The Backdated Deed and the Caveat
On 2 March, a long-standing client, a land developer, asks you to attest a deed of sale of a 40-perch block for LKR 40 million and to date it 10 January. He explains that the buyer's bank delayed the funds and that a rival purchaser registered a caveat against the land on 15 February; the earlier date will 'put us ahead'. He also asks you to show the consideration as LKR 25 million in the deed to reduce stamp duty, with the balance paid 'off the record'. Your agreed fee is 1.5% of the true price, but he offers to pay half in cash 'for office expenses' without a receipt and says he will use another notary if you refuse. The buyer's NIC shows a different address from the one in the draft. The land is subject to a pending partition case, which the client says is 'only a formality'.
1. Can you backdate the deed or understate the consideration? Explain.
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Backdating is not permissible. The deed must bear the date of execution. Dating it 10 January when it is signed on 2 March makes it a false instrument, can amount to forgery and a false statement, and misleads the land registry and the court. The caveat registered on 15 February means the rival purchaser has given notice; a deed dated before the caveat does not automatically defeat it. Priority depends on registration and the caveat procedure, not on a false date. Understating the price from LKR 40 million to LKR 25 million is stamp duty evasion. The notary must not prepare a deed with a false consideration; stamp duty is payable on the true value, and the instrument may be impounded and the parties penalised. The notary's duty is to read over the deed and explain its true effect.
2. How should you deal with the fee, the identity mismatch and the pending partition case?
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Refuse the cash 'office expenses' and insist on a receipted payment to the office account. The fee should be based on the true price and disclosed. Verify the buyer's identity and address with the NIC and a recent utility bill; if the address differs, ask for an explanation and record it. A pending partition case is not a formality; it affects title and the parties. The notary should call for the case number, pleadings and orders, and check whether the land is subject to lis pendens. The client's pressure and threat to use another notary are not reasons to act. The notary should decline the transaction and document the reasons.
3. What are the consequences of complying with the client's requests?
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Complying could expose the notary to criminal liability for forgery, use of a false document and tax evasion; disciplinary action under the Notaries Ordinance, including suspension or removal; civil liability to the buyer, seller and rival purchaser; and loss of professional reputation. The deed may be void or voidable, and the notary may be ordered to pay compensation. Professional indemnity insurance may not cover dishonest acts. The correct course is to refuse and, if the client insists, withdraw from acting.