Regulating the conveyancing services market
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](http://ec.europa.eu/comm/competition/sectors/professionalservices/studies/csmstudycomplete.pdf)_, Study COMP/2006/D3/003, Final Report, December.
- Antecedents, summaries and annexes of the EC report are available here.
By: Maurice Cowell
November 27th, 2014 , 05:01
Conveyancing is work carried out in connection with property transactions such as the sale of a freehold interest in land or the grant of a mortgage. Regulating the conveyancing services market might mean different reactions from conveyancers across the globe. As a Conveyancer in Adelaide at HCConvey, I agree that problem doesn’t lie in not regulating a given market for conveyancing services but the building and managing of the land registers.
By: Jonathan Paul
October 16th, 2009 , 13:32
he main purpose of the conveyancing process is to transfer the title of the property and any improvements from one owner to another. In the majority of cases this involves a seller (vendor) and a buyer (purchaser). There are examples where this is not the case, such as complying with the terms of a will. Usually the conveyancing process is transacted by way of a contract between the parties although there are occasions where this is not used. During the conveyancing process a number of searches and enquiries are carried out depending upon the nature of the transaction. These searches and enquiries are designed to protect your interests and ensure you obtain a sound Title. Click here for more information.
By: Erik Stubkjær
September 12th, 2008 , 20:24
Why a narrow scope? A broader scope seems feasible
Real estate transactions comprise both professional services offered by the market and government monopoly in terms of the land registry or similar. If the mandate of the competition authorities restrict the scope of investigations to the market part we indeed have a problem. Perhaps, a consumer protection point of view could broaden the mandate to cover the whole transaction, including the enforcement aspect. Admittedly, a home is not a usual commodity. On the other hand, even the US Republican Administration authorized governmental intervention also to protect customers, as commented by the Republican nominee, Senator McCain: We need to keep people in their homes.
Leaving the issue of future investigations, mention is made of three studies in real estate transactions which all model transactions in real estate from start to end, and basically as the transactions are performed in practise. The studies do not include accounts of ex post transactions or enforcement costs. These three studies are:
- International Comparison of Transaction Cost of Proprietary, commissioned by the German Federal Office for Building and Regional Planning,
- a comparative study prepared by the Nordic mapping and cadastral agencies in cooperation with university staff, and
- the research action Modelling Real Property Transactions, performed 2001-05.
Taken together, the above studies suggest that at least in the EU it is feasible to model transactions in real estate from start to end, and basically as the transactions are performed in practise. None of the above studies included ex post or enforcement costs, e.g in terms of number and cost of title disputes and boundary disputes, etc., and in number and cost of foreclosure processes. These and other routine ex post transactions should be added to get a more complete account of the quality of the regulation of the institution of property right. Other ex post transactions are more difficult to assess: Is it a quality that a family is turned into the street through an efficient foreclosure? Is it a quality that squatters are evicted briskly? Despite these open questions, the methodologies applied in the mentioned studies seem to offer a more adequate result and hence a better base for policy considerations than studies restricted to mandatory parts only.