We know the proposed changes to the legal act regarding changes in the functioning of land and mortgage registers
The Ministry of Justice has completed works on amendments to the Act on Land and Mortgage Registers. They are to improve the operation of land and mortgage registers by, among others, granting notaries the right to make entries in land and mortgage registers. This should result in a significant shortening of a waiting period for making such entries. Currently, the draft is subject to works within government and it will probably take at least a few months before it goes to Parliament and comes into force.
The purpose of the draft amendments to the Act on Land and Mortgage Registers is to relieve courts in cases that are not of a contentious nature and to shorten the time for making entries in land and mortgage registers. According to the data of the Ministry of Justice, in 2020 about 5 million cases were submitted to land and mortgage register courts, with the average time to settle the case being 3 months. These are statistical data, and as we know from practice, the situation is usually worse in large cities, where due to a significant increase in built-up real estate and, above all, an increase in the supply of apartments, the waiting time, e.g. for a mortgage entry in the land and mortgage register, may be even over 6 months.
The situation has not been improved by the last 2 years of the pandemic, due to which the so-called remote mode of work has also been transferred to the courts. The effects of delays were most severely felt by borrowers who, in accordance with commonly used practice, are obliged to bear additional costs related to the insurance of a loan taken for the purchase of a house or apartment, until the mortgage is entered in the land and mortgage register. For this reason, the draft changes are certainly a step in the right direction. It remains an open question whether it is not too late and how the new regulations will work in practice.
Greater powers of notaries
The draft assumes a departure from “paper”, traditional documents, which are the basis for entries in the books, and the transition to electronic files that will be available to authorized entities (e.g. notaries). It is also planned to make available to the notary – at his request – copies of documents in the land and mortgage register files in electronic form, which would be forwarded to the e-mail address (with additional security requirements) or to the ePUAP mailbox – without the need to photocopy and send them by post.
Currently, the waiting time for the mortgage entry in the land and mortgage register may be even more than 6 months. The situation has not been improved by the last 2 years of the pandemic, due to which the so-called remote mode of work has also been transferred to the courts. The effects of delays were most severely felt by borrowers, who are obliged to bear additional costs related to the insurance of a loan taken out for the purchase of a house or apartment, until the mortgage is entered in the land and mortgage register.
The most important of the changes proposed in the draft concerns granting notaries the right to make entries in land and mortgage registers in connection with their notarial activities (e.g. submitting an application for the entry of a new owner of an apartment after the conclusion of the purchase agreement). However, the parties to such actions would have the right to choose: to submit an application by a notary public via an ICT system or to proceed with the application on the basis of the existing rules (entry by the court).
Notaries would also be authorized to make entries in the land and mortgage registers, which would involve the establishment of new land and mortgage registers by separating the residential property from the developed land property, when the seller is an entrepreneur. They could also make a mortgage entry. What’s more, notaries would have the right to make entries in the land and mortgage registers – even if the document on which the entry is based was not notarized. In this respect, the will of the parties to the contract or other legal transaction would be decisive.
The draft also provides for the addition of a notary as another person authorized to adjudicate in land and mortgage register cases. However, this solution would apply only to notaries with a certain seniority, for whom there were no objections to the work they performed.
In turn, land and mortgage register courts would retain the power to serve notices of entry in the land and mortgage register. This would require changes and adaptations of the telecom system, which will probably extend the waiting period for the entry into force of the project.
Changes not so fast?
The proposed changes would undoubtedly contribute to the improvement of many activities and transactions, because the notary involved in the case would not have to read relevant documents in detail before making an entry. Not without significance is also the chance to avoid additional fees by borrowers associated with the increased cost of loan insurance until the mortgage is entered. The question of the time in which the changes could enter into force remains open, and taking into account the legislative path, as well as the need to agree on many practical issues (e.g. additional professional insurance of notaries or possible remuneration for performing additional duties) and the challenge of implementing changes in the telecom system, it does not seem that this will happen quickly.