, accounting for: Say’un includes Qutn branch; Ibb includes Qaida

branch; Hajja includes Tihama branch; Zamar includes Jhran branch

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Annex 6. Additional Detailed Comments on the MOLA draft

Article 2: The definition of “first registration” needs further clarification and accurate formulation. The law also specifies that first registration activities are established by Minister Decree. There needs to be a definition of the “Minister” (is it the Minister of Justice?), especially that the SALR is currently under the Prime Minister. There are also undefined terms in the draft law including optional registration, mandatory registration, etc. It is advised to shift definitions of the registers to Chapter 1 (Real Property Register System), Article 5. Articles 10 and 11: There is a contradiction in defining the officer in charge of the registration department; article 10 defines it as Office Director, article 11 Real Property Registry Director, and in other articles, as Director of Registry Office. The function must be standardized in all provisions of the law to prevent contradictions or each function should be defined with the role and competence. Article 13: The way of ascertaining that an application is valid/correct is unclear to prevent different interpretations and curb discretion and rent-seeking behavior related to acceptance or refusal of registration applications. Article 17: Since the Constitution empowers the judiciary to determine the jurisdiction in which disputes and litigations are settled, this article would need to be redrafted. It may be advisable to postpone registration until the court issues its verdict. Article 31: This article would be better placed in article 27 or article 68. It is also important to state which division of the Court of Appeals would examine contested settlement decisions, preferably the civil division. Article 33: The article mentions the Minister, which is undefined. It is also recommended that the decision to inaugurate mandatory registration activities would be made by the Chairman of the Authority rather than the Minister. Article 34: The mandatory registration publicity procedures (frequency of advertisements, broadcasting announcements or, publicity period, etc) are not determined. It is suggested that the publicity period would be at least four weeks prior to the inauguration of the work (30 days is mentioned in article 40). This article should also address the issues of absentee claimants and those unable to attend to present their documents during the process of registration for reasons beyond their control. Article 35: This article stipulates that mandatory registration activities may not start except six months after the announcement of the decision of the Authority Chairman, which is contrary to the provisions of article 33 where the decision is made by the Minister. This article also mentions that the

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period starts from the date of announcement of the decision and should also address the publicity process to ensure consistency with Article 34. Articles 38.39 and 40: These articles (on the announcement of the start of mandatory registration activities) should be annexed to article 35 in the form of successive clauses or article 35 would be annexed with article 38 and articles 39 and 40 joined in one clause to make them consistent. The different periods indicated in articles 35 and 40 should be clarified (work starts at least six months after the announcement of the Chairman’s decision and at least 30 days after the start of broadcasting and publicity) to prevent any ambiguity or contradiction. Article 42: It is recommended to state that the TSC should draw on the advice of local community members such as Akel Al Hara, Adl Al Mahal, etc, which would be included/nominated to the Committee and whose local knowledge would be critical in informing the TSC decisions. The appointment of the Judge should be by the HJC (as opposed to the Minister of Justice) as this is part of the Council’s prerogatives. Article 43: Given concerns over the safety of TSC in case of field-based adjudication due to the frequency in which ownership disputes turn into armed conflicts, it may be advisable that the TSC undertake settlement activitie s in a designated office, and undertake field inspections as necessary. Article 44: This article did not stipulate the maximum timeframe for the TSC to examine the different claims and prepare the schedule of claims, and the maximum timeframe to issue a settlement decision. The article does not also address the decision-making framework: is it the judge’s decision or the TSC’s decision? Does the decision need to be unanimous or by majority? These procedural issues need to be clarified. It may also be advisable to place this article in or before article 66. Articles 48.49 and 50: Many problems shall result from these articles, in reality, if they remain as they are, particularly as there is actually a legal contradiction existing presently between the provisions of the civil code and the evidence law with respect to accusation and the gaining and waiving retroaction and the periods of hearing actions. Therefore, the provisions of these articles in the law bill need more tightening and reformulation in light of all above and on the basis of what is established by the judicial work in this respect in order not to add yeast to the brew and to have problems multiplied and complicated in this regard. Article 53: It is unclear which “mahdar” are meant by this article? In addition, reference is to the procedures stipulated in Article 12, which is a mistake since the latter talks about a different issue. Article 63: This article is interpreted as if the Civil Code provisions are the exception, whereas it is the basic definition of real property rights. As such, this provision needs to be deleted. Article 64: The maximum window in which objections to the preliminary schedule of rights are accepted and the timing of hearings should be stated.

