Legal effects of Registration

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A) Internal effects: effects to the right itself and the entitlement

a) Registration and the process of transfer/acquisition of property rights

Constitutive vs. declarative

In the Portuguese legal system land registry is considered to be declarative when concerning the transfer or acquisition of property rights.

 

Article 408º, together with article 1316º, both of the Portuguese Civil Code states that “the constitution or transfer of real rights over certain thing occurs solely by virtue of the contract, saved the exceptions provided by law”. Article 879º of the Civil Code also states that one of the main effects of the purchase and sale contract is the transfer of the property right.

 

According to article 5 of LRC the facts subject by law to registry only produce effects against third parties after the entry at the LR [cf. B) bellow].

 

However, the registration is considered to be constitutive when concerning mortgages. Article 687º of the Civil Code and article 4º of the Land Registry Code state that the mortgage must be registered, otherwise it will not be effective, even for the parties.

The legal doctrine considers that before the registry the mortgage contract is not concluded or is not perfect.

 

Since the reform of the Land Registry Code (LRC) by the Decree Law 116/2008, of 4th of July, the registry is compulsory. Article 8º-A of the LRC states the obligation of register of all the facts listed in articles 2 and 3, exception made to provisional entries, acquisition in inheritance community, promissory agreement and first refusal contract. The registry of the mortgage is not compulsory because, as said above, the registration is part of the constitution of mortgage itself. For similar reason the cancellation of the mortgage is also not compulsory.

 

The Land Registry Code in force, dated 1984 (though with significant changes since then, namely concerning this matter) established the principle of probate under which the transfer or the burden of an immovable demands the need to prove the inscription of the property right in favor of the owner.

 

This principle of legitimating, that outlines a so called indirect obligation to register, appearing in article 9º of Land Registry Code, is one of the main pillars of the Portuguese Land Registry System. However it has some exceptions concerning for example the partition of assets, the compulsory purchase for public utility, the attachment and the insolvency (rectius, the seizure in the insolvency process).

 

The Land Registry Code also determines the entities for promoting the register, namely notaries, lawyers or solicitors who signed or authenticated the document; or the courts for the inscription of demands and judicial decisions. The deadline for submitting the registry entry is two months, under penalty of paying the double amount of the due fee – article 8ºC and 8º-D.

 

b) Effects to legitimize the owner

Legal presumptions. Registration as evidence of the right

Effects of registration and possession: adverse possession

Remedies and procedural actions derived from registration: actions derived from registration.

 

Article 7 of the LRC states that the definitive registration of a right benefits of legal presumption that it exists and belongs to the registered owner, in the precise terms the register defines it. The owner whose right is inscribed in the land books does not need to prove by any other means (not even in a court demand) that the right belongs to him. Nevertheless the presumption is iuris tantummeaning that it can be put apart by a different proof before court. In other words, if someone invokes in court a different right than the one inscribed in the land books, that person has the burden to prove they said right.

 

In fact, no right or burden (even if determined by court decision, except in urgent proceedings) becomes effective over a property without the consent or intervention of the inscribed owner.

 

The legal presumption (or positive effect) of the Portuguese system derives from the principle of legality established in article 68º of the LRC. The registrar, on his own responsibility (and with the State guarantee) must check the viability of the application regarding legal provisions, the documents submitted, the previous entries, and especially the legitimacy of the parties, the formal validity of the title and the validity of the acts contained therein.

 

No void acts will be published in the land registry database.

 

However, according to the Portuguese Civil Law, adverse possession may occur and become effective in court or out of court, in certain circumstances stated at the law.

It can operate and become effective against the legal presumption stated in article 7. Usucapio does not need to be registered to become effective against third parties – article 5 paragraph 2 a) of the Land Registry Code. [cf. A) b) bellow].

 

B) External effects: effects to third parties

Negative effect: opposing effect of registered rights against non registered rights.

Positive effect. Indefeasibility principle. Bona fides effect. Requirements

 

One of the principles of the Portuguese Land Registry is the principle of enforceability against third parties.

 

According to this principle, the facts that legally require an entry in the LR only produce effects against third parties once registered. These facts, if not registered, may only be cited between the parties or their heirs. [Cf. articles 4.º and 5.º of Land Registry Code (LCR)].

 

The exception to this principle is the establishment of a mortgage, of which the effectiveness between the parties depends on an entry being registered [see A) a)].

In Portugal, the entry of a right or burden at the LR constitutes a presumption of the existence of that right or burden – it belongs to the registered holder under the precise terms set out in the register [cf. above mentioned article 7 LRC]. Therefore, it is correct to say that the Portuguese system provides a positive effect towards third parties.

