Spanish Crisis
The
Spanish Directorate General of the Notarial Offices and the
Registries has introduced measures to block the Notarial
acts of non-Spanish Notaries.
A
full report by :
MANUEL JESÚS DOÑA
MARTÍN
[Solicitor,
Notary & Abogado (Spain)]
NOTE : TO DOWNLOAD THE FULL TEXT OF THIS REPORT IN PDF
FORMAT, PLEASE CLICK
HERE
I.-
Legal background
Implications of Resolutions 7 February 2005 and 20 May
2005 of the Spanish Directorate General of the Notarial
Offices and the Registries.
As a result of the above Resolutions from the Spanish
Directorate General of the Notarial Offices and the
Registries (“DGRN”) dated 7 February 2005
(published on 6 April 2005 in the Spanish Official Journal
“B.O.E.”) and 20 May 2005 (published on 1
August 2005 in the Spanish Official Journal
“B.O.E.”), which is practically identical to
the first one, Spanish Land Registrars are being forced to
refuse registration of documents authorised by non-Spanish
Notaries when those documents refer to purchase of property
or rights affecting property, inheritance of property or
any other transaction affecting property situated in Spain,
even if those documents authorised by non-Spanish notaries
comply with ALL the necessary formalities and guarantees
for the document to be registered in Spain. Registration
must be refused by Land Registrars (often against their
better judgment) simply because the document has been
authorised by a non-Spanish notary, as opposed to a Spanish
Notary or a Spanish Consul.
For a copy [PDF] of one of the many communications that we
have recently received from Spanish Land Registrars, which
illustrates perfectly well the current situation, please
click
A full copy of the Resolution of 7 February 2005 [in
Spanish and in PDF format] can be downloaded by
clicking
A full copy of the Resolution of 20 May 2005 [in Spanish
and in PDF format] can be downloaded by clicking
The
above Resolutions do not refer to matters on which Spanish
Notaries might exercise official authority.
It must be noted that under Spanish law, certain documents
or transactions require the local Notary to act, and no
other Spanish notary is able to deal with the matter. Thus,
for example, article 203 of the Land Registry Act declares
that where the current owner is not registered as such at
the Land Registry (because the name of a previous owner is
still registered), in order to rectify this, a Notarial Act
declaring ownership of real property (“Actas de
Notariedad”) must be authorised by the Notary
practising in the town or area where the immovable property
is situated. Another example of exclusive powers of the
local Notary is the Declaration of Heirs of an intestate
deceased’s estate in cases where the deceased left
issue, parents or spouse (article 979 of the Spanish Civil
Procedure Act 1881), which do not require an application to
Court. There are good practical reasons for the above and
in the opinion of the undersigned, they do not amount to
exercise of a monopoly because (1) the aim is for local
witnesses and publications to take place locally where the
immovable property is or whether the deceased lived in
Spain; and (b) those restrictions do not apply to foreign
Notaries only; they also apply to all other Spanish
Notaries not practising in the town or place whether the
property is or the deceased lived. In accordance with
judgment of the Supreme Court dated 4 February 1954, these
types of matters are regarded as ex parte applications
("voluntary jurisdiction") where the Notary has to resolve
on facts rather than legal issues. Thus, in these types of
matters, Notaries are acting in a quasi judicial capacity
and only the Notary whose office is in the area where the
property is situated is competent to resolve the
application.
However, any other matters or transactions which, in
accordance with Spanish law, do NOT have to be dealt with
by the Notary practising locally, such as transfer of
immovable property, mortgages, deeds of acceptance of
inheritance, deeds of gift, incorporation of Spanish
companies, transfer of Spanish shares, Wills, Powers of
Attorney, etc. can be dealt with by any Notary because in
such situations Notaries are not acting in a quasi judicial
capacity. Traditionally, this has been either any
Spanish Notary or any foreign Notary and thus documents
authorised by foreign Notaries were also registered at the
Land Registry (provided the document so authorised
contained all information and statements required by
Spanish law).
Indeed, for at least the last 35-40 years
(except from the period October 1986 until May 1999 where
Spanish foreign investments law required the intervention
of Spanish Notary or Consul when there was an element of
foreign investment in Spain; this requirement was
originally imposed by article 17 of Royal Decree 2077/1986
and was finally repealed in 1999 by Royal Decree 664/1999)
documents authorised by a non-Spanish notary have been
registered without problems at the relevant Spanish Land
Registry (provided the document complied with the necessary
Spanish law formalities). This has provided consumers with
the ability to choose their own Notary and avoided the need
to travel to Spain or be obliged to reluctantly grant a
Power of Attorney to estate agents, lawyers or friends (and
assume the risk and/or cost that this involves).
However, in accordance with Spanish law, transactions such
as transfer of immovable property, mortgages, deeds of
acceptance of inheritance, deeds of gift, incorporation of
Spanish companies, transfer of Spanish shares, Wills,
Powers of Attorney, etc. can be executed before any Notary.
Traditionally, this has been either any Spanish Notary or
any foreign Notary (provided the document authorised
contained all other information and statements required by
Spanish law).
Questionable
official authority of Spanish Notaries.
Any
documents authorised by a Spanish Notary, especially those
to which the above Resolutions of 7 February 2005 and 20
May 2005
refer (i.e. deeds relating to the transfer of immovable
property or to rights affecting real property) must be
perused and accepted or rejected by Spanish Land
Registrars. Thus, any notarial documents referring to real
property, whether authorised by a Spanish Notary or by a
foreign Notary, will be checked by a Land Registrar. If the
document is correct, the Registrar will proceed with
registration of the transaction at the Land Registry. If
the document is incomplete or incorrect, registration will
be refused until the error is rectified (articles 18 &
19, article 65, article 99 and 100 of the Land Registry
Act).
In addition, the Registrar acts as the tax inspector for
the purpose of ensuring that the correct tax for the
transaction has been paid and will register any charges
against the property in case of a possible additional tax
demand.
The above means:
(1)
The ultimate control of legality and completeness of the
document is carried out by the Land Registrar, not by the
Notary. The ultimate protection to the transferee of a
property or right is registration. Accordingly, often
Spanish and foreign Notaries submit draft documents to the
appropriate Land Registrar for his or her approval prior to
the transaction taking place.
(2) It is arguable whether Spanish Notaries exercise any
official authority at all, but if they were to do so in
some cases, it is clear that Spanish Notaries do not have
any official authority when authorising property
transactions as otherwise his or her documents could only
be refused or revised by a Court of Justice and not by Land
Registrars, who have no judicial powers.
In
the context of official authority, it is worth mentioning
that in the Judgment dated 20 April 1999 of the Spanish
Supreme Court, in the context of out of court sale of a
mortgaged property, it clearly states that the judicial
powers are reserved exclusively to judges and negates these
powers to Spanish Notaries.
Thus, it would be fair to conclude that in the Spanish
legal system, Notaries have an important role to play. Some
of the functions that Spanish Notaries fulfilled can only
be fulfilled at present by a local Notary (and it may be
possible to defend this apparent monopoly on the basis of
local factual knowledge) and no other Spanish or foreign
Notary can perform them. However, there are other
functions, such as authorising transactions affecting
immovable property in Spain which in accordance with
Spanish Law can be carried out by ANY Spanish Notary,
Spanish Consul or even by a foreign Notary (despite the
DRGN’s attempt to exclude foreign Notaries) because
(a) no local factual knowledge is required; and (b) the
transaction is ultimately subject to the (tax and legal)
control of Land Registrars. And even if it could be argued
(which is questionable) that the local Notary’s role
in the first type of functions are equivalent to the
exercise of official authority, there is NO DOUBT that in
the context of authorising property transactions they
exercise NO OFFICIAL AUTHORITY even if the properties are
situated in Spain.
Despite the above Resolution becoming binding on Spanish
Land Registrars, there is no statutory requirement in
Spanish Law that confirms the above Resolution.
It must be explained that the requirement imposed by Royal
Decree 2077/1986 that a Spanish Notary or Consul had to
intervene when there was a foreign investment element was
introduced as a result of Spain having to change the law in
respect of free movement of capitals as a result of joining
the European Union and wishing to introduce an
“alternative” control mainly for statistic
purposes. This requirement that the document had to be
authorised by a Spanish Notary or Consul never applied to
transactions between parties who were resident in Spain,
because in such cases, there was no foreign investment
element involved (i.e. when the transaction took place
between two Spanish resident individuals or companies).