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Article 65: Article 43 stipulates that the TSC’s work is field-based. This article concerning the TSC hearing of objections suggests that field visits are optional, which suggests office-based activities. Both articles are thus contradictory. Article 66: Same issues raised in comments on article 44. Articles 67 and 68: The notification means indicated by the first article need to be consistent with the realities in our country and therefore, the notification may be by an official minutes from the committee, by the zone or area chieftain or by the police station in which the residence of the party exists. The term (absentia decisions to absentees) should be clarified as taking the provision of this term as it is makes it applicable only to whoever is absent from attending all the previous sessions of the committee before the issue of its decision and not applicable to whoever is present in the committee sessions but did not attend the session of announcing the decision of the committee only. The content of the provision of these two articles is contradicting to what was decided by the jurist in this respect in the law of procedures where different procedures were decided concerning the way of communicating decisions and how to calculate the contest period of verdicts. Therefore, all this should be taken in consideration to reformulate these two articles to be consistent with the law of procedures or in a way not to violate it or to decide that in a way to make this provision an exception of common rules. Article 70: The term (when it becomes absolute) must be deleted and the following term ( whenever the verdict becomes final) is sufficient as the final verdict is the incontestable with any manner of the normal or exceptional contesting ways while the absolute verdict is the one that decides the issue and this verdict may be primary, appeal or even a revocation verdict. Therefore, the absolute verdict may be contestable and every absolute verdict is not a final verdict but a final verdict is an absolute verdict. Article (93): We advise adding the following expression to the end of this article (if a difference rises, the subject is referred to the competent court) and we advise that an article be added thereafter determining the following: (any decision issued by the real estate registration director is contestable before the competent court within 30 days from notification thereof to the parties). Article (95): We don’t know why the following expression is included in the article (real estate credit as in reality there are no contracts bearing such a denomination or related thereto contrary to the mortgage contract or the modern contract known as the funding lease contract and therefore, and not to leave this expression as mentioned, any contracts may be concluded hereunder as we believe that such an expression for contract samples has no meaning. Article (98): We don’t know any reason for stipulating this article. Does the content of this article mean that those indicated properties are not entered in the real estate register in the name of the state similarly to the rest of the other state properties which were entered and are entered to the real estate register, otherwise what is the meant by this article? Articles (101, 102, 103, 104):

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The content of these articles should be consistent with the content of the previous articles to avoid any repetition of provisions or contradiction or difference among them particularly the content of the precedent articles Nos. (9, 10, 11, 12, 13, 14, 15, 16, 39 and 40). Article (105) para no. (2): The content of this para is incorrect and contradicts the provisions of the civil code and the personal law as the incompetent or with incomplete competence may be a proprietor of any property right and therefore he may register any property right with the real estate register and except that the incompetent or who has incomplete capacity may not by himself conclude any disposal of his property but that should be either through the court, executor or guardian if the court has agreed to him to conclude such an act. Article (107): This article should be formulated correctly with another criterion of preponderance or establishing a clear criterion to protect rights. Article (108): The content of this article is contradicting the provision of article (5) of the presently effective real estate registration law as it decides that the actions between contracting parties are not considered effective unless register in the real estate register is completed while the provision of this article in the bill takes it in consideration and prohibits registration before establishing authenticity. How could this be acceptable and how can we establish that while it is not registered? How those not abiding by registration are rewarded while those abiding by law are declined real estate registration? Article (added): There is no legal basis for such an article but it contradicts the requisites of the law itself and it shall provoke numerous disputes and problems in addition to what has been said concerning our comment on articles (48 until 50). Article (110): The term (the absolute degree) should be changed to the term (the final degree) or (definitive degree) for reasons above stated in article (70) concerning difference between the meaning of absoluteness and a change must be effected to the following term adding the term (definitive) or (final) to read the expression as follows (or the issue of a final verdict for registration) or (issue of a definitive verdict of registration). Article (112): The expression (by a final judicial verdict) should be changed to the expression (by a definitive verdict) to match what is decided by previous article or change the content of previous article to match what is decided here to make reliance in all articles of the bill on a final judicial verdict or a definitive judicial verdict to avoid contradiction as is presently existing as some are decided by a final verdict and others are decided by a definitive verdict, of one hand and from the other hand because there is a difference between the final verdict and the definitive verdict as the final verdict is uncontestable by normal methods i.e by appeal but is contestable by exceptional ways which are contest by revocation or contest by petition for reconsideration while the definitive verdict and in accordance to what is stated above in article (70) is the one which is uncontestable by any means of contest either normal or exceptional. Article (113):

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The expression (absolute verdict) should be changed to the expression (definitive verdict) for the same above grounds. Article (115): The expression (final verdict) should be changed to the expression (definitive verdict) for the same above grounds. Article (122): Repetition of the content of article (97). Article (127): Should be moved to come after article (114). Articles (144, 145 and 146): There is no need for these articles as their content is already incorporated in the provisions of previous articles. Article (147): The expression (final degree) should be changed to the expression (definitive degree) for the same above grounds. Two articles (added) and article (149): The expression (a verdict of first degree) and the expression by (final verdict) should be changed to the expression (by definitive verdict) for the same above grounds. Article (153): The expression (by a final verdict) should be changed to the expression (by a definitive verdict) for the same above grounds. Article (155): Punishments and fines should be decided and compensations to the damaged party. Article (158): At the beginning of this article add (subject to what other laws determine) in order not to prejudice any other provision which may provide better remedy or punishment than that in this article. Article (165): The content of this article is incorrect and violates the requirements of law enforcement as the state of affairs established that fraud and problems currently existing are mostly resulting from these documents that enable some people by various ways to synthesize them and make them appear as if they were old and related to earlier years and on this basis they register them in the real estate register under the pretext that they are old documents to which searching procedures are inapplicable and by these documents and after registration in the real estate register they were able to conclude many illegal sales and provoked many problems and committed many infringements on lands owned by others and kept courts busy by many unnecessary actions and therefore we advise canceling this article in order not to be a pretext in future to the endeavors currently made to organize the real estate registration and put an end to the real estate anarchy that is prevailing in the country by acknowledgement of all people and also to prevent this article to be an open door for continuous real estate problems and disputes and to increase such problems and disputes in addition to their actual state.