 

In consequence of this presumption and of the trust in third parties it is intended to generate, the nullity of the registration shall not affect rights acquired by a bona fides third party, if the entry of his right in the LR is prior to registration of the nullity action [cf. article 17 LRC].

 

Any judicial decision shall not apply against the proprietor or other registered right holder, if he does not intervene in the judicial procedure and if his registry is prior to the registry of the action.

 

However the decision can prevail over the registry, according to the Civil Code [cf. article 291n.º 2], if the judicial claim is proposed and registered within three years following the deal and the corresponding registry entry.

 

Note that the nullity of a registration is very uncommon. Nevertheless it may occur as a consequence of a substantive nullity of the contract based on which the registry was made; or derived from an irregularity of the register itself; or just coming from the lack of legitimacy of the seller (in case someone has not registered an acquisition and the registered owner sells the same property two times).

 

The nullity of the title or the nullity of the registration has to be decided by court or, in some cases, by the registrar after a special rectification procedure at the registry office, and the entry will only be canceled after a final decision – article 17º and 120.º et seq. of LRC.

C) Different kinds of registration and its effects:

a) Class of title

Portuguese land registry is a title system. The inscription of a right or burden in the land registry is subject to a legality check by the registrar and, as previously said, generates the presumption (iuris tantum) that the right exists and belongs to the registered owner, in the precise terms set in the land registry.

 

According to its effects Portuguese Land Registry allows two types of LR entries:

 

–         Definitive entries – entries that produce all its legal effects until the transmission of the right by the registered proprietor or, in case of a burden, until its cancelation is authorized by the beneficiary or in consequence of a judicial or administrative procedure and final decision.

–         Provisional entries – that have its effects limited by a period of time stated at the law. After this deadline they expire. The expiration is registered. In general, theses entries correspond to registry requests that are not yet perfect, for example when some legal requirement is missing, but that are not null or that its potential nullity is not evident to the registrar.

 

b) Type of entry

The application for registration leads to an entry or annotation in the diary book which marks the priority rank of the registry request.

 

On the other hand, in the LR units sheets, three types of entries can be made:

 

–         Inscriptions – each fact, right or charge, subject by law to registry shall give place to an inscription. The inscriptions define the legal statute of that land unit. This inscription corresponds to an extract of the required elements of the documents presented with the request and is made after being legally checked by the registrar [cf. article 91.º LRC]

 

–         Endorsements (“averbamentos”) – the modifications of each entry are registered through an endorsement that identifies the modified entry [cf. article 100.º LRC].

 

–         Annotations (“anotações”) – some less relevant aspects enter at the LR unit sheet by an annotation that aims to give them only formal publicity. Examples of annotations are the expiration annotation of a provisional inscription after its deadline or the annotation of the notification to the interested party of a negative decision. The annotations are merely informative and usually have no legal effects.

 

c) First registration limitations

 

The Land Registry Code of 1984 established the principle of indirect obligation of the registry that implies that for the legitimacy of the transfer or the burden of an immovable the proprietor needed to make prove of the inscription of the right in his favor.

 

So, in general, the first inscription cases shall be entries of facts prior to 1984 or the fact that the registry is being requested is the first transmission after the same date, and in this case the proprietor must prove the legitimacy of the right of the person from which he acquired.

 

However, there can be exceptions to this rule. For example, in Portugal Public Domain immovable property is not subject to land registry, but if some property ceases to be subject to that regime, by the decision of the competent authority, it can enter the registry only with the proof of that decision. Other example are the acquisitions by usucapio, stated at a deed or by a special procedure decided by the registrar, and the special administrative procedure of justification of rights in favor of the State.

 

No matter on which document the first inscription is done, it will benefit immediately of the iuris tantum presumption stated in article 7 of the LRC.

(see below A) b) about adverse possession)

 

d) Type of information: physical data/ legal data, associated data…     

 

The information at Portuguese Land Registry is organized in function of the Land Registry Unit that can be a land, a condominium apartment or a timesharing right. Each unit as its sheet with two parts.

 

The first part is the description that can be called «section A», and has the physical, economic and tax identification of the LR unit. The physical information does not benefit of the presumption stated in article 7 of the LRC

 

The second part, that can be called a section B/C, includes all the rights over rem and the encumbrances that are inscribed chronologically according to its registry request date and number, as marked by the entry at the Diary book. This part publicizes the legal statute of each LR unit