Accordingly, for those transactions, even between 1986 and
1999, documents authorised by a foreign Notary were fully
effective and could be registered at the Land
Registry.
No
legitimate justification for the above Resolutions.
Aside from the lack of legal grounds for the DGRN to have
issued the above Resolutions, there are no
“moral” reasons either that could justify the
said Resolutions.
Non-Spanish Notaries, and particularly English Notaries,
have provided consumers with a good cost-effective,
convenient and secure way of dealing with their property
affairs in Spain.
Obviously, not all English (or foreign) Notaries deal with
Spanish documents; just like English Solicitors (who
specialise in different matters), only those Notaries with
the required knowledge deal with Spanish documents
involving Spanish property transactions or rights affecting
property situated in Spain. Indeed, most English Notaries
are also Solicitors; and whether or not they also practice
as Solicitors, Notaries are legally required to carry
professional indemnity insurance, comply with strict UK
money laundering regulations and with its own code of
conduct. Notaries are regulated by The Faculty Office, the
administrative branch of the Court of Faculties, integrated
within the Department of Constitutional Affairs (which in
most EU countries would be called “Ministry of
Justice”).
The
strengthening of the Spanish Notaries’ Monopoly.
As we shall mention in this REPORT, despite the integration
process that Europe has been and currently is experiencing,
the trend in Spain is towards the strengthening of
the
MONOPOLY
of Spanish Notaries.
Firstly, in 1999 Spain decided to abolish a profession
(“Corredores de Comercio”) which traditionally
was able to authorise commercial documents and for this
type of business, were in competition with Notaries.
For an excerpt of an article [in Spanish and as a PDF]
published in the well respected Spanish financial newspaper
“Expansión” which clearly sets out that there
was no real need for the “Corredores de
Comercio” to disappear, their volume of business was
growing and that this profession was looked on favourably
by Europe, please click HERE
It seemed, however, that although “Corredores de
Comercio” provided a useful specialised service (only
for commercial documents) and a good alternative to Spanish
Notaries, the Spanish Notarial profession did not favour
competition from a profession which was much easier for
individuals to enter into than the Notarial profession. In
addition, Spanish Notaries did not feel comfortable in the
knowledge that “Corredores de Comercio” also
had the status of public certifying officers, whose
documents would be enforceable by the Courts.
The above change (converting “Corredores de
Comercio” into Notaries) was implemented by
automatically “converting” “Corredores de
Comercio” into Notaries. As a result of this, since
2000, only Notaries can authorise company documents. It
must be remembered that in Spain only Notaries can also
authorise Wills, deeds of gift, deeds for purchase or sale,
deeds of mortgages, deeds of assignment, deeds of
incorporation of companies, deeds of increase of share
capital and many other transactions where documents need to
be noted in a Public Registry by a Land Registrar or by a
Mercantile Registrar.
Now, as a result of the above Resolutions, and with no
legal base on internal Spanish law, the Directorate General
of the Notarial Offices and the Registries, which is a
self-regulated body for Notaries and Registries, integrated
within the Spanish Ministry of Justice, has decided that
only documents authorised by a Spanish Notary can have
access to a Registry if the transaction involves land in
Spain. This is not only contrary to domestic Spanish law
but is also in clear breach of European Law.
Changes
in the Nationality requirement. A liberalising step.
The above Resolutions can be understood as a reaction to
Spanish Authorities being forced to amend the nationality
requirement for candidates to sit exams in Spain and become
a Notary, which until recently, was only available to
Spanish Nationals. Thus, in accordance with current
European legislation, Royal Decree 862/2003 (dated 4 July
2004) now declares that anyone who is a national of the
European Union (and fulfils the rest of the requirements)
can sit the exam.
It seems that the Spanish Notarial profession seeks to
counterbalance the above liberalisation with the above
Resolution, which represents an unprecedented protectionist
move seeking to strengthen their existing monopoly, not
just in terms of who is entitled to practise in Spain as a
Notary, but also by denying validity and force to the
documents authorised by other European Notaries whenever
those documents refer to real property in Spain or to any
rights capable of being exercised against property in
Spain. This move not only breaches European Law, but also
endangers the basic principles of international trade and
the recognition of Notarial documents internationally,
which is an essential pillar of worldwide trade and the
right of individual persons to enter into contracts or make
Wills which can be internationally recognised.
Scope
of the above Resolutions. A breach of the basic principles
of free trade in Europe.
The limits that the above Resolutions impose on the
inability of foreign Notaries to authorise any transactions
which related to the transfer of Spanish property or rights
directly affecting Spanish property are a clear breach of
the basic principle of free trade in Europe.
Furthermore, the implications of leaving this Resolutions
unchallenged are much wider. Thus, for example, by applying
the ratio and statements contained in the above
Resolutions, if a person or a company has shares in a
Spanish company, the transfer of such shares would also
need to be signed before a Spanish Notary because (a) the
Spanish company whose shares are being transfer may have
real property in Spain; and (b) in accordance with Spanish
law, a transfer of shares is subject to Spanish taxes in
certain circumstances.
Likewise, any mortgages or transfer of property by
inheritance would also need to be signed before a Spanish
Notary. In fact, by applying the ratio and statements
contained in the above Resolutions, all transaction
affecting property or rights in Spain would need to be
signed before a Spanish Notary simply because they either
affected real property in Spain or because the transaction
might be subject to Spanish taxes.
The immediate implications of the above Resolutions, as
well as their implications for the future, represent a
direct attack to the basic principles of the European
Union. There is only a very small leap between claiming
that you need to carry out the above transactions before a
Spanish Notary because they refer to property or rights
affecting property situated in Spain, and other Spanish
institutions claiming, for example, that only Spanish banks
or Spanish insurance companies can insure property or
assets in Spain, or even that only Spanish companies can
trade in Spain because foreign companies may not be aware
of or be willing to fulfil their Spanish tax obligations in
respect of any trade they carry out in Spain.
Report on domestic Spanish Law.
The Report that follows explains the reasons why the above
Resolutions are contrary to domestic Spanish law. It also
provides the relevant European Institutions with sufficient
background information for them to prepare a European Law
Report and take action against Spain for breach of European
law.
This is not a Report on the European Law reasons why the
above Resolution is in breach of Spanish European Law as no
doubt, the European Institution are well placed to
commission such report internally.
As the Resolution dated 20 May 2005
is practically identical to the Resolution dated 7 February
2005, in order to simplify this Report, we will refer only
to the latter.
II.- Resolution from the DGRN dated 7 February 2005 and
domestic Spanish Law.
1. The Resolution admits that documents granted abroad can
be accepted in so far as they provide evidence of consent
and capacity and thus it seems to accept that Powers of
Attorney granted before a foreign Notary are valid in
Spain.
It then goes on to say that we are dealing with a different
situation when a Spanish Notary is required for a
transaction (such as the transfer of immovable property in
Spain) to be effective in accordance with Spanish law in
order to protect certain Spanish interests. It states that
the intervention of the Spanish Notary is required as a
control (not as evidence of the consents of the parties)
and that a foreign Notary cannot exercise this control
because he or she is not subject to the Spanish
authorities. It then states that the interests of the
Spanish legal system cannot be protected by a foreign
Notary, because foreign Notaries do not have the necessary
knowledge and authority to control the legality of a
transaction which is foreign to them and do not have a duty
to cooperate with the Spanish authorities.
In response to the above:
- Issues
of capacity and consent are legally and morally more
important to a transaction than the control of the taxes
that the parties ought to pay. Form (and particularly the
intervention of a Notary) is important to ensure that the
person giving consent has been duly identified, that the
consent has indeed been given, that such consent is
informed (i.e. that the person giving such consent
understands the legal implications), and that all this can
be documented in a manner which enables others, whether in
the same country or in a different one, to know that such
consent has been given and to enable them to rely on the
document.
Thus, it cannot be understood why the above Resolutions
accept that a foreign Notary is good enough to authorise a
person’s Last Will and Testament or Power of
Attorney, but not to authorise the underlying transaction
where those documents are to be used. The only realistic
explanation that can be found to this paradox is the
convenience for Spanish Notaries to be provided with such
documents to enable them to deal with the more lucrative
underlying transaction, which they would be unable to
handle without such documents.