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Annex 7. Process and problems of land acquisition for investment and non-investment/residential use in Hodeidah City42

Process and problems of land acquisition for residential use: According to the director of the Hodeidah branch of the SLREA, the issue of freehold and leasehold land tenure contracts in Hodeidah City has been stopped since 1999. Land is allocated for residential or non-residential use (takhssiss) following instructions from SLREA headquarters in Sana’a or, as is often the case, from the Governor and/or GLC. In this case, a right-of-use contract (akd takhssiss) is issued. The transformation of any akd takhssiss into akd tamlik (freehold) or Akd Ijar (leasehold) occurs within certain timeframes determined by Presidential or Ministerial decree (the last such period was between 1996 and 1998). Otherwise, Presidential instructions are the only way to receive a freehold contract. A total of 767 contracts were issued by SLREA between 1995 and 2003. The procedure is as follows. SLREA Hodeidah receives applications all year round from citizens requesting the allocation of a land parcel through takhssiss. Once every 6 or 12 months, the authority undertakes an allocation process by matching the applications with the available non-distributed parcels (in that, SLREA relies on the detailed neighborhood plans provided by the Planning Department). Land parcels on average range between 150 and 500m2. According to SLREA, an average of 100 parcels are allocated each year. SLREA issues the right-of-use contracts and registers the beneficiaries’ names to prevent multiple allocations to the same person (a very difficult task since the registry is manual) or family (which is impossible to prevent). When a decree determines a window for leasing public land, SLREA Hodeidah publishes an announcement inviting interested citizens to submit applications. SLREA inspectors then undertake an inspection of the parcel to ensure that no utility lines pass through it and to survey its dimensions (occupants often expand their parcels’ boundaries). It is unclear whether the boundaries are scaled back to their original dimensions or the difference is simply noted for the purpose of accurately determining the rental amount. The request is then sent to a valuation committee to determine the appropriate rental/sale price (in the past, SLREA relied on a chart of land prices but it was not updated since the decree stopping land sales and leases was issued in 1999). According to the SLREA director, the value assigned to inhabited land parcels (those were mostly distributed before the revolution) is 50% of the price it would be expected to fetch on the market at the time of the assessment, while parcels assigned in the new (peripheral) subdivisions would be priced 25-30% less than its expected market value. It is unclear on which basis the committee determines market values in urban extension zones with no prior market activity or for unserviced land. The valuation committee also determines the lease/sale terms, including the number of installments. The beneficiary then signs the lease/sale contract and submits some guarantee of his/her ability to pay (the guarantor usually is a business registered in the chamber of commerce, the employer, Akel Al Hara, or other social figure). The highest land values are found in parcels fronting main paved roads (those with 30m or more in width), which in 2003 could fetch as much as YR3,000 (USD 16.7) per m2. Parcels on secondary streets fetched on average YR1,000 per m2 (USD5.6). Of the areas undergoing

42 Source: Wahba, Sameh, 2004a.

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distribution in 2003, neighborhood 611 (to the north, near Jizan road) fetched the highest prices. Such prices are clearly not affordable to the majority of the population of Hodeidah City, where a high incidence of poverty acts a curb to demand for land. As for rental values, SLA director estimated that on average parcels leased for YR5,000-10,000 (USD27.8-55.6) per annum, which is intended to ensure that the low-income majority in Hodeidah City had an affordable option (besides squatting). In the past few years, residential land in the city has typically been allocated to members of housing associations rather than to individuals. Most housing associations form with civil servants according to professional affiliation or place of work (e.g. army officers, Public Telecommunications Corporation engineers, etc). The association registers with the Ministry of Social Affairs and then secures approval for its application from the Governor and/or Local Council. The location assigned to the housing association depends on the number of members vis-à-vis the available lands.43 For civil servants, the payroll serves as guarantee of members’ ability to pay. A modified procedure is used to legalize squatters’ tenure. The process starts with the parcel’s inspection to ensure that the site’s safety (a report called Takrir Salama Faniya is issued). Squatters are then asked to sign a letter of intent, called Taahod Shira’/Ijar, to eventually buy or lease the parcel in the future in order to be issued the right-of-use letter. Only when they obtain the SLREA authorization can squatters apply for electric power and water supply. If a subsequent sale and/or lease period is decreed and former squatters do not apply to buy/lease their land parcels as they committed, SLREA contacts the utility providers to suspend their services until the situation is legalized. Process and problems of land acquisition for investment purposes: A different procedure applies to investors seeking to acquire (usually through lease) land for investment purposes, including industria l, commercial, touristic, or even residential developments. Typically the investor would approach the GIA’s Hodeidah branch with a feasibility study and a request for a parcel of land (often pre-selected, but sometimes not). The GIA would examine the proposal and visit the site to ensure its suitability to the desired investment project. GIA would then involve the relevant ministry branch according to the nature of the investment project (agriculture, industry, tourism, etc) as well as other relevant public agencies (environment, water, etc). Ultimately, GIA and the relevant authorities produce an assessment of the project, which is sent for approval to the Local Council. When all the necessary approvals and paperwork are completed, the GIA issues a request, endorsed by the Governor, to SLREA so as to assign a site for the investment project. If a parcel has not been pre-identified by the investor, SLREA assigns a site to the investor (in the case of industrial development, land is usually assigned outside of the urbanized perimeter). The planning department’s involvement of the selection of an appropriate site for an investment project occurs only on an ad hoc basis, if any. The preliminary procedure is called Mahdar Tahdid awaly, and it determines the maximum time period during which the investor has to start construction. When site development seems underway, SLREA then issues Akd Takhssiss (its conversion to a leasehold depends on instructions arriving from the abovementioned authorities).

