In December 2007, the DG Competition of the European Commission made public a report on the reform of the provision of legal services in real estate transactions.
The report classifies conveyancing systems according to a formal and relatively minor feature—intervention by different kinds of conveyancers: notaries, lawyers or real estate agents—instead of the much more substantive issue of the type of land register existing in each country, which defines by default the functions actually performed by conveyancers, whether they are lawyers, notaries or real estate agents.
Consequently, the report shows surprise when finding that some highly regulated conveyancing systems, such as those of Germany and Spain, exhibit low legal costs. However, this finding is surprising only within its badly focused framework: conveyancing costs depend mainly on the nature of the land register in place. For the same reason, the report’s consideration of the Netherlands as a unique system is widely off the mark.
Most importantly, the report’s perspective might lead the EC to advance misguided policies. Rather than liberalizing conveyancing, the priority requirement for both reducing conveyancing costs and for liberalizing conveyancers is an effective registration system such as those already in place in Germany, Spain, Sweden or the UK. After minimum control ex ante, these systems are able to register and ensure land rights at minimum cost, thus eliminating future information asymmetries, transforming land rights into commodities, and reducing the need, scope and cost of professional conveyancing services. Mere systems of land recording, such as those in Belgium, France, Greece or Italy, only make artisan land titles public, therefore multiplying the need to examine the legal quality of titles in the future and increasing the scope and costs of conveyancing services, however these are regulated.
The key social problem is not that of regulating a given market for conveyancing services but building and managing land registers so that most of these services become unnecessary.
- My article discusses these issues at length: ARRUÑADA, Benito, “Market and Institutional Determinants in the Regulation of Conveyancers,” European Journal of Law and Economics, 23(2), 93-116.
- The full reference for the report is: SCHMID, Christoph U., Steffen SEBASTIAN, Gabriel S. LEE, Marcel FINK and Iain PATERSON (2007), Conveyancing Services Market, Study COMP/2006/D3/003, Final Report, December.
- Antecedents, summaries and annexes of the EC report are available here.