-
If we accept that a foreign Notary is qualified to produce
a document (e.g. a Power of Attorney for the sale or
mortgage of property; or Last Will and Testament) which
accurately reflects the wishes and consent of the person
signing it, we cannot deny that the same (or another)
foreign Notary may also be qualified to implement the
underlying transaction for which those documents have been
prepared. If we think of a foreign Notary drafting and
authorising a Power of Attorney for a vendor to sell a
specific property in Spain, and the same Notary also
drafting and authorising another Power of Attorney for the
purchaser to buy that specific property in Spain, and if we
accept (as the DGRN seems to accept) that those two Powers
of Attorney are valid and acceptable in Spain, even though
they refer to the sale and purchase of immovable property
in Spain, it would not make sense to say that the same
foreign Notary, instead of drafting and authorising those
two Powers of Attorney, could not have drafted the actual
Spanish Deed of Transfer of the property (provided, of
course, that foreign Notary had sufficient knowledge to
prepare such document and advise the parties on the
transaction) and have the document executed in his or her
own jurisdiction outside Spain.
If the DGRN accepts that a foreign Notary has sufficient
authority to do something essential (certify the
party’s consent to the transaction via their
respective Powers of Attorney) we cannot seriously claim
that even if that foreign Notary has expertise to prepare
the actual Spanish transfer document he or she cannot do
so.
-
The tax control of the transaction exists without the need
for a Spanish Notary to intervene. Thus, Spanish Land
Registrars, who normally act as tax inspectors for the
purpose of the transactions lodged at the Land Registry,
will refuse registration of any documents unless any due
taxes have been paid. They also charge the properties with
the obligation to pay any additional tax demands which the
tax authorities could issue. Furthermore, article 25 of the
Lifetime Gift and Inheritance Tax Act (as amended by Law
53/2002 of 30 December) and article 50.4 of the Transfer
Tax and Stamp Duty Act state that in the event of deeds
authorised by foreign officers (e.g. foreign Notaries) the
limitation period shall commence only after the document
has been presented at any Spanish authority”. Thus,
this Law not only expressly recognises that it is possible
to have the document validly executed before a foreign
Notary (e.g. a Deed of Acceptance of Inheritance or Deed of
Transfer of immovable property situated in Spain), but also
that, in order to protect the interests of the Spanish tax
authorities, the taxpayer shall remain liable for any tax
until the document is lodged with any Spanish authority,
from which time the normal tax limitation period will star
to run. It must be understood that these amendments to the
limitation period of the taxes were enacted shortly after
Royal Decree 664/1999, which removed the need for a Spanish
Notary or Consul to authorise documents when there was a
foreign element involved (i.e. when at least one of the
parties involved was not resident in Spain).
- Even
if the above mechanisms did not exist (which is clearly not
the case) such lack of control would entitle the Spanish
Parliament or Government to enact the necessary statutes or
statutory instruments. It is not the DGRN’s role to
grant or deny full effect to the documents authorised by a
foreign Notary based on the convenience of tax controls.
- As we
shall see throughout this Report, there is not a single
statutory instrument in Spain which requires transactions
relating to immovable land in Spain to be authorised by a
Spanish Notary. Between 1986 and 1999 (until RD 664/1999)
2. The Resolution also states: “...when the Spanish
law enacts the value and effects of a public document,
referring to those documents authorised “by a Notary
or competent public officer” (article 1216 of the
Civil Code) it has in mind a Spanish Notary or a Spanish
competent public officer, in the same way as article 117 of
our Constitution refers exclusively to the Spanish Courts
when it enacts that only the Courts are empowered to issue
and enforce judgments. Resolution dated 18 January 2005
states in respect of Notarial System, “when the law
requires in general terms that a Notary intervenes, it must
be understood that it refers to a Spanish Notary, who is
the only Notary who can incorporate his opinion of
compliance of the document with Spanish law.”
“...when the Spanish law enacts the value and effects
of a public document, referring to those documents
authorised “by a Notary or competent public
officer” (article 1216 of the Civil Code) it has in
mind a Spanish Notary or a Spanish competent public
officer.”
In
response to the above:
- In
accordance with article 1 of the Spanish Civil Code, there
is a hierarchy between the different types of legislation:
the Spanish Constitution and international treaties are at
the top, followed by fundamental (“organic”)
statutes, statutes, statutory instruments, and so on. In
accordance with article 1.6 of the Civil Code, the
judgments of the Spanish Supreme Court complement and
interpret the law. It must be remembered that the
Resolutions of the DGRN are hierarchically subject to all
those mentioned (including the jurisprudence of the
Courts), as such Resolutions do not even have the status of
jurisprudence, because the DGRN is not a Court, it is part
of the Ministry of Justice and thus, its Resolutions are
similar to the Resolutions or Internal Rules of any other
part of the Public Administration (civil service).
However,
they are binding for Spanish
Registrars.
- Article 3.1 of the Spanish Civil Code states:
“Statues and statutory instruments shall be
interpreted in accordance with the proper meaning of its
words, taking into account its context, their historic and
legislative background, and the social reality at the time
when they are to be applied, attending mainly to their
intention and purpose.”
- In accordance with article 4 of the Spanish Civil Code,
it is necessary to apply other legal rules governing
similar situations by analogy when the law does not
regulate a specific matter.
- Judgment of the Supreme Court dated 27 January 1994 and
Judgment dated 11 November 1991 of the Spanish
Constitutional Court states that
only Judges and Courts are part
of the Judiciary, and that in accordance with article 117.3
of the Spanish Constitution, they alone
have the exclusive and excluding power to apply and
interpret the relevant legal rules, and
pass and enforce judgments.
- Most importantly, interpretation is required only when
the rule in question is not clear. Thus, Judgment of the
Supreme Court dated 2 July 1991 states that: it has been a
long-established view of this Court the need to interpret a
rule beyond its literal meaning, and although it is
necessary to
start from the literal meaning of the
words, it is also necessary to interpret them in a rational
manner. That is why, (as confirmed in a former Judgment
dated 23 June 1940), the Courts must
interpret a rule taking into account all other rules
which also refer to the issue on which
the Court is to pass judgment, thus establishing a rational
link between all the other rules which deal with the same
issue.
- In addition, Judgment of the Supreme Court dated 18 April
1988 confirms that the relevant legal rules (statutes,
statutory instruments, etc.),
in so far as they may be
incomplete, must
be interpreted not only in accordance with the Spanish
Constitution but also in accordance with any relevant
international treaties. Judgment dated 22 July 1994 states
that when the jurisprudence has interpreted a legal norm in
a certain manner, this interpretation must be followed.
- From the above, it follows that: (a) although the
Resolutions of the DGRN are binding on Registrars, they do
not have power to interpret the law; (b) the starting point
when interpreting a rule is its literal meaning, if it
makes sense in the context of the other rules and is not in
breach of the Spanish Constitution and international
treaties, there is no need to go any further. Article 216
of the Civil Code is quite clear when it refers to a
“Notary” and to a “competent public
officer” (e.g. a Court Clerk in respect of certifying
Court documents). It does not qualify that they need to be
Spanish; (c) the interpretation that the Notary does not
need to be Spanish is in accordance with international
treaties (e.g. European law, The Hague Convention 5 October
1961, etc.) and with other Spanish law rules which refer to
documents executed outside Spain (e.g. article 50.4 of the
Spanish Transfer Tax and Stamp Duty Act; art. 25 of the
Lifetime Spanish Gift and Inheritance Tax -as amended by
Law 53/2002, dated 30 December 2002-; article 323 of the
Civil Procedure Act; derogation by Royal Decree 664/1999 of
the reference to Spanish Notaries or certifying officers,
etc.); (d) the interpretation that the Notary does not need
to be Spanish is also in accordance with the social
reality, as there have been some non-Spanish Notaries with
sufficient knowledge of Spanish law who have been
authorising documents relating to Spanish property
transactions for several decades and those documents have
been registered at the Spanish Land Registry; and (e) over
the last few decades there have been judgments of the
Spanish Supreme Court confirming that such documents
authorised by foreign Notaries can be registered in Spain.