43 Half of the parcels in neighborhoods 511 through 519 have been assigned to housing associations, and so is all of 328 and part of 732. The neighborhoods on both sides of the planned 90m ring road (the port bypass road) are also expected to accommodate several housing associations in the future.

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The two-step procedure in assigning land for investment purposes owes to the prevailing tendency in many Yemeni cities for speculators to acquire land under false investment projects, although such a phenomenon is much more acute in Aden and Mukalla than in Hodeidah. Hence the importance of follow up to ensure investors’ seriousness, which is the task of SLREA’s monitoring department. The problem, however, is that investors are only held responsible to the timeframe suggested in their feasibility study. There are no rules or pre-determined regulations as to the maximum time allowed for investors to complete and operate their projects, which means that land in theory can be locked indefinitely by non-serious or unprofessional investors or land speculators. The subsequent conversion of Akd Takhssiss into a leasehold/freehold contract follows the same procedures as with residential land, with the lease/sale value determined by the valuation committee. This creates a climate of uncertainly for investors who embark on an investment project without knowing a priori the cost of one of the key ingredients in the venture, which means that they are unable to determine a rate of return. Ultimately, by virtue of lobbying the Governor and GLC, investors end up settling on a reasonable value, but such conditions clearly do not help in creating a predictable environment for business. The alternative, to acquire land on the market, is generally not advantageous to investors so long as the option of receiving a discounted price exists (whether the de facto 30-50% discount applied by the valuation committee or more as a result of lobbying). The other critical factor that complicates land transfers is the lack of an updated and reliable land registry, which means that investors and residents are unable to check whether there are disputed ownership claims over a land parcel they seek to acquire is dispute. This explains why prospective land buyers prefer to trade with sellers known to them or to their network or those who have third party guarantee (from a respected person, Akel Al Hara, etc). Another interesting approach is also used: prospective land buyers request that sellers dig the parcel in question first. Such action would trigger any person or entity disputing the parcel’s ownership to step forward. If no claimants show up within one or two weeks, then the deal is concluded and payment is made. Recently, a new route for land acquisition for investment purposes is becoming more commonplace, which is causing confusion in the land allocation process. The new route owes its origin to the large number of investment projects that have not (yet) been completed and the perceived inefficiency of the different public organizations involved in the conventional process (GIA, SLREA, etc). As a result, in 2002, the Hodeidah Governor transferred control over the prime lands designated for investment purposes, especially waterfront sites, to the CIF, which is widely viewed as one of the most efficiently run public sector organizations in the governorate. Investors now directly approach the governor at first who, upon approving the project proposal (as part of the administrative council44), refers them to CIF to assign a site and negotiate the lease terms. Investors also approach GIA to register their project and process the necessary tax and customs exemptions.

44 The administrative council is a 5-person council that includes the Governor, the Secretary General of the GLC, and the three heads of committees in local council: planning, development and finance; services; and social affairs.

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The Governor’s direct involvement and follow up and the CIF’s effective management may indeed have produced better results, given that the few contracts negotiated since 2002 are for the most part operating, but modifying the investment project cycle has also caused confusion among investors. Bypassing non-performing institutions may seem to solve the problem in the short run, but it also creates a climate of uncertainty and reinforces a perception of unpredictable governance, which can have damaging effects on investment levels in the long run. What is needed instead is to build the capacity of existing institutions.

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Annex 8. Process and problems of land acquisition for investment and non-investment/residential use in Mukalla City45

Process and problems of land acquisition for residential use: Land is earmarked and allocated for residential or non-residential use (a procedure known as hajz or takhssiss) following instructions from SLA headquarters in Sana’a or from the Governor and/or GLC, as is typically the case. In this case, a Akd Ijar for a period not exceeding 30 years is issued against the payment of a pre-determined rental amount (usually a highly subsidized price that does not account for the delivery of services). In other circumstances (although which are unclear), a akd Intifaa (usufruct) is issued. The only requirement is that the land parcel in question be located in a “planned” area (i.e. for which a detailed neighborhood plan already exists and which acts as the basis for distribution and for eventual service delivery in the future). A akd tamlik (freehold), including the so-called akd majan (zero-payment freehold contract or land grant), can only be issued if there are Presidential instructions. In theory, the process of acquiring a land parcel for residential use in Mukalla City starts with housing associations or individuals submitting requests for land to SLREA. Housing associations typically form of civil servants according to professional affiliation or place of work (e.g. army officers, Public Electricity Corporation—PEC—engineers, etc) and register with the Ministry of Social Affairs. The request for land, whether from individuals or housing associations, usually needs to be endorsed by a member of the governorate or municipal council (this requirement, some argue, reinforces clientelist relationships, although it turned out in reality that obtaining a local councilor’s signature is a relatively easy task in Yemen). Citizens’ requests are then matched against the available non-distributed land parcels in a process that relies on the detailed neighborhood plans provided by the Urban Planning Department. Land parcels usually range between 150 and 500m2. SLREA then issues a document or Wathika (either a Akd Ijar or akd tamlik according to the situation) and records the beneficiaries’ names in its registry to prevent multiple allocations to the same persons (a very difficult task since the registry is manual) or family (which is impossible to prevent). Yet, according to the Hadramout SLREA director, the problems associated with the official process of access to land, including widespread corruption and lengthy cumbersome procedures, coupled with the special political and socio-economic situation especially during the early 1990’s, have all contributed to the development of two unlawful methods of acquiring land. The first method, which was dominant throughout the 1990s, consisted of corrupt engineering staff working for the Public Works directorate, usually in the Planning department or Building Permit section (especially the “area engineers”), selling so-called site forms (Istimaret Mawque’) to those seeking to obtain land. These unscrupulous engineers collected information on vacant, not-yet-distributed land parcels from the detailed neighborhood plans (to which they had access in the Public Works’ Planning Department) and reproduced the site information in seemingly official forms, which they then sold to those seeking to obtain land. Unsuspecting citizens believed that the engineers’ employment with the Public Works directorate entitled them to distribute land and they trusted in the seemingly official status of the Istimaret that they have paid for. The Istimaret Mawque’ itself was not cancelled until 2003. Local authorities often tolerated

