Publicity and Privacy in Land Reform in Scotland

This post is co-written by Dr. Jill Robbie (Glasgow University) and Anna Berlee (MEPLI fellow). It is a cross-post from the University of Glasgow School of Law Blog.

The previous post by Dr. Akkermans already mentioned the Land Reform in Scotland as an example of creative private law solutions. Today we would like to delve in a bit more with a specific eye to the reforms proposed in land registration  in Scotland looked at also in a broader light with perspectives from the EU with its recent 4th Money Laundering Directive and individual Member States like Germany with its limited access to land information. 

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The Young Property Lawyers’ Forum in photos (for now) – Oxford, 2014

 

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CROBECO continues: reflections from the CROBECO 2 Conference – 14 May 2014 Barcelona

In the past years I have reported (here, here and here)  on the Cross Border Electronic Conveyancing of Land (CROBECO) project run by the European Land Registry Association (ELRA) with its national partners. In this project there is a very prominent place for the Registradores de Espana, as the first CROBECO transfers all concern land situated in Spain. A logic place to hold a conference was therefore the headquarters of the Registradors de Catalunya in Barcelona.

The CROBECO project meanwhile is known as  CROBECO 2 and has become a project with financial support from the European Commission. At this conference a serious attempt was made to further realize the CROBECO project and I had the pleasure to join in to advice on the legal relationships between the parties involved. To recall, the CROBECO project enables the transfer of land situated in another Member State by completing the formalities for conveyance at a local notary. By making use of choice of law and jurisdiction options under the Rome I and Brussels I EU regimes, parties work as much under their own legal system as possible, before surrendering to the mandatory effects of the lex rei sitae. The CROBECO projects works on the basis of respect for existing legal systems and does not seek to change law.

An important part of this conference was to (re)consider the existing and future EU framework as well as to envisage in what situations EU citizens will be using CROBECO transfer possibilities. This includes the actual workflow between a Dutch or English notary and the Spanish Land Registry. Notaries are under a statutory obligation to ensure legal certainty and one of the most important problems to solve is how such a notary comes in a position in which he or she can decide to go ahead with the transfer at hand. This requires, as CROBECO has certainly learned in the past years, specialized notaries. Not all national notaries are going to be in a position to do this.

However, having stated that, CROBECO seeks to enable notaries as much as possible. For that purpose, the project now also includes the Gestores Administrativos. These are administrative agents that investigate the situation of Spanish parcels, including public and private law burdens, building permits etc.  Through the NetPRO platform (with other CROBECO tools, i.e. the help desk and the repository of clauses), which has been created under the heading of the CROBECO 2 project, notaries will be brought into contact with gestores and will be able to contract (independently from the platform) on the receiving of these information services.

Under further investigation are also the cases in which ownership of land is going to pass in the coming years. Research into EU wide data shows for example that Spain’s foreign property ownership is mostly in the hands of German and UK citizens. Especially when we look at land ownership of persons over 65, there is a very large group of UK land owners in Spain. Increasingly therefore CROBECO will also have to take passing of ownership on succession into consideration.

Finally, the CROBECO team is now also looking at banks and the providing of mortgages under the CROBECO framework. This is very interesting and highly relevant, but it does introduce an unseen level of complexity to the project. Banks, it is now clear, are very interested to join, especially if it enables them to provide domestic loans and foreign property security rights, but only on their terms. It is this latter aspect that will prove difficult but necessary to navigate in the months to come.

In short, CROBECO is developing and remains not without controversy. However, as more and more people and experts are joining in, including academics from the participating countries, the project gains momentum that will certainly bring it to a successful end. It is clear that the result will not be massive number of transfers between the Netherlands and Spain or England and Spain, but rather an operating system to enable this (CROBECO 2 will be completed at the end of this year with a conference in London). Cross border transfers of land can so develop slowly and organically. Other ELRA projects, such as the fantastic IMOLA project – also funded by the European Commission – which concerns the interoperability of land registers (IMOLA stands for Interoperability Model for Land Registers), will create a platform for the future development of property law in the European Union. (more on IMOLA at a later moment)

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CROBECO’s closing conference: concluded but far from over. (Brussels 31 May 2012)

The closing conference of the CROBECO (Cross Border Electronic Conveyancing of Land) project carried out by European Land Registration Association (ELRA) was as European as can be, with speakers from The Netherlands, Spain, England, Portugal and many more nationalities and countries which were represented in the audience at the Scottish House in Brussels. In attendance were academics, practicing notaries and many registrars from all over Europe. How fitting and inspiring such an atmosphere was for a closing conference which felt more like a kick-off conference of CROBECO-2. A highlight of the conference was in my opinion the first cross-border mortgage made up by a Dutch notary in the Netherlands which was entered into the Spanish land registry, and not just because of the enthusiasm shown by the Notary, Mr. Frits von Seydlitz, at the moment of sending the document. The progress made between the launch of the project and the first conference in 2010 and last week was indeed a small click for a notary, but a giant leap for cross border conveyance of land and if I may be so bold; eg. freedom of services (some of the notaries present, came because they saw a good business opportunity); freedom of capital (by facilitating the process of investing in property across borders).  

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EU Succession Regulation Creates Problems

On 7 June 2012 the Council of the European Union will adopt adopted the Proposal for a Regulation on the applicable law to succession and the creation of a European Certificate of Succession. In the last months, I have been involved in talking to notaries and registrars about the proposal for this regulation. Although I am very favorable towards the idea, I have some concerns about the Regulation that I consider worth to share.

