The New Regulations on the Land Registry – Part III

The new Land Registration Act introduced significant changes to land registration procedures. However, the application of certain provisions of the new regulations is still pending due to technical reasons.

In our previous newsletters, we presented the principal innovations introduced by the new Land Registry Act. These included the introduction of the electronic land registration system (E-ING), under which applications must generally be submitted electronically, as well as the introduction of mandatory legal representation in land registry procedures. We also outlined the growing importance of electronic signatures enabling legal documents to be executed electronically, in certain cases without the parties being physically present.

We further highlighted the introduction of the nationwide jurisdiction of Land Offices, replacing the previous territorial system, and the measures aimed at accelerating land registry administration through summary procedures and automatic decision-making. In addition, the new system will be interconnected with other publicly certified registers, allowing certain data to be transferred automatically and reducing administrative burdens for clients.

Although several provisions of the new legislation are still being introduced in stages, some important changes have already entered into force. One of the most significant practical changes concerns the legal position of purchasers of real estate, particularly the abolition of the previously well-known pending registration system and the introduction of the purchaser’s right associated with retention of title. In this newsletter, we provide an overview of these new rules and their practical implications.

 

Effective Changes – Purchaser’s Right Registered in the Land Registry

Perhaps the most significant change already in effect has been the abolition of the well-known ‘pending registration’ and the annotation of a sale with retention of title. Previously, within the framework of a single registration procedure, it was possible for the purchaser - after paying a deposit or part of the purchase price - to have one of these rights temporarily registered in the Land Registry (as a marginal note on the title deed), and upon full payment of the purchase price, to submit the registration consent and have the ownership of the purchaser over the property officially registered into the Land Registry.

In place of the previously used pending registration, a new legal institution has been introduced: the purchaser’s right to the retention of title, which serves a similar function. This right may be established for either a definite or an indefinite period (practically, until the purchase price is fully paid), but it may be registered in the property’s title deed for a maximum of 5 years. A purchaser’s right stipulated for an indefinite period will be deleted ex officio from the title deed after 5 years.

The purchaser’s right provides full protection for the purchaser - including protection against enforcement measures - only for 6 months following its registration. After this period of 6 months, the effect of the purchaser’s right is equivalent to that of a contractual prohibition on alienation and encumbrance. During the 6 months following its registration, the Land Registry Authority shall, ex officio, suspend any procedures aimed at registering additional rights or facts (e.g. judicial enforcement proceedings) related to the property. However, after this 6-month period, the purchaser’s right no longer grants such protection.

Compared with the previous regulations, another significant difference between pending registration and the purchaser’s right associated with retention of title is that while the former allowed the entire process to be conducted within a single unified procedure, the latter no longer provides this possibility. Instead, (i) the registration of the purchaser’s right linked to retention of title and (ii) the registration of ownership now take place in separate procedures.

 

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This summary is intended to raise awareness and does not constitute legal advice.

If you have any questions or need further information in connection with the above, please do not hesitate to contact us.