45 Source: Wahba, Sameh, 2004b.

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the status quo or compensated the citizens with another land parcel, which may be one of the reasons that kept this method alive. The second method involves a variant on the official procedure of obtaining urban land, namely that those seeking to obtain a land parcel start by squatting on a vacant site with undisputed ownership (usually by building a makeshift structure at night or on Friday). The process of obtaining urban land is thus transformed into one of legalizing existing squatter tenure. In doing so, squatters start by addressing a request to SLREA to legalize their land tenure. The request needs to be endorsed by a member of the governorate or municipal local council. SLREA then forwards the request to the Public Works Directorate, which dispatches the “area engineer” (responsible for inspections in the area in question) to visit the site and report whether it is technically fit for inhabitation or not (the outcome is a report called Takrir Salama Faniya). SLREA checks that the squatted-upon site in question has not been distributed before and (in theory) that the prospective beneficiary has not been given other land parcels before (a very complicated task since only a very small portion of beneficiaries of land have been registered on a digital database). If the Takrir Salama Faniya decrees the site fit for inhabitation and if SLREA finds that the site has not been distributed before and that the recipient is entitled to receive a parcel (on account of not having obtained other State land), then SLREA proceeds with the legalization process (otherwise, the procedures are stopped). SLREA typically dispatches its own area engineer (from the technical department) to ensure that the squatter site and that visited by the Public Works directorate match and that the forms have been properly filled. SLREA performs this (admittedly redundant) crosscheck in part to curb any possible excesses and to reduce the possibility of errors. Indeed, SLREA’s registry only contains alphanumeric data, which means that unique markers need to be used in identifying the site (e.g. by referencing the site to adjacent streets, landmarks and even owners of neighboring parcels). The next step involves the documentation of the land parcel in question on the detailed neighborhood plan (a process called Iskat), including any modifications to the planned road network that may be needed as a result of the legalization of the squatter site. Such alterations to the road network are usually proposed by the Area Engineer to reflect the modified/actual conditions on the ground and need to be approved by the director of the Planning Department. The problem in Mukalla is that plans were frequently changed in the past to accommodate all sorts of excesses (squatting, annexation of public lands, etc), which has earned a corrupt reputation for many planners and engineers in the Hadramout Public Works Directorate. The next step involves the recording of the site in question and its occupant in the SLREA registry (a process called Tawssiq ). SLREA then prepares the necessary forms and sets in motion the procedures to issue a akd takhssiss to the squatter in question. The main step is to determine the amount that the squatter will need to pay for the parcel. A pre-determined list (called La’eha Maliya Assaar Arady) details the price of urban land as a function of the area of the parcel in question, the neighborhood in which it is located, and the width of the street fronting the parcel. One of the main problems with the land prices list is that, for a given (and long) period of time, it fixes land prices that do not get adjusted to account for inflation or other such factors. For locations or situations not covered in the list or when the latter has not been updated in some years, SLREA relies instead on an appraisal committee (Lagnet Tathmin). Charts with land prices have reportedly not been updated since the Presidential decree stopping land sales and leases was issued in 1999. This puts the onus on the valuation committee, which theoretically should charge a fraction of the price (50%-75%) that the land could fetch on the market at the time of the assessment (a very arbitrary