I
explain the above-mentioned statutes and Judgments
elsewhere in this report.
“…in
the same way as article 117 of our Constitution refers
exclusively to the Spanish Courts when it enacts that only
the Courts are empowered to issue and enforce
judgments.”
In
response to the above:
-
Article 117 of the Constitution declares who has power to
interpret and apply the law, pass judgments and enforce
them
in Spain. This
article does not mean that a foreign Judgment cannot be
recognised and enforced in Spain.
Quite to
the contrary, both Spanish domestic law (e.g. Civil
Procedure Act) and international treaties signed by Spain
(e.g. Brussels Convention on the recognition and
enforcement of foreign judgments 1968, Council Regulation (EC) No 44/2001 on
jurisdiction and the recognition and enforcement of
judgments in civil and commercial
disputes,
etc.) expressly recognise and deal with the enforcement
of foreign judgments in Spain.
- It
also follows that just in the same way that a foreign
judgment, made by a foreign court within its jurisdiction,
can be enforced in Spain, a document authorised by a
foreign Notary in his or her own country, which refers to
property in Spain, can also be registered in Spain by the
Spanish Land Registrar.
It should also be noted that neither Notaries nor the DGRN
have such powers to interpret or to apply the law, to pass
judgments or to enforce them.
Resolution
dated 18 January 2005 states concerning the Notarial System
that “when the law requires in general terms that a
Notary is needed, it has to be understood that it requires
a Spanish Notary, because only Spanish Notaries can express
in the document whether the document complies with Spanish
law”.
In
response to the above:
-
As previously indicated, (e.g. Judgment of the Supreme
Court dated 27 January 1994 and Judgment dated 11 November
1991 of the Spanish Constitutional Court)
only Judges and Courts are part
of the Judiciary, and that in accordance with article 117.3
of the Spanish Constitution, they alone
have the exclusive and excluding power to apply and
interpret the relevant legal rules, and
pass and enforce judgments.
- Although the Resolutions of the DGRN are binding on
Registrars, they do not have power to interpret the law.
- Accordingly, the fact that the DGRN said on 18 January
2005 that “when the law requires in general terms
that a Notary is needed, it has to be understood that it
requires a Spanish Notary, because only Spanish Notaries
can express in the document whether the document complies
with Spanish law” has no legal relevance.
3. The resolution also states: “A Spanish Notary must
certify that the document executed is in accordance with
Spanish law, an opinion that a foreign Notary does not
state”.
In
response to the above:
-
Documents authorised by foreign Notaries also contain an
express or implied statement made by the Notary that the
document is valid in Spain. If a Notary authorises a
document for Spain which is not valid there he or she would
be responsible to his or her clients for any damages. From
this, it follows that only those foreign Notaries with
sufficient knowledge of Spanish law are prepared to
authorise any documents for Spain, whether they relate to
property there, to Powers of Attorney, to Wills, etc.
- The adequacy of the document authorised by the foreign
Notary (and indeed by any Spanish Notary) is decided by the
Spanish Registrar, who decides whether the document in
question complies with all the necessary requirements for
it to be valid and have access to the Land (or Mercantile)
Registry.
- In fact, many documents authorised by Spanish Notaries
are rejected by Land Registrars and are not registered
until the mistakes contained therein have been rectified.
4. The Resolution also says that a Spanish Notary protects
the interests of the transferor and the transferee, but
especially the interests of the transferee (a) by checking
ownership of the property, any restrictions to the right to
transfer the property and any charges or encumbrances by
means of perusing the title to the property and obtaining
office copy entries from the Land Registry by fax or email;
(b) by checking any outstanding debts owed to the
residents’ association from the certificate of debts
issued by them; (c) advising the parties (especially
consumers) of the legal and tax implications of the
transaction. The Notary does all this simultaneously to the
transaction taking place, and he or she then notifies the
Land Registry that the transaction has taken place, also by
fax, in order to obtain priority at the Land Registry
pending the lodging of the original documents. The
Resolution than says that a foreign Notary would not have
the means to afford the above protection to the parties or
the knowledge to advise them on the legal and tax
implications of the transaction. The purchaser is
especially unprotected due to the inability of the foreign
Notary to obtain office copy entries by fax as above in
order to check the ownership and charges of the property,
and in order to request priority at the Land Registry once
the transaction has taken place as above. It is true that
purchasers can waive their right to get the Notary to
obtain office copy entries and request priority to the Land
Registry as above, but it is not the same to waive such a
right than not to have the right to the above.
In
response to the above:
-
Foreign Notaries that authorise documents for Spain also
HAVE the obligation to check ownership of the property, any
restrictions to the right to transfer the property and any
charges or encumbrances by means of perusing the title to
the property. Foreign Notaries CAN and often DO obtain
office copy entries from the Land Registry by fax or email,
check any outstanding debts owed to the residents’
association from the certificate of debts issued by them
(just like when the transaction takes place before a
Spanish Notary, this certificate is produced by the vendor,
it is not obtained by the Spanish or foreign Notary), and
advise the parties (especially consumers) of the legal and
tax implications of the transaction. Just like in the case
of Spanish Notaries, foreign Notaries do all the above
simultaneously to the transaction taking place, and the
foreign Notary also notifies the Land Registry by fax that
the transaction has taken place in order to obtain priority
at the Land Registry pending the lodging of the original
documents. All this should be done (and is normally done)
when a transaction takes place, regardless of whether the
Notary is Spanish or foreign. Any Spanish or foreign
Notaries who do not deal with the transaction as above are
breaching their legal obligations and could be sued by
clients for any resulting damages.
- It is also untrue that Spanish law does not allow foreign
Notaries to obtain office copy entries by fax (“nota
simple continuada”) shortly before completion in the
same terms as Spanish Notaries or that foreign Notaries
cannot request priority at the Land Registry immediately
following completion of the transaction (“asiento de
presentación por fax”), the only additional
requirement being the need to send the Land Registrar
evidence that the requesting foreign Notary is indeed a
Notary in his or her country, by means of producing an
“apostille”. In fact, most, if not all, Land
Registrars have duly and efficiently provided any
requesting foreign Notaries with the above services, which
obviously have been enacted in Spanish law not for the
benefit of Notaries (Spanish or foreign) but for the
benefit of those who purchase land in Spain, regardless of
their nationality or place of residency.
- Indeed article 354.a. of the Land Registry Regulations
states that any requests made by
Notaries by fax
in respect of information relating to the description,
ownership, charges, encumbrances and restrictions to any
registered property shall be sent by the Registrar to the
requesting Notary, also by fax. This article was added to
the Land Registry Regulations by article 3 of Royal Decree
2537/1994 (29th December) and
does not limit this right to Spanish
Notaries.
Accordingly, it has been interpreted until now, and it must
continue to be interpreted, on the basis that any Notary
(whether Spanish or foreign) can request this information.
Article 354.a reads as follows: “ Any request for
information relating to the description, ownership,
charges, encumbrances and limitations affecting a
registered property requested
by Notaries by fax
shall be dealt with by the Registrar and sent by fax to the
Notary in accordance with the following rules:
…”
- Paragraph 4 of article 418 of the Land Registry
Regulations states that any communications sent by
Notaries by fax
relating to the authorisation of deeds shall be noted in
the Entry Book and this entry shall cease to be valid if
the original document is not lodged for registration within
10 working days. As we can see, this article does not
specify that only communications received by fax from a
Spanish Notary can be noted in the Entry Book.
- Indeed, the subscriber, who is an English Notary, has
requested and received many office copy entries by fax from
Land Registries in Spain in accordance with article 354.a.
above and has requested from the relevant Land Registries
entries in their Entry Book and received fax confirmation
from the relevant Land Registries indicating that the
priority had been granted, in accordance with paragraph 4
of article 418 above.
- It must also be remembered that although documents
granted before a Spanish Consul have exactly the same
validity in Spain as documents granted before any Spanish
Notary, in accordance with article 5A of the Spanish
Notarial Rules, a Spanish Consul does not have to apply for
office copy entries from the Land Registry prior to
authorising completion of a transaction and Consuls never
forward a copy of the document by fax to the Land Registry
in order to apply for priority of the transaction at the
Land Registry. Article. 1A of the Notarial Rules:
“Ambassadors and professional Spanish Consuls shall
fulfil abroad the role of Notaries, in accordance with
articles 11 and 734 of the Spanish Civil Code and the
contents of any relevant International
Treaties.
