Apply for a notary to ensure legality of a transaction
Electronic service of registration of legal entities created by the Centre of Registers has already allowed users incorporating individual enterprises and some other closed joint-stock companies through the internet. However, notarial services are still needed for incorporation of the most legal entities. Preventive justice function performed by notaries is especially important to ensure business transparency.
We discuss services provided by notaries, safety of electronic transactions, enterprise mortgage, and other topical questions with the president of the Lithuanian Chamber of Notaries Marius Stračkaitis.
The Public Electronic Service of Real Estate Transactions is implemented in notary offices. Procedures of incorporation and registration of individual enterprises, non-complex closed joint-stock companies, associations have already been transferred to electronic space. Incorporators of companies won’t have to attend either the Centre of Registers or notaries. Will the notaries be in short of work? In what cases will legal entities still need services provided by a notary office?
The Public Electronic Service of Real Estate Transactions (NETSVEP) is implemented at notary offices in July of 2009. Currently, all notaries are using it. Though this system created by the Centre of Registers has technological defects, it is permanently improved, and we do not see an alternative to it. NETSVEP dispenses customers from necessity of several visits to institutions and reduces number of visits to notary offices. It is important to emphasize that NETSVEP only simplifies procedures for a customer but does not change the role of a notary in ensuring legality of a real estate transaction.
Electronic service of registration of legal entities (JAREP) being created by the Centre of Registers has already allowed users incorporating individual enterprises and closed joint-stock companies according to standard regulations through the internet. To incorporate CJSC according to non-standard regulations (these constitute the most part) and the most part of legal entities a notary is needed. The Chamber of Notaries hasn’t agreed and doesn’t agree with reduction of notary’s role in registration of legal entities as experience of a notariat on European basis shows that preventive justice function performed by notaries is more effective for the state and its residents and costs less that elimination of negative consequences. Unfortunately, attempting to liberalize law and to implement liberalization principles in services sector such political decisions were made in Lithuania, negative consequences of which for business transparency will be seen in several years, and some negative effects may be seen now; they are discussed by the press. In order to help small and medium business sector the best thing to do is not to reduce legal prevention performed by notaries but to implement practicable and accessible information technologies. However, in the next ten years notaries will have enough work as the Chamber of Notaries initiates processes of creation of e-notariat.
What other notarial services are to be transferred to electronic space?
Currently, tenders and purchase procedures take place that would allow transferring more than 20 services provided by notaries to electronic space. It will be possible to discuss it in more detail in several months. Our goal is to retain notary’s legal control even when all our environment and everyday life is transferred to electronic space. This will be done by creating electronic notarial service, practicable and reliable access for customers by integrating all that to electronic archive.
Will an electronic transaction be as safe as a transaction certified in a notary office? Is there any risk of breaking data protection? Additionally, will a direct contact between a notary and his customer – a possibility to consult, to get answers to questions of interest, and to make a right decision - be lost?
Information society has introduced a lot of dangers into various spheres of life, although threats also encourage the progress of safety technologies. I‘ve already mentioned that by creating e-notariat we are seeking to preserve a very important thing – a direct contact between a notary and his customer. All the rest is just a matter of choosing appropriate technical solutions. It is obvious that within the last several years possibilities of reliable personal identification have expanded: electronic banking, electronic signature, iris scanning and check of other biometrical data, and other means of identification. Legality of an electronic transaction is firstly based not on technical means which are constantly in progress but on notary‘s legal supervision. Reliability of notariat system in our country, as well as Latin notariat in the world is 99 per cent. This ensures especially bright prospects for the e-notariat project.
At the end of the last year the Seimas approved the mortgage reform; it was resolved to entrench a provision that allows mortgaging an enterprise as a complex of proprietary rights. Could you comment enterprise mortgage in more detail?
Practice in regard to this question will start accumulating only after entry into effect of amendments in July this year. As you understand, a possibility of mortgaging an enterprise as an aggregate of proprietary rights has appeared. A mortgagor, being an owner of an enterprise performing ordinary commercial activities, will be entitled to dispose of the property mortgaged under enterprise mortgage. For example, a construction company that has mortgaged an apartment built for borrowed financial means to the bank will be able to sell the apartment, and the mortgage will automatically terminate after purchase of this property by any person. Although it may be stipulated in the company mortgage transaction that such rule is not applied. Actually, it is an experimental provision, and today it is hard to say if it is frequently applied in practice in future.
Did number of luxurious property sale or gift transactions increase in notary offices after implementation of a new real estate – luxury – tax in order to avoid paying such tax? Perhaps number of real estate transactions has increased after “Snoras” Bank failure?
In December of 2011 the same as at the end of the each year number of customers in notary offices of the country had really increased. But we don’t associate it with amendments to tax laws or bank bankruptcy. At the end of the year people got used to handle their affairs with notaries. Currently, we don’t have any statistics that could confirm assumptions found in public space predicting that amendments to tax laws may increase number of luxury real estate gift transactions. We also can’t confirm statements of real estate market representatives stating that due to “Snoras” Bank failure larger number of smaller and cheaper apartments is purchased.
How have notarial services rates changed within the last several years? Have they increased or reduced? How rates for such services are going to change after expansion of e-notariat system?
The last time notarial services rates have been reduced in February of 2008. We want e-notariat to be practicable and accessible to people as it is now.
How many notaries currently work in Lithuania? Is their number sufficient? Or people still have to register in advance?
Currently, 265 notaries and 226 notary offices perform their activities in Lithuania. In the nearest future new notaries plan to start their activities in Panevezys District, Elektrenai municipality, and Kursenai eldership. Statistics shows that number of notaries in Lithuania is sufficient. Real estate boom stopped a long time ago, and it is not likely to repeat, so there are no lines in the most notary offices. We recommend people to register by phone of e-mail before visiting a notary, as thus they will primarily save their own time.
What topical things about activities of notaries company accountants, financiers should know?
Despite of a profession or a social status notary’s customers should know that a notary is a keeper of person’s secrets, a competent and independent jurist performing preventive justice function in civil relations important to the society.
Interviewed by Jadvyga Miniotaite