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assessment especially in the case of new land subdivisions where comparable land parcels do not exist). When squatters have paid the necessary amount or provided a guarantee of their ability to pay (the guarantor is usually a registered business, the employer, Akel Al Hara, or other prominent person), their application is referred to the legal affairs department to prepare the appropriate contract document (Wathika). The document is in most cases a Akd Ijar and in few cases a akd tamlik (if there are Presidential instructions or if the occupancy that is being legalized dates from the Qaety Sultanate, after crosschecking the documents against the Sultanate’s archives at the Ministry of Finance’s branch). In theory, squatters cannot apply for a connection to the electric power and water supply networks before finalizing the legalization process and obtaining appropriate tenure documents from SLA. In reality, only PEC-Hadramout requires applicants to submit appropriate land tenure documents endorsed by SLREA before connecting to the electricity network. Water and telecommunications services are reportedly provided without checking land tenure documents (the request only needs to be endorsed by a local politician, a business, employer, Akel Al Hara or other prominent figure). A variant of the legalization of existing squatter tenure is very common in Mukalla City. This is a process known as Taadil, which consists of legalizing the status of additional lands that the owner/occupant has annexed to his/her parcel in the past. The most typical such case is the annexation of a strip of land fronting a privately held parcel to create a front yard, usually by carving such strip out of the public domain (whether by reducing the planned street width or extracting a piece of the land earmarked for public services). The process usually requires the Iskat and Tawssiq steps, which in turn rely on a site inspection and the issue of a report on the feasibility of such annexation on technical grounds (Takrir Salama Fanniya or Takrir Fanni Khass Be Arady Al Benaa), before undertaking the Taadil process. Usually, if the application for annexation is well endorsed, if the annexation is technically feasible and/or more importantly if a precedent exists (i.e. another adjoining land parcel that annexed parts of the said street), then the process proceeds with an authorization of the change of the land parcel’s dimensions (using a form known as Istimaret Taghier Hodoud wa Abaad Ket’et Ard) followed by an amendment of the existing land contract (using a form known as Istimaret Idafet Missaha Illa Akd). The annexed parts are then considered to be legally held by the applicant after payment of the necessary fees. The proliferation of the Taadil process in Mukalla City in the past decade is another example of the large-scale problems and excesses surrounding the land issue in Mukalla City and its region. Indeed, the Taadil process was often undertaken by individual landowners who feared that unscrupulous Public Works engineers and planners would subsequently alter the detailed plans, usually by narrowing the street width and extracting a new row of land parcels fronting existing landowners. Existing landowners/occupants forestalled such fears by annexing all adjoining public land separating their parcels from the streets to prevent that these be subsequently distributed for residential use. Process and problems of land acquisition for investment purposes: The chaotic distribution of land for investment purposes is arguably the main land-related problem in Mukalla, especially with the chaotic pattern of land distribution that occurred between 1992 (when the GIA was established) and 1995. Indeed, Yemen’s reunification in 1990 opened the door to land ownership after two decades of socialism in the former South. As a result, many speculators and unprofessional unseasoned investors presented any sort of investment project, often without feasibility study, to the then newly created GIA as a way of acquiring large parcels

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of land (otherwise not obtainable by individuals applying for land for residential use) and in some instances also to obtain exemptions from tariffs. Of 281 investment licenses issued by GIA between 1992 and 2002, 162 projects (58%) have been aborted or were never implemented for various reasons. Chief among those reasons are land problems, which primarily characterizes projects licensed throughout the 1990s. Such issues include non-designated sites (for all recently licensed projects), disputed ownership of the land (usually with tribes). Poorly located and/or unserviced sites represent other major hurdles identified by investors as main reasons for the failure of their investment projects. In total, land related problems explain the failure of 74 out of 159 investment projects (47%) that failed in Mukalla City between 1992 and 2003. A particularly pressing problem is the land ownership disputes with tribes or individuals claiming that their control over the land extends back to the Qaety Sultanate (sometimes with documents of dubious quality). Such ownership disputes halt the implementation of many investment projects for long periods of time. Investors are also usually required by the courts to settle with the tribes, which adds large amounts of settlement money to the investment project’s cost. In particular, Al Akabra tribe has single -handedly aborted or delayed many of Mukalla’s most anticipated investment projects. Most recently, the tribe received YR260million (USD1.44 million) from Al Bokshan conglomerate in settlement money for a 6km2 waterfront parcel on which the investment company intended to build a USD15 million fish-canning factory. This constitutes a major cost to the investor and represents a counterproductive step at the same time when the Government offers land for free if the underlying investment projects are worth more than USD10 million. This chaotic situation lasted throughout the 1990’s although there has been a marked improvement since 1996 (compared with the 1992-1995 period, in which most of the problems took place). The enactment of the SLRE Law in 1995 was specifically intended to remedy such chaotic land distribution. The main achievement of the new legislation was to consolidate all powers to distribute urban land in the hands of SLREA, thereby curbing the excesses of the local branches of the Agriculture and Awqaf Ministries and the GIA. Today, the problem is that there are no available sites for investment projects in Mukalla City and almost all the region between Burum and Al Shihr. This is due to two reasons. The first is the fact that all appropriate sites within approximately a 40km distance from Mukalla City Center (encompassing most developable lands from Halla to the west to Rayan to the east) and all waterfront sites and those both sides of the east-west highway between Burum and Al Shihr City have already been distributed/designated for a specific use. The second factor is that there is today a moratorium put in place by the Governor of Hadramout following the President’s instructions on the distribution of land for both investment and agricultural purposes. At the time of the survey, SLREA officials reported that there were only 3-4 requests being processed for investment sites, all of which were for residential developments and none in Mukalla (all four were located in Al Shihr and Mifaa cities). Only “serious” investors, including most notably established Saudi investment conglomerates such Al Bokshan, appear to be exempted from the moratorium. SLREA distributes investment sites only if it receives instructions from the President or the Governor. To prevent speculators and unserious investors from acquiring investment sites by way of individual application for regular sites for residential use (a practice which started after the moratorium was made), SLREA policy is not to distribute land parcels for residential use that are larger than 1,600m2 (40m by 40m). In addition, the President issued instructions to the Prime Minister in December 2002 for the repossession of the lands leased for investment projects since 1990, but which have not been developed (the implementation delay was not specified). The GIA’s board of directors, headed

