Today, we're completely changing the subject to focus on an issue that has been stirring the development market in the last week – the announced changes intended to accelerate the processing time for land and mortgage register applications. These media reports are not based on any published draft laws or regulations – however, we've received inquiries on this topic, so we've decided to present the Ministry of Justice's announcements.
First, the ministry plans to send orderly regulations to the courts, requiring priority consideration of land and mortgage register entries. Media reports do not specify the specific entries in question, although deletion is also an entry. Furthermore, when purchasing real estate, the current owner must first be deleted, and only then can the buyer and, for example, the mortgage be entered. Courts review applications in the order in which they are received, and prioritizing a specific category of cases will likely paralyze other applications, such as easement entries or deletion of claims for transformation fees.
Secondly, the announcements include information that notaries would be responsible for making land and mortgage register entries. This idea seems interesting, although many unknowns remain. It is unclear what type of entries they would be making – what does "some" mean? And whether they would only be related to registering ownership or establishing a land and mortgage register for properties purchased with a loan. The Ministry indicates that the motivation for these measures is the high cost of loan processing associated with waiting for the mortgage to be registered as collateral, so the changes may turn out to be very limited in scope. On the other hand, if notaries were granted such powers on a broader scale, such a change would not only improve the situation of apartment buyers but could also positively impact the entire real estate market. Many transactions currently held up for several months while waiting for registration could be completed sooner, and any potential increase in notarial costs would be less severe compared to the costs of waiting for registration. The solution is expected to be introduced this year, so we are eagerly awaiting specific proposals.
Thirdly, good news for all borrowers – the Ministry is announcing changes to banking law that will oblige banks to refund fees or commissions collected as security for the period from loan disbursement to mortgage registration in the land and mortgage register. In practice, this would mean that banks would collect these fees, but after the entry is made, they would be refunded or credited towards the loan repayment. The announcement indicates that the amendment to banking law would come into effect in March. It is currently unclear which loans would be affected by the changes: only newly concluded ones, those where the courts have not yet registered the mortgage, or perhaps in cases where the loan is still being repaid. This will be significant for many people. It is worth emphasizing that the mandatory refund will only apply to mortgage loans granted to consumers, so these changes will not apply to businesses.
In summary, our experience shows that months-long waits for registration are no longer limited to large cities, where registrations can take up to a year. Smaller courts are also experiencing increasingly long waits. Therefore, any measures aimed at shortening the time it takes land and mortgage register courts to process applications should be viewed positively.
Next week, we will return to the topic of lex developer and focus on the issue related to the appeal procedure.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of January 31, 2022
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