We began in mid-May (15.05.), continued in June and July (5.06., 3.07., 7.07., 10.07.) and today we are concluding this series of reminder articles about a problem created by state institution employees, which, given the various nuances of recent years' events, demonstrates that: "Time passes, but habits and shortcomings remain!" You won't find such thoughts in government declarations!
Real estate
From 1 December 2019, changes aimed at simplifying the registration of real estate data and addressing issues of cooperation and data exchange between state authorities—the data holders—will come into force. This is provided for by extensive amendments passed by the previous Saeima to the State Real Estate Cadastre Law, the Land Register Law, the Law "On Recording Real Estate in the Land Register", as well as the Law "On State and Municipal Land Property Rights and their Consolidation in the Land Register" and the Law "On the Protection of Cultural Monuments". Several people surveyed admitted that it would only be possible to see how these changes work in reality in 2020, once the relevant regulations have been "in operation" for at least a few months.
Differing perspectives
Interestingly, representatives from various fields have differing opinions on these amendments. For instance, landowners believe these amendments were timely and provided the right moment to sort out the issue of having all encumbrances and restrictions found in a single database. Real estate developers, on the other hand, do not see that these changes will significantly facilitate operations. An assessment of the amendments carried out by "Primus Derling" shows that, in certain cases, the burden on private individuals to contact multiple institutions to register real estate information will decrease, and the environment for obtaining information will be tidied up. However, "Primus Derling" points to the lack of clarity in regulatory acts as a problem, since the amendments were made across five different regulatory acts. Consequently, the authorities themselves, as well as notaries, lawyers, and other persons involved in property transactions, will have the task of explaining these new procedures to the public so that they alleviate the administrative burden on individuals not only "on paper" but also in practice, and so that people have clarity. It will also take time to implement these procedures and dispel the uncertainty of private individuals regarding which institution to approach and which documents to prepare in order to act in accordance with the new, efficient procedure and avoid causing people unnecessary expenses and administrative burdens simply due to a lack of knowledge.
Property sales will not be affected
"For persons who are purchasing or disposing of a property in exactly the same composition as it already exists, nothing will change significantly with these amendments – the property acquisition procedure will remain the same. The only difference is that the Land Register, when reviewing a request for registration regarding a change of owner, will check whether any encumbrances have been registered for the property in question which, according to the amendments, will no longer be recorded in the Land Register, and will delete them from the Land Register," reveals Kristīne Gaigule-Šāvēja, a partner at "Primus Derling", regarding the results of the expertise. Furthermore, greater clarity will be introduced regarding which database to search for and check specific data, and it will eventually be more convenient for real estate buyers to check data on a potential property before purchasing it.
The hopes of several surveyed owners that parliamentarians would have ensured when creating the changes that all existing encumbrances on a property—servitudes, protection zones, etc.—would henceforth be indicated in the Land Register have not been fulfilled. "There will not be a unified database containing all information about encumbrances! The Land Register will contain data on encumbrances established on the basis of a contract (mortgages, building rights, servitudes, etc.), and these data will be visible in the cadastral information system. In turn, all data on encumbrances established on the basis of law (for example, protection zones) will be visible in the cadastral information system," explains K. Gaigule-Šāvēja. She does add, however: although there will not be a single database, there will be a clearer distinction as to which database shows which information – it will no longer overlap to the extent it does now, and thus there will be fewer discrepancies in these databases. Moreover, the Land Register and the cadastral information system are not the only databases in which to check the status and encumbrances of a property (additionally, one must ensure, for example, that no protected nature territories or pollution are registered on the property)," says K. Gaigule-Šāvēja.
A matter of data volume
As early as 11.10.2018, "DB" reported on the conclusions reached as a result of a discussion at a meeting of the Saeima's Sustainable Development Committee, that not all encumbrances are recorded in the Land Register and they must be sought in multiple databases. As a result, a situation persists where a property is purchased, and then it is discovered that the new owner's intended use of the property is not possible due to certain encumbrances. Since, in the view of the responsible committee, maintaining multiple property-related databases simultaneously is inefficient and user-unfriendly, the Cabinet of Ministers, by consolidating existing databases, should create a unified Latvian real estate database where information about properties, their established encumbrances, restrictions, and territorial planning can be found in one place. Future deputies of the responsible committee should ensure that the government creates a convenient and understandable information system that would allow people and potential investors to obtain all the necessary information about a specific piece of real estate.