The Regulation seeks to create a unitary system as regards the applicable law to cross-border successions cases in – primarily, but not exclusively – the European Union. The Regulation connects to the residence of the deceased, but allows a choice of the applicable law as well as the court that will have (exclusive) jurisdiction over the succession. This is a true milestone in the development of European private law that should not be underestimated.

The choice of law, however, in combination with the unitary approach of the Regulation, creates a rich variety of conflicts between, amongst others, the applicable succession law (lex successionis) and the property law that applies by operation of the local private international law rules (lex rei sitae).

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CROBECO (Cross Border Electronic Conveyancing of Land) update: systems of publication-problems?


A while ago I reported on the first CROBECO (Cross Border Electronic Conveyancing of Land) conference held in Brussels in November 2010. Much has happened since and it is well worth to mention some of the developments for those following the project.

The conference raised a lot of interest in the project, but also focussed our attention on significant legal objections to its further success. These concern first of all the different nature of land registration systems in the European Union. It is generally known that there are two types of registration systems, although there are of course many differences between all states. The first are positive systems, or better title registration systems, that directly register the correct property entitlement to land. In such a system the force of the State basically guarantees the correctness of the register. The registrar will therefore examine the validity of the data presented to him or her. Hence they are known as positive. The best two European examples of such systems are Germany (with its Grundbuch) and England (with its Land Register). The other type of system is a negative system or deeds registry system, whereby transfer-deeds are received and those are registered. Subsequently there is often another registry, known as Cadastre in which, on the basis of this public registry, entitlement of land is administered. These systems are known as negative because the registry ‘simply’ administers the data it receives, without going into the validity of it.
Contrary to what is usually held by lawyers from positive (or title) systems, both systems have their advantages. The main difference between the two is speed. In a positive system, the investigation undertaken by the registrar can take up to three months (or even more as I understood recently). A negative (or deeds) system will enable registration within a matter of seconds if it’s done electronically. This difference is not just a technicality: registration is a constitutive requirement for the transfer of ownership of land. Without it, no title to land (ownership in civil law terminology) can pass from the seller to the buyer. In 1997 this was illustrated by the House of Lords (now Supreme Court) in the Scots case of Sharp v. Thomson 1997 SC (HL) 66 where the buyer had paid the purchase price to the seller already, but registration was not yet completed when a property security right (floating charge) of the seller attached to his business. The buyer did not receive ownership yet as conveyance (transfer) had not yet been completed, and was left with a concurrent claim in restitution for the return of the purchase price.

For CROBECO the difference between these two systems is essential as the role of the notary or notary public depends very much on the type of registration system that is adhered to. Most of the time positive-registration-system-lawyers cannot understand how a negative system can function at all. Of course, and the Netherlands adheres to such a negative system, this is untrue, the system generally functions very well. Here the role of checking the validity of the parties, the transaction and the property data is for the notary, who will be liable in case of a mistake that can be attributed to him or her. Hence, the information the land register received and on the basis of which the Cadastre (Kadaster in the Netherlands) is updated, will be correct. But, and this must be admitted, mistakes can be made and there are situations, such as passing of ownership on death, in which a negative system can portray incorrect information.

The relation and interplay between the notary and the registry is the central element of the CROBECO project. The Netherlands and Spain are both adhering to a negative system and as far as I know, there are not that many differences in our approach that make it impossible to overcome these for a successful conveyance. However, let’s assume the project would receive a broader scope and a positive-registration-system, say Germany, would be included. How would a German registrar treat a document that is offered by a foreign notary? Assuming this can be done in German law, which is not entirely sure, German registrars would get very nervous.
This nervousness is the core of the next potential CROBECO-problem. Any property law system, by its very nature, operates with a purely internal perspective. Hence, foreign influence is regarded as dangerous and usually stopped: this is the lex rei sitae in operation. Sjef van Erp drew attention to this antagonism in 2006 for the first time, but the meaning of his words receive more meaning as we dive more into substantive property law matters. Even worse, perhaps one of the most nationalistically oriented aspects of property law is the conveyance of land and, as a part of that, the intricate relationship between the notary and the registrar. Add the nationalistic perspective of any purely domestic trained property lawyer (see my previous post), i.e. the natural sense of superiority of one’s own system, and we have a recipe for our potential CROBECO-problem.

Of course the solution is at hand already: As I reported before CROBECO is based on trust between registrars, who in their turn maintain a relationship of trust with their notaries. It is therefore a matter of the circle of trust between negative-system registrars and positive system-registrars.
This is, of course, just the general solution to a very technical problem.

In order to overcome this we need:

1. More knowledge on land registration systems in the EU
2. More knowledge on the property relations that are part of this
3. More knowledge on the content and nature of the relationship between notaries and registrars

Points 1 and 2 are part of what we do at M-EPLI, but I have come to realise that point 3 is perhaps the most important for the success of CROBECO. In all of these we must not shy away from closely examining the compatibility of national property and registry rules with European Union Law. Many rules that domestic-property lawyers not even consider can create problems in Europe’s internal market. A fantastic example is the pending Dutch case on the nationality requirement for notaries. Antagonism does not cover these ‘nationalists’, since they are not even aware of a European Union influence.
CROBECO does not seek to change the national property law and registration rules, but instead intends to work with them in a pragmatic way. However, in doing so, light is shed on problems that have remained hidden so far. It raises immediate questions of EU law, especially relating to non-discrimination and free movement (mostly of capital).

More news on this, especially as CROBECO expands, will follow.

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