Real estate management 2018-07-18T14:31:13+00:00

REAL ESTATE MANAGEMENT

Local governments often own and manage high-value real estate, which poses a variety of risks, especially with regards to corruption.

Municipality management is regularly engaged in different forms of dealings with municipally-owned real estate, such as auctions, direct selling and buying, granting a mortgage or lease, exchange of land, as well as, public-private partnerships.

Local officials, since they are often exposed to highly profitable real estate transactions, may be involved in corruptive activities such as calculation of the value of the land below its actual market price in exchange for an improper benefit or give an advantage to the third party without considering alternative options.

For these reasons municipalities should conduct regular procedures for land dealings through transparent processes and procedures, which may involve: setting clear requirements, fees and deadlines for responses in order to minimize corruption risks and optimize the quality of provided service.

INTEGRITY RISKS

An integrity risk assessment of land dealings and land registration may identify some or all of the following integrity risk factors (the list is not limited):

  • Officials assess the value of the land below its actual market price in exchange for an undue benefit.

  • Officials propose a sale to aid a third party without considering alternative more beneficial options (i.e. developing the land; or using the land for some community purpose). Officials sell the land without offering a competitive bidding process (i.e. an open tender which shall help ensure value for money.) Officials conceal information about all proposals concerning the land, or sell information to favour a particular party.

  • Officials allow poor recording of the relevant proceedings to prevent an effective audit trail.

  • Officials make use of inaccurate property rights registry to produce an out-dated record to aid a third party and enable an illegal sale. Officials transfer property to third parties based on forged property documents. Officials manipulate property documents, such as authorizations for forced evictions, contracts of sales, or issue documents on the basis of the unverified contracts of sale.

  • Officials arbitrarily deny entities of their property rights by refusing to record the property in the cadastre.

 RISK MANAGEMENT STRATEGIES

Following the risk assessment, the local government may consider the following risk management strategies as development points:

  • Introduce, implement and monitor policy/procedures for land dealings, aligned with relevant regulations and local priorities. Communicate them effectively to all staff. Train relevant personnel accordingly (induction and continuing training).

  • Prior to considering any land dealing, ascertain the precise value of the asset, including through obtaining an independent valuation.

  • Consider various alternatives for land dealing (i.e. use expert opinion, market research, etc). Clearly justify the reasons in case of a decision to dispose of land at below market price for strategic purposes.

  • Treat joint ventures with special attention because of their high risks and complexity. Formal joint venture agreements should be clear about the project outcomes, the timeframes, costs and financing, contributions of partners, management, and the risks and proposed gains. Require joint venture partners to commit to high ethical standards.

  • Ensure transparent and competitive processes for proposed land dealing. Ensure that relevant authorizations are in place and are adequately documented.

  • Ensure effective information exchange regarding all proposals concerning land of local government. Maintain transparency and adequate record keeping regarding all phases of the procedure when dealing with land, to provide an effective audit trail.

  • Promote transparent and effective land certification and registration systems. Use viable and affordable solutions that can simplify the process, allow easy monitoring and promote coordination between actors, including e-governance. (Digital cadastral data and internet access create guarantees for the interested parties. E-cadastre provides up-to-date data with the possibility to do surveys in real time, offering simplified digital data distribution with required accuracy, as well as, simplified approach to maintaining data.)

  • Integrate the existing recording systems with the other spatial information systems, as appropriate.

  • Maintain transparency and adequate record keeping in all phases of the property registration procedure, to provide an effective audit trail. Ensure effective document and record management system, including safe archiving (i.e. scanning, information security arrangements, etc).

  • Provide equal access for interested parties to record tenure rights and obtain information without any discrimination. Pay special attention to vulnerable groups (i.e. establish mobile offices, offer necessary counselling to these groups, as appropriate).

  • Make publicly and easily available information on tenure rights to all, subject to justified privacy restrictions. To prevent corruption, widely publicize processes, requirements, fees and any exemptions, and deadlines for responses to service requests.

  • To minimize corruption risks and optimize quality of service, consider introducing urgent and standard service delivery against appropriate fees.

  • Train relevant personnel to raise competence and awareness (induction and continued training). Pay special attention to secure access to up-to-date normative databases, to make sure officials are well aware of the regulatory changes affecting the land cadastre.

GUIDE TO CORRUPTION-FREE LOCAL GOVERNMENT