K. Gaigule-Šāvēja, however, points out that the amendments are aimed precisely at ensuring that each database—the Land Register and the cadastral information system—contains the information that corresponds to the purpose for which that database was created. "In essence, the amendments will reduce the volume of data that will be recorded in the Land Register and which more appropriately belongs to the cadastral information system. After all, the Land Register is designed to record real estate and the rights associated with it (e.g., ownership rights), but not to list all information related to a property," says K. Gaigule-Šāvēja.
"I cannot say that these amendments will change anything significant in the real estate market," evaluates Edgars Šīns, Chairman of the Board of the Latvian Real Estate Association. He bases his statement on the fact that, unfortunately, no major breakthrough or reduction in the administrative burden for the real estate industry was observed. "I would like to see these important industry issues receive more attention in the eyes of the people's representatives than they have in the past. I have high hopes for the new – 13th – Saeima," emphasizes E. Šīns. Meanwhile, lawyer Aigars Bērziņš points out that problems with the compliance of data in databases exist not only in the Land Register, which lacks information about restrictions applied to a specific plot of land, but also in the Commercial Register, where alongside "active" companies there are those that are not actually operating, and for some of which the tax administration has even suspended economic activity. "Of course, I can agree with the landowners' view that when these laws were open in the Saeima, the servants of the people should have incorporated a provision that everything can be found in one database—the Land Register—and if an encumbrance or restriction is not there after the amendments come into force on 1 December 2019, then it should be considered that none simply exist for that specific plot of land. That is now the competence of the new Saeima," emphasizes A. Bērziņš.
Current data discrepancies
The "Primus Derling" partner pointed out that, currently, identical categories of data about properties are maintained in both the cadastral information system and the information system of Land Register divisions, but in practice, they are updated in one system and not in the other, leading to discrepancies, where the data are not mutually consistent, correct, or complete. This is the main goal of the amendments—to eliminate these inconsistencies. As the amendments will enter into force on 1 December 2019, those institutions that need to adapt their systems to these changes—the State Land Service and the Court Administration—have a little over a year's time. "After the amendments come into force, the exchange of information between the two information systems will be ensured, and certain groups of data will no longer be duplicated in both systems," informs the "Primus Derling" partner. If previously a person had to contact two institutions—the State Land Service and the Land Register division—to register data or changes related to real estate, now specific cases are provided where a person will approach one institution with a single application, and the institutions themselves will carry out the information exchange, and each institution's information system will register the data that fall under that institution's competence. "It is intended to approach the State Land Service if the registration or updating of cadastral object data (land unit, part of a land unit, building, or group of premises) is being carried out. In turn, one must approach the Land Register division if the creation of a new, separate real estate or changes in the composition of real estate are being carried out in connection with adding a land unit to it, separating one from it, or establishing property rights in relation to this real estate," K. Gaigule-Šāvēja explains the essence.
Material first published in the newspaper "Dienas Bizness" on 8 November 2018
* previous articles:
https://www.zemeunvalsts.lv/cies-nolaidibas-del-vai-15-gados-kaut-kas-ir-mainijies-atgadinajums-
https://www.zemeunvalsts.lv/apgrutinajumi-atklasies-kas-ir-mainijies-atgadinajums-ii-
https://www.zemeunvalsts.lv/datus-apkopos-devinus-gadus-kas-ir-mainijies-atgadinajums-iii-
https://www.zemeunvalsts.lv/perkot-ipasumu-neiekrist-slazdos-kas-ir-mainijies-atgadinajums-iv-
https://www.zemeunvalsts.lv/mekle-taisnibu-kas-ir-mainijies-atgadinajums-v-