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by the Prime Minister, also issued a series of decrees in April 2002 that aimed to deal with the issue of non-implemented investment projects. Decree no.158 cancels all licenses issued to investment projects since 10 or more years but which have not yet been implemented. Decree no.159 authorizes all investment projects licensed for 6 or more years but that were never built to be publicly bid among investors, including the licensee. Decree no.160 reinforces the 6-year window for implementation by giving a one-year delay to investment projects licensed in 1997, including the allocation of sites, but which have not yet been implemented. Investors that began working on their projects are exempted from the revocation of their site and licenses (although it is unclear whether a fenced parcel is considered as beginning of implementation). All these directives are aimed at addressing the problem of unserious investors and curbing land speculators. In theory, the process of acquiring land (usually through lease) for investment purposes, including industrial, commercial, touristic, or even residential developments, involves prospective investors approaching the Hadramout branch of the GIA with a feasibility study and a request for a parcel of land (often pre-selected, but sometimes not). At the GIA, the proposal is examined often in conjunction with the relevant ministry branch according to the nature of the project (agriculture, industry, tourism, etc) and with other relevant public agencies (environment, water, etc). Ultimately, GIA and the relevant authorities produce an assessment of the project, which is sent for approval to the Local Council. When all the necessary approvals and paperwork are completed, the GIA requests the Public Works directorate’s planning department to identify an appropriate site for the project based on the master plan’s recommendations (especially if the site has not been pre-identified by the investor) and issues a letter, endorsed by the Governor, requesting SLREA to assign the site identified by the investor or by the planning department for the investment project. There are several problems with this process. The first problem is that there are no officially designated sites for investment purposes (there are no maps identifying the sites for distribution to investment projects, whether overall or by sector). The second problem is the lack of industrial lands (the two industrial zones in Khalf and Salb remain unplanned and without services even if they are almost entirely distributed). The third problem is the high prospect of land ownership disputes for a large number of unbuilt land parcels in Mukalla City. In summary, it seems that investors in the 1992-1995 period selected any site they preferred, but then later opted for any site that was available as land became increasingly unavailable. Since 2000, a two-step procedure was developed in leasing land for investment purposes. The idea is to ensure investors’ seriousness and thus address with the issue of speculators acquiring land under dubious investment projects. The first step, called Mahdar Istilam, hands over the site to the investor and specifies the maximum timeframe during which construction has to start (failure to do so is grounds for withdrawing the site). When site development is underway (usually when 75% of the project has been built), SLREA then issues a Akd Ijar or in few instances a Akd tamlik (if there are Presidential instructions). One problem with this process, however, is that investors are only held responsible to the timeframe suggested in their feasibility study. There are no pre-determined rules as to the maximum time allowed for investors to complete and operate their projects, which means that land in theory can be locked indefinitely by non-serious or unprofessional investors or land speculators. The other key problem in converting a Mahdar tasslim into a leasehold/freehold contract is that the lease/sale value is not pre-determined or agreed with the investor. Instead, the value of the

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land is subsequently determined by the valuation committee. This creates a climate of uncertainly for investors who embark on investment projects without knowing a priori the cost of one of the essential factor inputs, which means that they are unable to determine the venture’s rate of return vis-à-vis their hurdle rate. Ultimately, by virtue of lobbying the Governor and GLC, investors end up settling on a reasonable value, but such conditions clearly do not help in creating a predictable environment for business. In the case of the fish-canning factory “Tuna”, the lease contract was only issued after the President inaugurated the plant. Prior to that, there was a dispute between the owner and the valuation committee on the lease amount (the valuation committee at first requested YR50/m2 and the owner ultimately paid YR3/m2). To add predictability to the issue of land pricing, the COM issued a decree (no.167) in 2003, which set the price of land in industrial estates as follows. Investment projects exceeding USD10 million are granted the land for free whereas investments of less than USD10 million can either rent or buy the land (the purchase option, however, is restricted to those with Presidential instructions). Rental contracts for industrial land are given a 10-year grace period at first, followed by an annual lease of USD0.5 per m2 for the following 10 years, USD1 per m2 for the next 10 years, and then by half the rental amount for subsequent years. The alternative for investors, acquiring land on the market, is generally not advantageous given the overall scarcity of investment sites in Mukalla (and hence the elevated asking prices) and so long as the option of receiving a discounted price exists (whether the 30-50% discount applied by the valuation committee or more as a result of lobbying). The other critical factor that complicates land transfers is the lack of an updated and reliable land registry, which means that investors and residents are unable to check whether there are disputed ownership claims over a land parcel they seek to acquire. And in Mukalla many investors were reportedly forced to purchase their land parcel multiple times. This explains why prospective land buyers prefer to trade with sellers known to them or to their network or those who have third party guarantee (from a respected person, Akel Al Hara, etc). Another interesting approach is also used: prospective land buyers request that sellers dig the parcel in question first. Such action would trigger any person or entity disputing the parcel’s ownership to step forward. If no claimants show up within one or two weeks, then the deal is concluded and payment is made. Rowainat settlements and the problems of land distribution and pricing: The four settlements known as Rowainat 1 through 4 are particularly relevant examples in explaining the chaotic land distribution and pricing issues that plague Mukalla City and Region, making its land market highly dysfunctional and hindering the region’s ability to accommodate future growth in an orderly way. Today, 10 years after land distribution, these four subdivisions are still for the most part uninhabited. These four subdivisions were distributed by the GIA as investment sites in residential projects during the 1990-1994 period. The smallest land subdivision, Rowainat 1, had approximately 600 parcels whereas the largest, Rowainat 4, had 4,000 parcels. Some of these subdivisions were political handouts distributed in a rush before the events that culminated in the 1994 civil war. As a result, a settlement such as Rowainat 4 did not have a detailed plan upon distribution. The land distribution process did not stipulate a maximum amount of parcels that anyone investor (individual or company) could obtain, which meant that a small number of speculators and well-connected individuals obtained very large landholdings. In Rowainat 4 subdivision, for instance, approximately 10-12 individuals jointly own 1,000-1,500ha of land. Some of these speculators own over 100 land parcels each (5-10ha).