Ambassadors
can delegate the notarial role to the most senior Embassy
Secretary and Consuls can delegate the notarial role to
Vice-Consuls…” Article 11 of the Civil Code
states: “… 3. Spanish law shall apply to any
contracts, Wills and any other legal acts authorised by a
Spanish diplomat or Consul abroad”. And article 734
of the Civil Code states: “Spanish nationals who are
abroad can also make their (open or close) Wills before a
Spanish diplomat or Consul acting as a Notary in the place
were the Will is made”. Article 5A of the Spanish
Notarial Rules translates as follows: ”Diplomatic and
Consular agents shall comply with all the regulations
comprised in the Notaries Law and in Title IV of the
Notarial Rules and Schedule II thereto, in so far as
relevant, except as set out herein below. Article 175 and
the fifth paragraph of article 249 of the Notarial Rules
shall not apply.“ (Article 175 and paragraph 5 of
article 249 above refer respectively to obtaining office
copy entries from the Land Registry by fax prior to
completion of a transaction, and to requesting priority at
the Land Registry by fax following completion of a
transaction).
- Clearly, in respect of protecting consumers, the powers
of Spanish diplomats (despite their lack of legal
knowledge) and the powers of “Honorary
Consuls”(who are not even employees of the Spanish
Embassy or Consulate) should be more of a concern for the
Spanish DRGN, than the intervention of fully qualified
European Notaries authorising documents within their own
jurisdiction (English Notaries in England, French Notaries
in France, etc) which relate to or affect property or
rights in Spain.
- The DGRN should also be more concerned about the quality
of advice and the ability of some Spanish Notaries to even
routinely check the documents drafted by their clerks. Some
Notaries authorise so many documents and transactions daily
(with the help of legal secretaries, clerks and other staff
who have never qualified as Notaries, and often do not even
have a degree in law) which makes it impossible for them to
perform their obligations and this often results in badly
drafted or incomplete documents which are then rejected by
Land Registrars.
- In any event, as the DGRN admits, in accordance with
article 175.2.c of the Notarial Rules, requesting
information from the Land Registry (e.g. office copy
entries by fax by the Notary or any other interested party)
or lodging a document at the Land Registry (by fax after
execution of the document by the Notary to ask for
priority; or the hard copy of the Deed to be registered) is
not a legal requirement for the transaction documented in
the Deed to be valid. Requesting such information, priority
or registration of the document is voluntary and purchasers
can freely decide whether or not they want their interest
protected by such means. This was confirmed by the
Resolution of the DGRN dated 24 January 1950. Indeed, many
Deeds authorised by Spanish Notaries contain (often
standard) clauses whereby the transferee (normally the
purchaser) expressly relieves the Notary from requesting
office copy entries from the Land Registry prior to
completion.
- It is also worth remembering here that diplomats and
Consuls do not even need to have a legal degree of training
(and indeed often they do not have them) in order to act in
their role as a Notary and for their documents to be
registered at the Spanish Land Registry (provided, of
course, they are found to be correctly drafted and executed
by the relevant Land Registrar).
- Furthermore, in accordance with article 2A of the
Notarial Rules, Spanish Consuls can also appoint (with
prior authorisation from the Spanish Ministry of Foreign
Affairs) “honorary Consuls” (i.e. persons who
do not even work for the Spanish Embassy or Consulate and
do not need to have any specific training or
qualifications) to fulfil their role as a Notary.
- In addition, the above-mentioned “Corredores de
Comercio”, who were “automatically
converted” into Spanish Notaries, with effect from 1
October 2000, by virtue of Law 55/1999 (LEY 55/1999, DE 29
DE DICIEMBRE, DE MEDIDAS FISCALES, ADMINISTRATIVAS Y DEL
ORDEN SOCIAL), did not even need to have a Law degree. The
requirements to sit the exams to obtain a post as a
“Corredor de Comercio” were, amongst other:
a) To be Spanish;
b) To be above 18 and below 65;
c) To have a degree in Law, Economy and Business
Administration, Mathematics, Mercantile Intendant or
Insurance Actuary.
It
should be noted that apart from the above “automatic
conversion”, only those who hold a Law Degree or have
a Doctorate in Law can sit exams to become a Spanish
Notary.
Accordingly, it can also be argued that those who used to
be “Corredores de Comercio” and currently are
Spanish Notaries are not sufficiently qualified to provide
consumers with sound legal advice on the transaction that
they authorise and at least some of the legal documents
that they draft are likely to contain serious errors.
Indeed, this is the view which many Notaries took in 1999
when “Corredores de Comercio” were converted
into Notaries and many of them still believe that there is
a two-tier system, comprising the “real”
Notaries, knowledgeable lawyers who can provide an
excellent service to their clients; and the “old
Corredores de Comercio”, who have very little of the
knowledge and expertise that their prospective clients
require.
5. The Resolution also says that the Notary also acts to
protect the interest of third parties. The effect of a
public deed is not only between the parties, but also
against third parties. After a transaction has taken place,
Spanish Notaries make a note on the old deed to ensure that
it cannot be used again. Also, if the property subject of
the sale is rented, the tenant must be notified; or if a
property is to be subdivided, the need to verify that
planning licence to enable the transaction; or possible
preferential rights of the Town Hall. Spanish Notaries must
also verify the architects’ certificate or the
ten-year insurance policy in respect of new buildings in
respect of deeds of declaration of new building and in
respect of subsequent transfers, or the limitations of the
price in respect of social housing.
In
response to the above:
-
All the above matters, when relevant, must also be verified
by foreign Notaries authorising any transactions involving
Spanish property, for two reasons: (a) failure to do so
would result in the foreign Notary being liable for
damages; and (b) the Land Registrar would not authorise
registration of the document.
6. The Resolution also says that the Spanish Tax
Authorities are amongst those whose interests are protected
by Spanish Notaries. The obligations that Spanish Notaries
have to co-operate with the Tax Authorities do not apply to
foreign Notaries. There is no connection either with the
place where the transaction takes place and they have no
means to compare the prices declared with the real value of
the properties, and this represents a danger of fraud, tax
evasion and money laundering. When a property situated in
Spain is sold by a non-resident (person or company), the
Spanish Notary must check whether or not the purchaser must
withhold 5% of the purchase price for the purchaser to pay
this to the Spanish Tax Authorities. The Spanish Notary
must also check that VAT is paid on a transaction subject
to this tax. Whenever a property transfer takes places, it
is compulsory to quote the property tax reference for
council tax purposes, and Spanish Notaries can now have
access to the relevant office to obtain this number.
Spanish Notaries have the obligation to inform periodically
the Spanish Tax Authorities of any transactions and to
notify Town Halls of such transactions for the purposes of
local “plusvalia” tax. This is done in order to
avoid taxes which have not been paid becoming time barred.
In this context, article 50.4 of
the Transfer Tax and Stamp Duty Act states that “in
the event of deeds authorised by foreign officers, the
limitation period will start from the date on which such
deeds are presented to any Spanish Authority”.
In
response to the above:
-
Spanish law does not require that a transaction involving
land be executed before the nearest Notary. Often clients
sign documents before Notaries of other towns or cities,
for convenience or because they find them to be more
efficient. Indeed, if there were an element of fraud, it
would be unlikely for the transaction to take place before
the Spanish Notary whose practice is nearest to the
property. In the same way that Spanish law does not require
the transaction to take place before the Notary whose
practice is nearest to the land, it does not (and it should
not) say that it cannot be authorised by a foreign Notary.
- Spanish Notaries tend to move from one Notary’s
office in one town to another one (often hundreds of miles
away) and they rarely practise in their home town.
