Property Transfer Services to Go Online in Ethiopia but some banks doubtful

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The Federal Supreme Court of Ethiopia is to launch a web-based property transfer authentication service but at a recent meeting to announce its launch, local banks expressed scepticism that it would tackle the problems it was targeted to solve.

The Website will feature a list of properties that are held as bank collateral, court orders and anyone who lends to the owner of the property, including the amount of money involved. The authentication and registration software currently is under installation and will begin rendering services in the coming two months.

Ethiopia's commercial code states that, when an agreement to transfer, through gift, sale or mortgage of immovable properties like buildings is made, it has to be authenticated and registered either by the courts or any other body that is given the authority.

However, a paper prepared and presented by Justice Menberetsehay Tadesse, vice president of the Supreme Court, two months ago revealed that the code has not been effectively implemented in the last 40 years due to the failure of courts and properly organised offices to carry out the authentication.

Menbertsehay also claimed that court orders freezing immovable properties from third-party transfer based on any litigant's request, as well as banks' grabbing of property title deeds for loan collateral, prevented them from being sold or transferred to a third party and has thus driven many houses out of the market. "This has its own role to play in the shortage of houses that has been witnessed in the country," concludes the paper.

Banks have no authority to take title deeds and this created problems for owners of the collateralised immovable properties from any kind of transfer or sale. They have the right only to have the property authenticated within the legal framework by the authorised body.

"I wonder how many are going to have the ability to make use of this technology," requested Araya Gebreegziabher, acting president of Wegagen Bank SC. "This also has to be considered." Abie Sanu, president of the largest bank in country, the Commercial Bank of Ethiopia (CBE), who strongly argued with Menberetsehay when he presented his paper to judges and the business community at the Sheraton Addis, considered the move commendable. But he shares the concerns of Araya that most people will not be able to have access and know-how to use the services. However, the banks acknowledged that there were no well organised offices at the city municipality to enable the Courts to authenticate contractual agreements.

"It was a legitimate fear," Menberetsehay told Fortune. "Though private banks have taken the initiative to order their legal departments to take seriously the law procedures when they prepared loan agreements, state-owned banks have yet to be seen implementing it." To deny banks room for excuses, the Supreme Court has decided to launch an online authentication service, Menberetsehay told Fortune.

(Source: Addis Fortune)