The CROBECO II Conference took place in Lisbon on Wednesday 22nd May 2013 hosted by the Instituto dos Registros e Notariado de Portugal
• SUMMARY OF THE PROJECT
CROBECO II concerns cross border registration in foreign Land Registers and is the follow up of the first CROBECO project. This project was awarded by a Grant within the Civil Justice specific programme (JLS/2009/JCIV/AG/0002-30-CE-0349438/00-41) and introduces an alternative conceyancing process for foreign buyers of real estate. The framework for such a process is described in a Cross Border Conveyancing Reference Framework (CCRF).
CROBECO is based on the applicability of Regulation Rome I and Rome II. A draft of the CCRF was discussed in a CROBECO conference in Tallinn in December 2011. The final version was presented in the final CROBECO conference on 31 may 2012 in Brussels. CROBECO II wants to implement the alternative process of the CCRF in Member States with a common law system, as well as those with a notarial system.
The conveyancing process is based on a bilingual deed, executed by a conveyancer in the foreign buyer’s home country. The deed is written in the buyer’s native language and in the official language of the country in which the plot is located.
The contract is based on the freedom of choice of Rome I. Pursuant to Article 3, a foreign buyer can stipulate with the seller that contractual obligations are governed by the law of his home country. Non contractual obligations could be governed by Article 14(1)(b) of the Rome II Regulation and the law of the foreign buyer’s home country.
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CROSS BORDER CONVEYANCING REFERENCE FRAMEWORK
The European Land Registry Association (ELRA) has completed a research on cross border conveyancing. The project has the name CROBECO: CRO(ss) B(order) E(lectronic) CO(nveyancing). In this project the framework for cross border conveyancing is described by a CCRF: C(rossborder) C(onveyancing) R(eference) F(ramework). The project was awarded an action grant by the EC. A first draft of the CCFR was presented to ELRA-members during a CROBECO-conference in Brussels in November 2010. Comments were discussed during the general assembly of ELRA of May 2011.
An updated draft of the CCFR was discussed at the second CROBECO conference in Tallinn on 1 December 2011.
The final version of the CCRF was discussed at a third CROBECO conference in Brussels and approved at the General Assembly of ELRA in May 2012.
CHARACTERISTICS OF THE CCRF
The project described an alternative European conveyancing process that could contribute to better cross border service of documents (art 81 TFEU). For property rights the law of the country of the plot (“lex rei sitae”) (art 345 TFEU) is fully respected, but for contractual and non contractual obligations the law choice of Regulations Rome I and II and the choice of forum of Regulation Brussels 1 is used to make the law of the country of the foreign buyer applicable. Clauses with these choices are added to contracts in the native language of the home country of a foreign buyer, and improve faith that there is sufficient legal protection. This process is only possible for plots in countries that allow submission of foreign deeds. To ensure timely receipt of information and conveyancing documents, the process is based on electronic communication. The leading principle is respect for existing legislation and techniques. This means that the CROBECO conveyancer needs to have sufficient knowledge of different types of electronic communication (electronic lodging, electronic registration, electronic conveyance) and of at least two national legislations (that of the contractual law and that of the property rights).
Because of the differences between British and Irish common law systems and continental civil law systems, the different deeds and title systems for Land Registers and the national differences within those systems, the task of a CROBECO conveyancer is complicated. To support him or her framework of guidelines and possible supportive tools has been described, in the so-called CCRF: “Cross Border Conveyance Reference Framework" (see www.ELRA.eu/). This was based on the advice of professors from the Universities of Valencia (Spain), Coimbra (Portugal) and Maastricht (Netherlands), tested in pilots with contracts of sale and mortgage contracts between Netherlands and Spain and verified by desk research between Netherlands and Portugal. Drafts of the CCRF were discussed at CROBECO conferences and finalized on 31 May 2012. The CCRF proposes to support CROBECO conveyancers by means of:
- A repository with clauses for sale and mortgage contracts, including both clauses that are mandatory for registration and those that offer optional protection against risks;
- A glossary with explanations of legal terms in the country of the plot (a first draft has been developed together with EULIS);
- Fact sheets from the European Land Registry Network (ELRN) with explanations of national legal systems (already started by ELRA);
- Translations of all Land Register information in English using the EULIS’s LINE system;
- Translations of Land Register information from non EULIS members of specific plots on demand;
- Easy access to relevant non Land Register information by means of a help desk. The help desk offers assistance by local specialists, who help in fulfilling formalities and preventing pitfalls for foreign buyers because of differences between cadastre (tax) boundaries and legal boundaries, unknown public limitations, public obligations etc. Some of the pitfalls for foreign buyers are made clear in the publication “European Property Rights & Wrongs”, edited by Diana Wallis, then a vice President of the European Parliament, and Sara Allanson. The publication is based on contributions at a seminar that showed what can go wrong for cross border buyers of real estate. Opting for a CROBECO process could provide safeguards, give prospective foreign buyers greater confidence that they have effective protection and make them less reluctant to buy foreign property.
For the electronic exchange of information and documents, the CCRF contains principles of good IT governance and best practices of ELRA members.
Concerning the role of registrars and notaries, the CCRF emphasizes the importance of a neutral attitude. Notaries and Registrars should not judge the desirability of European legislation. A notary has to support a foreign buyer who prefers to make use of existing legal cross border possibilities. The registrar has to support the cross border conveyancer in the same way he does national conveyancers. Withholding that support could be seen as protecting a monopoly of notaries in the country of the plot. As support the above mentioned tools could be added at different stages of the cross border document chain. ELRA wishes to start a project to implement these tools. Initially a group of Dutch and English notaries is willing to participate in such a CROBECO 2 project for cross border buying of property rights in Spain and Portugal. Later on, extension to other countries is foreseen.