- The obligations imposed on Spanish Notaries in respect of
money laundering are those set out in the current European
Directive. This Directive also applies to all European
Notaries. Furthermore, the relevant money laundering
regulations in England are set out in the Proceeds of Crime
Act 2002 and in the Money Laundering Regulations 2003,
which go much further than the Directive and regards money
laundering as any money connected with tax evasion (however
small the amount) or connected with any crime (not just a
money laundering crime). Thus, the argument that only
Spanish Notaries can check money laundering matters and
that another European Notary cannot do so is totally
unacceptable. Although the Notarial profession in Spain,
just like in the rest of Europe, is a very respectable
profession, Spanish Notaries have not been free of money
laundering scandals in recent months (operation
“Ballenablanca” is claimed to be the biggest
money laundering operation ever in Europe which was
uncovered in March 2005 and it included three Notaries from
Marbella who were charged and released on
bail). It should also be noted that unlike in many other
European countries (including the UK) where Notaries
usually hold the purchase price in his or her own account
prior to the transaction taking place, upon which the
Notary transfers the funds to the vendor, Spanish Notaries
do not hold any money from the clients, thus making it
easier for the parties to pay a price and declare another
substantially lower. This is the main reason why there
still is an endemic habit in Spain for the parties to
under-declare the price, thus avoiding a higher tax bill,
and in some cases successfully laundering narcotraffic and
terrorism money.
- As we have seen above, the tax control of transactions
exists without the need for Spanish Notaries to intervene.
Thus, Spanish Land Registrars, who normally act as tax
inspectors for the purpose of the transactions lodged at
the Land Registry, will refuse registration of any
documents unless any due taxes have been paid. They also
charge the properties with the obligation to pay any
additional tax demands which the tax authorities could
issue (“afección fiscal”). Furthermore, article
25 of the Lifetime Gift and Inheritance Tax Act (as amended
by Law 53/2002, of 30 December) and article 50.4 of the
Transfer Tax and Stamp Duty Act state that in the event of
deeds authorised by foreign officers (e.g. foreign
Notaries) the limitation period (for the taxes to be paid)
will start from the date on which such deeds are presented
to any Spanish Authority”. There are two implications
to this article: (a) the Spanish Tax Authorities have
established their own mechanisms to ensure that they do not
lose revenue as a result of transactions being executed
before foreign Notaries; and (b) Spanish law accepts that
transactions signed before foreign Notaries are valid.
- The fact that Spanish law imposes an obligation on
purchasers of property when the vendors are non-resident in
Spain to withhold 5% of the price and pay this amount to
the Spanish Tax Authorities on account of the
vendor’s Spanish capital gains tax liability further
illustrates the fact that Spanish law can and has put in
place the necessary measures to ensure that they get their
taxes, regardless of whether that transaction takes place
in Spain or abroad. If Spanish law had wanted property
transactions to be authorised by Spanish Notaries only, it
would have enacted the Spanish Notary’s obligation to
receive that 5% and pass it on to the Tax Authorities.
Instead, the obligations lies with the purchaser and
Spanish law states that failure to comply with this
obligation will render the property acquired by the
purchaser responsible for this amount. The duty of the
Notary (Spanish or foreign) is simply to advise the
purchaser of this obligation.
- Likewise, in respect of VAT, the duty of the Notary
(Spanish or foreign) is simply to advise the parties that
the transaction is subject to VAT, but payment is made
directly from the purchaser to the vendor, not to the
Notary. Although the Resolution of the DGRN does not
mention this, in the event of purchasing a property subject
to VAT, the Notary (Spanish or foreign) must also inform
the purchaser of that he or she will also need to pay Stamp
Duty (to the tax authorities, on a self-assessment basis).
The Land Registrar will not register the document until the
appropriate taxes have been paid and in any event, will
register the usual statutory charge against the property,
which will ensure that in the event of the Spanish Tax
Authorities disagreeing with the taxes or the amounts paid
in respect of taxes, the property will ultimately be liable
for any tax which remains unpaid.
- Regardless of the above, whether or not a Spanish Notary
were to perform any essential role in respect of tax
matters (which at present, do not), this cannot be used as
an excuse to deny full validity in Spain to documents
authorised by foreign notaries or to deny them the right to
be registered (upon payment of the appropriated taxes to
the Spanish authorities).
7. Although documents authorised by foreign Notaries (with
certain requirements) guarantee the authenticity of the
consent of the parties, it does not provide the additional
controls that documents authorised by a Spanish Notary
provides. As a result of this, the transaction would not be
valid and this cannot be later replaced by the check that
the Land Registrar carried out. The Spanish legal system
requires two checks when dealing with property
transactions, and there cannot be any discriminations or
exceptions allowing foreign documents to have less
stringent requirements then documents authorised by Spanish
Notaries. Even if the negotiations and payment take place
abroad, the transfer of property is in essence, an internal
market.
In
response to the above:
- The
DGRN makes the above statements without any legal support
or grounds for them. They simply amount to opinions which
they cannot back by any legislation or jurisprudence.
- Article 1216 of the Spanish Civil Code defines public
documents as those authorised by a Notary or duly
authorised public officer which comply with the formalities
required by the law.
In
accordance with paragraph 1 of article 1280 of the Spanish
Civil Code, any transactions or contracts creating,
transferring, modifying or terminating rights in rem
affecting immovable property must be contained in a public
document.
The meaning of this article is clarified by the Supreme
Court in its Judgement dated 19 February 1990 which states
that the above article imposes an obligation on the vendor,
at the purchaser’s request, to execute a public
document recording the sale (Judgment 7 January 1924,
Judgment 29 December 1926 and Judgement 24 December 1929),
but that a sale of a property does not need to be
documented in a public deed for the transaction to be
valid. Supreme Court Judgments dated 3 February 1987, 30
May 1987 and 3 October 1988 also confirm this.
- Thus,
there is no legal obligation under Spanish law to register
the title of a property. Furthermore, there is no legal
obligation to sign a Deed before a Notary (or a written
document at all) for a contract for the transfer of land to
be valid and binding between the parties.
“Traditio” or physically handing over the
property to the purchaser is required to complete the
transaction, and the “traditio” is implied by
law in any Deed of Transfer, but it is also quite common to
find many transactions where the property is unregistered
and the parties simply sign a contract and hand over
possession. Although the transaction instrumented in this
manner is valid and effective under Spanish law, it cannot
be registered at the Land Registry.
- It is true that the Spanish legal system requires two
“controls” when dealing with property
transactions
before they can be registered at the Land
Registry: (a)
that the transaction authorised by a Notary (but not
necessarily a Spanish Notary) or by a Spanish Consul,
Honorary Consul (duly authorised) or similar authorised
diplomat (regardless of these persons having no legal
training at all); and (b) that the Land Registrar is
satisfied that the document so executed complies with all
the necessary formalities to have access to the Land
Registry.
- A Deed of transfer relating to property in Spain
authorised by a foreign Notary IS a public document and
therefore, just like in the case of a Deed authorised by a
Spanish Notary, provided it contains no mistake or
omissions, the Land Registrar have registered them and
should continue to do so. The “double” control
is present whether the Deed has been authorised by a
Spanish or by a foreign Notary.
- The DGRN’s reference to the transfer of property
being in essence, an internal market simply confirms the
Spanish Notary’s desperate attempts to strengthen
a
monopoly which
they can feel starting to crumble away as a result of the
threat of the Qualifications Directory (which has been
subsequently approved and which does not exclude Notaries),
and as a result of the above-mentioned Royal Decree
862/2003 (dated 4 July 2004) allowing nationals of the
European Union to sit the exams to become a Spanish Notary.
- Although the DGRN does not mention this, the essential
role of the Notary (Spanish or foreign) is not acting as a
tax informant. The main role of a Notary is to identify the
parties, ensure that they have sufficient mental capacity
for the transaction, if they are representing a company or
another individual, ensure that the Power of Attorney or
authority is sufficient for the transaction, ensure that
they are acting freely and ensure that they understand the
nature and implications of the transaction which they are
about to enter (obviously, ownership issues, details of
charges or debts and tax implications are part of
understanding the nature and implications of the
transaction).
8. The Resolution also says that the public deed of
purchase and sale executed before a Spanish Notary is the
instrument of the contract and the title deed which
transfers ownership. It is also the document which enables
registration at the Land Registry. However, a deed executed
before a foreign Notary which refers to the sale of a
Spanish property can only be regarded as a contract, which
creates obligations between the parties, but not as the
title deed with the effect of transferring ownership,
because a deed executed before a foreign Notary does not
have equivalent force in Spanish law to a Spanish deed
which transfers ownership and it cannot be registered at
the Land Registry either (article 4 of the Land Registry
Act), because it cannot cause registration at the Land
Registry (article 33 of the Land Registry Rules).
