Brussels. December 10th, 2013
“Impersonal Transactions and
Registries of Property Rights”.
Fernando P. Mendez González
Director of International Relations.
Colegio de Registradores de la
Propiedad y Mercantiles de
España.
Personal Transactions and Perfect Information.
In the simplest scenario of personal transactions:
•perfect information exists.
•there is no need for institutions to compensate
asymmetries in information.
•there are no associated "transaction costs".
•Land usually stays in the same hands for generations
and all members of the community know each other.
Impersonal Transactions. Uncertainties. Institutions.
In modern Market Economies, where
Impersonal Transactions are frequent,
when dealing with Real Estate, we are
faced with some uncertainties:
•
who is the owner?
•
Do privileged liens/burdens exist?
•
Is the property correctly described?
When purchasing a certain plot of land the buyer is not only dealing with the
transferor, but with all the previous owners who later transferred that same
property.
Those previous dealings may affect the present acquisition via a real action,
conceived as a protective instrument of the owner's ius disponendi.
Impersonal Transactions. Uncertainties. Institutions.
•In impersonal transactions all the risks lie on the buyer side: he cannot know for
sure who the owner is, and the owner has at his disposal the reivindicatory
action.
•The buyer cannot know what vicissitudes may affect the preceding contracts,
which may be protected by an actio in rem which, and as a consequence, may
lose the acquired right.
•Under these circumstances, whoever acquires a good- be it movable,
immovable or a credit- is actually acquiring a "surprise box" (Ascarelli)
•The roman doctrine of titulus constitutes a formidable obstacle for the
development of Commerce and Credit.
Impersonal Transactions. Uncertainties. Institutions.
•Merchants in the middle ages solved this inconveniences with the Lex Mercatoria
(LM), establishing a causal disconnection inter tertios,
•LM made a clear separation between the legal regimes applicable to movable and
immovable property.
•LM acknowledged the bona fide buyer of movable goods, a superior set of rights to
those attributed to the verus dominus.
•The buyer, by onerous title and in good faith, was disconnected and immune to the
causal vicissitudes affecting the prior contracts regarding the same good, which in
the roman system of titulus could affect him.
•For this Rule to fully operate it was necessary that the good had been acquired from
a Merchant.
Impersonal Transactions. Uncertainties. Institutions.
•After the end of the Old Regime, most western European countries underwent
different forms of Land Liberalisation.
•The roman system of Justus Titulus was a big hindrance for the circulation of
Land and the establishment of Real Estate and Mortgage Markets.
•As opposed to movable property, where possession has a legitimizing effect,
Real Estate allows the simultaneous concurrence of several iura in rem, which
may or may not imply possession.
•To solve these issues European States devised different strategies, being the
most common the adoption of Registries of Documents and Registries of
Rights.
The Registry of Rights
•The defining feature of the Registry of Rights is the so called “Registry
Legal Authority” which implies a transactional disconnection inter
tertios.
•For the Market, the registered owner is the true owner, and no liens
or burdens, other than those registered, exist. (except strictly limited
legal privileges).
•Whoever acquires a ius in rem, by onerous title and in good faith, from
the registered owner protected by the Legal Authority of the Registry,
enjoys the same level of indefeasibility than the buyer of chattel from a
merchant, by onerous title and in good faith.
The Registry of Rights
•Registries of Rights aim at addressing the first two issues we previously
examined: Who is the owner of the Land, and whether or not burdens
exist.
•In the Real Estate field the identification or description of the Land (third
question) is sufficiently evident through the peaceful and undisputed
possession in relation to the neighbouring plots of Land.
•The biggest interest in the geometrical depiction of the Land is that of the
State, and for the sole reason of collecting taxes. This is the origin of the
Cadastre.
Land Registry and Cadastre
•The Land Registry is an institution of the State for the sake of the Market, so in an
impersonal environment, real estate transactions can be conducted in an agile and
secure manner.
•The Cadastre, is born as an Institution of the State for the State, to enable territorial
taxation.
•Public law has strongly permeated the property rights over real estate, especially for
urban planning and environmental reasons.
•Taxes on the property of land have lost its historical importance as the main source
of income for the State, resulting in a relative loss of importance of the cadastre.
•In recent times physical technologies for faithfully reproducing and depicting the
Earth's surface, have been developed with ever decreasing explicit and implicit costs.
All this has opened new necessities and organisational possibilities.
Graphical Data and Public Law Constraints
Should the use of Graphical Databases be compulsory in the Registration
Procedures?.
•From a theoretical perspective: Yes… as long as it brings desired utilities to the
market at a cost the market is willing to pay.
•In practice, mapping is costly and slow, and even in developed countries it is
impossible to keep an updated physical depiction of all the territory at the speed the
market moves.
•Such depiction should, perhaps, be reserved for the first entry of a property at the
registry, and subsequently for physical alterations which also imply modification of
rights.
•Should the Cadastre graphic data be the only admissible in the registration
procedures? Or shoud the State define standards for such information so any
compliant provider or professional could supply it?. No reason for monopolies.
Graphical Data and Public Law Constraints
Should the Registry include among its functions disclosing information
about urban planning and environmental constraints?.
•Registries of Rights supply information which is produced at the Registry:
who is the owner?, what are the preferred liens and burdens?..
•Urban planning and environmental constraints have a legal origin, and/or are
caused by other institutions, not the Registry. Therefore, the Registry should
just link to such institutions but not provide and be responsible for that
information.
•On the other hand, Registries of Rights are a powerful tool for enforcing
urban planning and environmental legislation (also in the field of taxation),
and the State could use the registrars as gatekeepers controlling the
fulfillment of public laws governing private transactions at a zero cost.
In conclusion…
•Some of the issues addressed in this intervention, as well as many others, are
certainly complex and open to debate.
•It seems necessary to formulate a consistent strategy and course of action,
that a consensus is reached on these matters by our Association, to guide the
policies of ELRA in relation with which projects should be undertaken, and what
position should be adopted towards other Institutions of the so called “Land
Administration”.