Legal Counsel in European Real Estate Conveyances: Brokers and Notaries Ola Jingryd, Jur. dr. Malmö University

Background Three legal families in the EU ◦ Civil law, common law, Scandinavia Three/four Basic Models for Conveyances Two key players ◦ The Swedish broker and the Latin notary

General observation The Swedish broker and the Latin notary seem to perform, in great part, the same functions in real estate conveyances, and to have similar duties.

Licentiate thesis (2008) Compared the Swedish broker and the Latin notary with respect to: ◦ Relation towards buyer and seller ◦ Tasks and duties performed Swedish law compared to nine notary countries: ◦ Argentina, Belgium, Brazil, France, Germany, Mexico, Portugal, Puerto Rico, and Spain

Licentiate thesis, findings Duty of impartiality Counseling role Contract-engineering

Plans for step 2 Law-and-economics analyis ◦ Transaction costs ◦ Market failures Empirical studies difficult to effectuate

Doctoral thesis Compare duty to counsel Legal study, not ”empirical” study Sweden and France

Swedish Conveyance Process No formalities except written contract signed by the parties ◦ 4:1-3 of the Land Code (1970:994) Traditionally two deeds ◦ Contract ◦ Bill of sale – on day of possession Title registration at Land Registry ◦ Declaratory only

Swedish Conveyance Process No professional intervention required In practice, however: ◦ More than 90 % of all conveyances are accomplished through brokers

French conveyance process Pre-contract – avant contrat ◦ Binding between buyer & seller, not to third parties ◦ Different kinds: compromis de vente, promesse de vente, etc. Sales deed – acte de vente ◦ Acte authentique – notarized ◦ Binding to third parties, enforceable Title registration declaratory

Duty to counsel – Swedish broker Legal basis: ◦ Estate Agents Act (2011:666), esp. 8, 16, 21 §§ ◦ Case law from civil and administrative courts as well as the Estate Agents Inspectorate

Duty to counsel – Swedish broker Duty to verify ◦ Right of disposal, encumbrances, joint facilities ◦ Not zoning & planning!  ◦ Complemented by duty to investigate Duty to disclose information ◦ Concerning the property and other relevant factors connected to the transaction

Duty to counsel – Swedish broker Duty to advise ◦ Matters of import to the transation ◦ Legal, financial, technical Contract-engineering ◦ Tailor the deeds to the needs of the transaction at hand ◦ Intertwined with duty to advise

Duty to counsel – French notary Legal basis: ◦ Art of the Code Civil ◦ Extensive case law from the Cour de cassation

Duty to counsel – French notary Duty to verify ◦ Including zoning & planning! Duty to disclose information Duty to advise Contract-engineering

Implications, future research Economic effiency Institutional robustness ◦ Does it work? ◦ Can it work ◦ Incentives! Part of housing market ◦ Self-owned homes large portion of total market ◦ Access to housing on fair terms