In
response to the above:
•
ARTICLE 2 OF THE SPANISH LAND REGISTRY
ACT.
Article
2 of the Spanish Land Registry Act (“Ley
Hipotecaria”) states “The following shall be
registered at the Land Registry:
1. Title
deeds relating to the transfer of ownership or declaring
ownership of immovable property or any rights affecting
such real property.
2. Title deeds creating, acknowledging, transferring,
modifying or terminating life tenancies
(“usufructo”), right of use, right of
habitation, emphyteusis, mortgage, census, easements and
any other rights affecting property.”
•
ARTICLE 3 OF THE SPANISH LAND REGISTRY
ACT.
Article
3 clarifies that for the above to have access to the Land
Registry, they must be contained in a (1) public document,
(2) court document or (3) document issued by the Government
or its Agencies in accordance with the relevant
regulations.
The
interpretation given by the DGRN of what constitutes a
public document is completely arbitrary and wrong. As we
have already mentioned, there is not a single statute or
statutory instrument in Spanish law which support the
claims of the DGRN that just because the public deed
executed before a foreign Notary refers to Spanish property
it is not a public deed in Spain.
•
ARTICLE 4 OF THE SPANISH LAND REGISTRY
ACT.
Article
4 of the Spanish Land Registry Act (“Ley
Hipotecaria”) states the documents mentioned in
article 3 above which have been granted abroad and are
valid in Spain in accordance to the law will also be
registered at the (Land) Registry.
RESOLUTION
11 FEBRUARY 1931.
In
respect of the requirements needed for foreign documents to
be registeed at the Land Registry, Resolution from the DGRN
dated 11th February 1931, states that
for the transfer of immovable property situated in
Spain, our
Land Registry laws require: a legal cause evidenced in the
public document or in the public document together with
other supplemental documents or with formalities which are
shown to have been fulfilled, and that the property subject
of the transfer is registered in the name of the
transferor.
This Resolution of 11 February 1931 also states that: The
formalities of documents granted abroad are governed by the
law where they are granted. Article 3 of the Land Registry
Act states that (1) public deeds, (2) judgments and (3)
government orders can be registered. If a document has been
granted abroad we cannot insist that a given transaction
has to be granted before a Notary (i.e. as a public deed)
just because this would have been the case in Spain.
However, we cannot expect Spanish Registrars to have
detailed knowledge of foreign legislations. Although the
Statement of Purpose ("EXPOSICION DE MOTIVOS") of the
original Land Registry Act made it clear that
foreign documents can be registered in Spain
and a
section of the doctrine believed that Land Registrars had a
duty to peruse them and decide upon their registration,
article 36 of the Land Registry Regulations made this task
easier by allowing the Registrar to request a certificate
issued by a Notary or by a Spanish Consul in the country
where the document is granted or by a Consul or officer of
the country of execution, confirming that the formalities
required in the country of execution have been complied
with, or confirming that the parties to that transaction
have sufficient capacity in accordance with that foreign
law. As this article says "can be proved", it still allows
Land Registrars to obtain evidence of this matter by any
other means, or to request no evidence at all if the
Registrar has personal knowledge of the relevant foreign
law.
The above Resolution dated 11 February 1931 goes on to
state that
for a document dealing with the transfer of immovable
property situated in Spain to have access to the Land
Registry, the
public document of transfer must make reference to a legal
cause for the transaction and the transferor must be the
registered owner of the property.
Clearly, this resolution, which dates from 1931, does not
say that such documents dealing with immovable property in
Spain cannot be registered unless they have been authorised
by a Spanish Notary or by a Spanish Consul (as the DGRN now
claims in Resolution dated 7 February 2005, subject of this
Report). Quite to the contrary, it specifically confirms
registration in Spain of a deed relating to the transfer of
Spanish immovable property authorised by a foreign Notary.
RESOLUTION
11 JUNE 1999.
Resolution
from the DGRN dated 11th June 1999, in the context of a
document granted before a German Notary, states that
for a foreign document to have access to the Spanish
Land Registry, it must fulfil the minimum requirements of
Spanish public documents, which
are: a) the document must be authorised by a Notary or by a
competent public officer (i.e. an officer who can either
legally certify documents in court or outside court); b)
the necessary formalities required by the law for each type
of public document must have been complied with, which for
non-court orders are: the grantor must be sufficiently
identified and the authorising Notary or officer must
satisfy himself/herself of the capacity of the grantor
(this does not need to be expressly stated in the document;
it can be deemed implied). This resolution then concludes
that if we compare the above basic requirements of a
Spanish public document with the German document in
question, we must conclude that registration of the said
German document cannot be refused.
Clearly,
this resolution also confirms that foreign Notarial
documents can be registered at the Land Registry.
•
ARTICLE 36 OF THE SPANISH LAND REGISTRY ACT.
Article
36 of the Land Registry Regulations states:
Any documents granted abroad can be registered if they
fulfil the requirements needed in accordance with the
[Spanish] Private International Law rules
(they
are set out in the next paragraph),
provided they have been legalised and contain any other
requirements for them to be regarded as authentic documents
in Spain.
Compliance with the relevant foreign forms and solemnities,
their suitability and existence of legal capacity for the
act can be evidenced, amongst others, by a declaration or
report made by a Notary or Spanish Consul or by a competent
Embassy Officer, Consul or civil servant of the country
whose law is to be applied. The civil capacity of a foreign
person granted a document in Spain can also be proved as
above.
If the Land Registrar has sufficient knowledge of the
foreign law in question, he or she can proceed with
registration without evidence of the above.
•
SPANISH PRIVATE INTERNATIONAL RULES.
The
Spanish Private International Rules are set out in articles
8 to 12 of the Spanish Civil Code. Article 11 states that
contracts, wills and any other legal transactions must
comply with the formalities of the country where they are
granted. However, they will also be valid (a) if they have
been granted in accordance with the formalities required by
the law applicable to their content; or (b) if they have
been granted in accordance with the personal law of the
person granting them or if more than one party is involved,
in accordance with the common personal law of the
parties.
Contracts and transactions [GRANTED ABROAD] referring to
immovable property will also be valid if they comply with
the formalities required in the place where the real
property is situated..
Article
11 also states that if the law applicable to any contract
or transaction require certain formalities for them to be
valid, such formalities must be complied with,
even if the documents are granted abroad..
JUDGMENT
4 OCTOBER 1982 OF THE SPANISH SUPREME COURT.
In
a case involving article 11 of the Spanish Civil Code, in
respect of a Deed of Gift of
immovable property situated in Spain
which
was granted abroad, Judgment 4 October 1982 of the Spanish
Supreme Court confirmed that for the document to be valid
in Spain, it had to contain the year when the document was
granted because the personal law of the donor was Spanish
and the property gifted was in Spain, and in accordance
with Spanish law, the date is a necessary formality.
JUDGMENT
23 JUNE 1977 OF THE SPANISH SUPREME COURT.
In
another case involving a Power of Attorney granted in
Italy, the Spanish Supreme Court (Judgment 23 June 1977)
confirmed that in accordance with paragraph 5 of article
1280 of the Civil Code,
the only Spanish law requirement for this document to be
valid is that it must be contained in a public
document
(i.e.
a document authorised by a Notary).
Any further requirements imposed by articles 161, 161, 165
and 166 of the Spanish Notarial Regulations need to be
disregarded because the Civil Code takes precedence over
the said Regulations.
This was
also confirmed by the Spanish Supreme Court in its judgment
of 2 June 1998.
•
ARTICLES 1216 & 1217 OF THE CIVIL CODE.
Article
1216 of the Spanish Civil Code defines public documents as
those authorised by a Notary or duly authorised public
officer which comply with the formalities required by the
law.
In
accordance with paragraph 1 of article 1280 of the Spanish
Civil Code, any transactions or contracts creating,
transferring, modifying or terminating rights in rem
affecting immovable property must be contained in a public
document.
The meaning of this article is clarified by Judgement dated
19 February 1990 which states that the above article
imposes an obligation on the vendor, at the
purchaser’s request, to execute a public document
recording the sale (Judgment 7 January 1924, Judgment 29
December 1926 and Judgment 24 December 1929), but that a
sale of a property does not need to be documented in a
public deed for the transaction to be valid.