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Land was almost leased for free: the annual lease amount in Rowainat 4 is YR0.65per m2, which for 400m2, 500m2 and 600m2 parcels amounts respectively to USD1.4, 1.8 and 2.2 annually. Beneficiaries of land were required instead to pay so-called Rossoum Moagala, which in effect are a lump sum payment charged to each parcel and intended to cover the cost of service delivery. In Rowainat 4, the Rossoum Moagala were set at YR130,000 or USD722 per parcel. A Presidential decree later absolved investors from paying this one-time fee if they contributed themselves to service delivery in the area in question. In their effort to avoid paying the lump sum payments for land, the largest residential, industrial and touristic investors in Rowainat 1-4, Khalf industrial area and waterfront area made an agreement with the Governorate executive leadership in 1996 to co-finance a series of services in the area, including widening the main east-west road connecting Rayan with Rowainat (by Joul Al Massha) and financing a 12km 300mm water main serving these areas. Each benefic iary was thus asked to pay a fee to finance these improvements, and which would guarantee in return the delivery of services to their parcels. This so-called service fee (Rossoum Khadamat) was set at YR260/USD1.4 per m2 in residential parcels in Rowainat 1, whereas in Rowainat 2 it was set at YR68/USD0.3 per m2 for residential use and YR317/USD1.8 per m2 of commercial use. There were, however, three problems with the land pricing system put in place for these subdivisions. The first was that many beneficiaries of land did not pay their part in the hope of free riding, which meant that the funds were unable to cover the servicing cost, which in turn delayed the provision of services. The second and interrelated problem is that the collected funds were not gradually invested in service delivery. The money was instead deposited into a Fund called Sandouk Al Khadamat, which was faced with many pressures from competing needs for services throughout the city. Moreover, some funds were advanced for other uses (including co-financing the aerial photography of 2002). The services account today has been partly decapitalized and the remaining funds are clearly insufficient to cover the cost of servicing today (another associated problem is that many beneficiarie s think that they have put in their share, so they currently expect services to come at not extra cost to them). The third problem resulted from scrapping the easily administered de facto lump sum fee Roussoum Moagala and introducing the Roussoum Khadamat, which brought about many legal loopholes that eventually stalled the project. It proved to be very complicated to apportion the services improvement (i.e. the road widening and the water main) on the different categories of investors (which included an agreement on excluding residential beneficiaries). Many landholders disputed the payment amount that was required of them and/or the service that they were being asked to fund. In addition, where beneficiaries of land paid for certain fees—for instance, in Rowainat 4, landholders paid YR24,000 (USD133) as a share of detailed site planning and demarcation of parcel boundaries—and did not see any services in return, a situation of mistrust was created.

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Laws (in Arabic): • Civil Law No. 14 of 2002 • Law No. 4 of 2000 concerning the Local Authority • Republican Decree concerning Authentication/Notarization Law No. 29 of 1992 as

amended by Law No. 34 of 1997 • Republican Decree concerning Endowment Law No. 23 of 1992 • Republican Decree concerning Evidence Law No. 21 of 1992, as amended by Law No.

20 of 1996 • Republican Decree No. 32 of 1993 concerning Administrative Decree of the Survey

Authority • Republican Decree concerning Registration Law No. 39 of 1991 • Republican Decree concerning State Lands and Real Estate Law No. 21 of 1995

(executive decree No. 170 of 1996)

Draft proposed laws (in Arabic): • Proposed Land Registration Law Draft by the Survey Authority and Land Registry

(SALR), 2002 • Proposed Land Registration Law Draft by the Ministry of Legal Affairs (MOLA), 2004 • Comments by the Ministry of Justice on the Proposed Land Registration Law Draft by

the Ministry of Legal Affairs (MOLA), 2004 • Proposed State Land and Real Estate Law Draft by the State Lands and Real Estate

Authority (SLREA), 2004

Statistical Reports (in Arabic): • Statistical reports from the Land Policy Task Force (LPTF) participants: SALR, SLREA,

MOJ, MOPWH, MOLA, MOF, Judiciary, Private Sector • Taiz Appeals Court: Annual Statistical Report for the year 1422 hijri (March 2001-

February 2002) • Ibb Appeals Court: Annual Statistical Report for the year 1421 hijri (April 2000-March

2001)

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