This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The amendment of the Land Registry Act that came into effect on 1 September 2009 ended the lengthy discussions about the need for authorisation of real estate transfer agreements by a lawyer or notary public. The authorisation is now optional. The question now is how long this "semi-status" will continue.

Basic idea of the amendment

Until recently, basically anybody could draw up a contract on the transfer of real estate. However, since 1 September 2009 the issue has become more complex. If the person intending to sell or purchase the real estate wishes somebody to take responsibility for the contract, it has two options. It can ask a lawyer to authorise the contract or it can ask a notary public to write the contract in the form of a notarial protocol ("authorisation" will be used for both cases).

In addition to the fact that there will be somebody who could be made responsible if something goes wrong, the authorised contract will be handled more quickly by the Land Registry and for a lower administrative fee.

On the other hand, real estate contracts without an authorisation will (if all other conditions are fulfilled) achieve a legal transfer of ownership as well.

Advantages and disadvantages of the authorisation

The most important added value of the authorisation is that the lawyer or notary public who has authorised the contract takes over responsibility for the following issues:

  1. that the contract was in fact signed by the persons whose names are on the contract;
  2. that the contract is consistent with the law;
  3. that the contract does not circumvent the law; and
  4. that the contract is not inconsistent with ethical business conduct.

In addition, the lawyer or notary public will be obliged to assess whether conclusion of the contract could give rise to damages. If the contract is against payment (the usual case), the lawyer or notary public who authorises the contract is also obliged to inform the contracting parties about the payment terms. The contract must contain declarations by the contracting parties that they have been informed about the payment terms. This is particularly helpful for people who are unfamiliar with legal language or with current business practices in general (e.g. older people).

The lawyer or notary public must also provide the contracting parties with information on its insurance, including the amount of coverage for damages arising from or connected with the authorisation of a contract.

Since the responsibility of the authorising person is essentially an objective one (liability can only be avoided if the injured party knew about the fact giving rise to the damage), the newly introduced institute of authorisation has engendered heated discussions and objections from those taking on such responsibility. And this is intensified by the fact that due to Slovakia's communist history, ownership over some pieces of land is still unsettled. There are still cases where two, or even more, persons can prove ownership to the same piece of land, and cases where the person registered in the Land Register is not in fact the owner.

In light of this, it is understandable that lawyers and notaries will not be keen to provide the authorisation. It can be assumed that these services will be provided only to the best, long-term clients, and then only for a higher price.

On-line communication with the Land Register

Another change introduced by the amendment is the possibility for the contracting parties to send the notification of their intention to transfer ownership to the Land Register even before filing the motion on registration of the ownership transfer. If such a notification is filed, the registration procedure for the ownership transfer should be expedited and the risk of mistakes reduced. However, the notification is only valid for 90 days. Online notification became possible on 2 September 2009.

The amendment should result in more flexible and faster communication and cooperation with the Land Register. In addition to the authorisation, the lawyer or notary public can be asked to file the motion on registration of the ownership change on behalf of the contracting party(ies). The motion can be filed electronically. The idea was that the office of the lawyer or notary public would become a location where the entire real estate transfer could take place. But this well-intentioned idea has an obstacle: the necessary technical and software support is still far from adequate on the side of the Land Register as well as on the side of many lawyers and notaries. And it is unclear how long this situation will last.

It is understandable that lawyers and notary publics will not be keen to provide the authorisation.

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.