Article
1217 of the Spanish Civil Code states that any documents
authorised by a Notary public shall be governed by the
Notarial rules. This, of course, must be read in
conjunction with the above-mentioned Judgments of 23 June
1977 and 2 June 1998.
•
ARTICLE 156 OF THE NOTARIAL REGULATIONS.
Article
156 of the Notarial Regulations sets out the formalities
which deeds must contain; they are: 1. town where the
document is granted, date (day, months and year), full
name, professional address and jurisdiction of the
authorising Notary, full name, age, marital status,
occupation and address of the parties, reference to the
identification documents of the parties and capacity in
which they act. The Notary must confirm that he or she
personally knows or has identified the parties and must
indicate whether, in the opinion of the Notary, the parties
have the necessary legal capacity to grant the document.
The document must also contain the name of the transaction
(e.g. Deed of Transfer, Deed of Gift, Power of Attorney,
etc.).
RESOLUTION
11 JUNE 1999.
Resolution
of the DGRN dated 11 June 1999 confirmed that the
requirements for a document to be a Spanish public document
(so that it can be registered at the Land Registry) are:
(a) the document needs to be authorised by a Notary (IT
DOES NOT SAY “SPANISH NOTARY”, JUST
“NOTARY”) or a public certifying officer and
(b) the necessary formalities for each type of document
must have been complied with.
•
ARTICLE 323 OF THE CIVIL PROCEDURE ACT ON FOREIGN PUBLIC
DOCUMENTS
In
accordance with the Spanish Civil Code (article 3,
concerning the way in which the legal rules must be
interpreted, as previously explained in this report, and
article 4, in respect of the need to apply other legal
rules governing similar situations by analogy when the law
does not regulate a specific matter), we need to refer to
the above-mentioned articles 25 of the Spanish Lifetime
Gift and Inheritance Tax Act, and 50.4 of the Transfer Tax
and Stamp Duty Act and, in addition, to article 323 of the
Spanish Civil Procedure Act.
Article
323 of the Spanish Civil Procedure Act (7 January 2000)
states that in the context of proceedings,
documents granted abroad which in
accordance with an international treaty or any specific law
have the proving effect of article 319 of this Act,
shall be regarded as public
documents.
If no international treaty or specific law is applicable,
the documents granted abroad shall be regarded as public
documents if (a) they comply with the formalities required
in the country where the document has been granted for them
to provide full evidence in court and (b) the documents
have been legalised or have the
apostille and
other requirements for the documents to be valid in Spain.
Spain
and the UK are part of The Hague Convention of 5th October
1961 Abolishing the Requirement of Legalisation for Foreign
Public Documents. Article 1 of this Convention states "The
present Convention shall apply to public documents which
have been executed in the territory of one Contracting
State and which have to be produced in the territory of
another Contracting State. For the purposes of the present
Convention,
the following are deemed to be public
documents: a)
documents emanating from an authority or an official
connected with the courts or tribunals of the State,
including those emanating from a public prosecutor, a clerk
of a court or a process-server ("huissier de justice"); b)
administrative documents ;c)
notarial acts; d)
..."
•
It is worth mentioning that the website of the Spanish
Ministry of Justice expressly recognised that any deeds
executed before a foreign Notary can also be registered in
Spain, even if they refer to immovable property or to
rights directly affecting immovable property. This webpage
states: “The following can be registered at the Land
Registry:
o The title deeds as a result of which immovable property
(or rights in rem) is transferred or the ownership of
immovable property (or rights in rem) are declared, and
title deeds which impose certain prohibitions to dispose or
transfer them.
o Mortgages.
o Title deeds setting up, acknowledging, transferring
modifying or terminating life tenancies, rights of use,
rights to live in, emphytheusis, mortgages, census,
easements and any other rights in rem.
o (…)
(…)
The above titles will also be registered at the Land
Registry when they have been executed abroad, provided they
are effective in Spain in accordance with Spanish
law (…)”
The above can be found at the following address :
CLICK HERE
9. The
[foreign] notarial document which has been refused
registration and which is the subject of this appeal [which
the Resolution decides] without prejudice of its value of
notarial evidence of the consent given by the parties and
their resulting binding contractual obligation between the
parties who signed it (or their heirs), has no value as
“traditio” and does not have the effect of
transferring ownership, and therefore, it cannot be
registered in accordance with Spanish law. Spanish law,
which gives Spanish Notaries a role of control, the
presumption that their documents are legal with their mere
intervention and which imposes upon them an obligation to
cooperate with the Public Authorities which foreign
Notaries do not have. The “traditio” effects
set out in paragraph 2 of article 1462 of the Spanish Civil
Code and its resulting effect to transfer ownership can
only be applied to Spanish public deed. The purchase
documented in a [foreign] notarial document cannot have
those effects in Spain. That document cannot have those
effects in Spanish law, and it does not even have those
effects in [German law, where the document was signed] law.
Protecting legal documents internationally can aim to try
and preserve (or reduce the loss of) their effects in other
countries, but it would be an absurdity to expect that
their effects become wider and that they are recognised
abroad effects which those documents would not have in
their country of origin.
-
Article 1462 of the Civil Code translates as follows:
“The subject of a sale will be deemed to have been
sold when control and possession thereof are handed to the
purchaser.
When a
sale takes place by public deed, execution of the deed
shall amount to delivery of the subject of the purchase
unless the deed states or infers otherwise”
(“Se entenderá entregada la cosa vendida, cuando se
ponga en poder y posesión del comprador.
Cuando se haga la venta mediante escritura pública, el
otorgamiento de ésta equivaldrá a la entrega de la cosa
objeto del contrato, si de la misma escritura no resultare
o se dedujere claramente lo contrario. “)
- The
delivery (“traditio”) to which the DGRN refers
is delivery of the subject of the purchase with the
intention to transfer its ownership. In accordance with
Spanish law, delivery (“traditio”) of the
subject of a purchase can be “real” or
“implied” (“instrumental
delivery”). This has been confirmed by the Spanish
Supreme Court in many Judgments (e.g. 12 November 1994; 19
December 1986; 29 July 1999; 22 December 2000).
- Paragraph 2 of article 1462 above refers to
“instrumental” (i.e. implied) delivery. When a
public deed is executed, delivery (and thus, transfer of
ownership) is implied unless the deed states otherwise.
- The Supreme Court, in its Judgment dated 9 October 1997
states: as this Court has stated in other occasions (e.g.
30 June 1989 and 31 May 1996), for implied delivery to take
place: a) the sale and purchase must be instrumented in a
public deed containing all the necessary formal
requirements for the deed to be valid; b) that deed must
not state or imply that delivery has not taken place, and
c) the vendor must be in possession of the subject of the
transfer at the moment when the transfer takes place.
- We have previously seen that the definition of a public
deed in accordance with Spanish law is authorised by a
Notary or duly authorised public officer which comply with
the formalities required by the law. We have also seen that
there is no legal requirement in Spanish law that the
Notary must be a Spanish Notary. A document authorised by a
foreign Notary (and even by a Spanish Consul or by a
Spanish Honorary Consul) is also a public document in Spain
as long as it complied with the formalities (i.e.
information, clauses, etc.) required in Spanish law.
- We have also seen that in accordance with Spanish law,
whenever a property is sold, delivery is implied if a
public deed of transfer is executed by the parties (unless
the deed states or implies otherwise).
-
Thus, delivery (i.e. “traditio”) is implied by
law in any public document of sale; and in accordance with
article 1216 of the Spanish Civil Code, a public document
is a document authorised by a Notary or duly authorised
public officer which complies with the formalities required
by the law. Thus, in accordance with Spanish law, delivery
or “traditio” is present whenever a public
document of transfer is signed, and the DGRN’s claim
that delivery is only implied when the deed of sale has
been authorised by a Spanish Notary is completely
unsubstantiated, arbitrary and mistaken.
- The DGRN states that a document authorised by a foreign
(e.g. German) Notary cannot have in Spain an effect (i.e.
delivery of the property) which that document does not have
in the country of execution (e.g. Germany). However, the
DGRN is ignoring the fact that the document authorised in
Germany (or England) is valid