Taking counsel: One step forward, two steps back?

  • 2007-05-30
  • by Nijole Vaiciunaite [Jurevicius, Balciunas & Bartkus]
Recently the Lithuanian state took several steps toward implementing the "one-stop-shop" principle and improving the functioning of the system of notaries. The aim was to have the notary office as the only place to visit while concluding a real estate transaction. The notary would then transmit all the required data, via Internet, for registration in the public register 's without any extra charge. The same principle should be used with regard to registration of property mortgages and pledges as well as registration of new legal entities and changes to their main corporate data.

Before the new rules were introduced, a real estate owner first had to apply to the Real Property Register for a certification on the current legal status of a property and to pick it up after a few days (when the order was processed). A person would then apply to a notary for notarization of a contract on a real estate sale-purchase or its mortgage. Further, the real estate buyer or the mortgager would have to submit the contract to a respective public register for registration.
Since March 1, 2007 all notaries order certifications for a transaction directly from the Real Property Register. Starting July 1, 2007 it will also be possible for a person who will become the owner of the real estate upon notarization of a contract to submit a request for registration of the real estate ownership to the Real Property Register through the same notary. The owner will have to go to the Real Property Register just once'sin order to collect the ownership certificate. Later, it will be possible to collect ownership certificates at the notary offices, too.

Similarly, it was established that a client may choose to submit documents for registration of a legal entity or its changed data directly to the Register of Legal Entities or through the office of a notary who certified those documents.
Due to implementation of this "one-stop-shop" principle, notaries' workload has been increasing. Without providing all the required information technologies, in many instances papers have to be delivered between the notary and register offices physically rather than electronically. Those who need to have things registered as soon as possible still prefer standing in the queues in the Center of Registers themselves. Also, in major real estate transactions the transfer of ownership is usually postponed until the closing of the deal, and therefore notaries will not be able to assist the buyers with the registration of their ownership rights.

Changed notary fees. In April 2007, major changes in the regulation of fees for notary services were introduced in order to improve the business environment. Notary fees were reviewed, and a fee range (minimum and maximum fees) was established for many services in lieu of fixed fees. Fees for certification of transactions on immovable and movable property, transactions on securities or rights as well as monetary transactions were established lower for individuals than for legal entities. Other changes were also introduced.
It was publicized that under the new regulations clients would be able to negotiate with a notary the remuneration amount and thus reduce the cost of transaction. But with more and more functions attributed to the notaries, it is rather difficult to evaluate any significant competition among notaries judging by the charged fees.

One the other hand, some changes in notary fees even stopped the transactions that were waiting notary certification. Among them was introduction of percentage fees for notary certification of documents on an increase or reduction of statutory capital. The notary fees were established in a range of 0.3-0.5 percent of the amount of the increase or reduction of the statutory capital. For example, the increase or reduction of the share capital of a private limited company by 10 million litas would now cost 30,000-50,000 litas in notary fees instead of the previous 175 litas.
Haste in approval of the new notary fees and lack of wider consideration of the intended changes has resulted in the need to revise the changed notary fees. The revised regulation is expected to be published one of these days, as a matter of urgency again.

Nijole Vaiciunaite is an associate advocate at Jurevicius, Balciunas & Bartkus, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms including Teder Glikman & Partnerid in Estonia and Kronbergs & Cukste in Latvia, dedicated to providing a quality "one-stop shop" approach to clients' needs in the Baltics.