The Registry of Mortgages is a State Authority where titles to property are kept and where all encumbrances on properties are registered. Property is filed under the names of the owners as opposed to the Land Registry system whereby property is filed under the National Grid irrespective of who the owner is. Lawyers are entitled to check property belonging to any individual or company to establish whether it has been properly transferred, whether it is encumbered, whether there are any claims etc. This is always carried out in the conveyancing process with the aim of securing the future purchaserís rights.
The difference between the two cases lies in the basis of the security of the titles: once an owner holds an uncontested title from a Land Registry it means that his/her title is secured by the State, while in the Registry of Mortgages the title is secured through the contract held by the owner, and hence, the owner must secure his interests through his lawyer. Therefore, in the first case there is an independent Authority, which regulates the various ownerships while in the second the process is left to individuals on a contractual basis. Diligent legal work will mean that ownership is as secure with the Registry of Mortgages system as with the Land Registry one.
For property to be officially bought/sold a contract must be signed before a Public Notary. The Notary is a state official in front of whom the contract deed is read and signed by both vendor and purchaser. He/she is there to draft the contract deed, verify and register in the public records the sale/purchase, which is signed in his presence and understood by the parties concerned.
The Notary is not there to advise or to protect either the vendorís or the purchaserís interests. He/she is there to record the transaction based on a contract prepared by him/herself. When this record is made then the contract becomes a valid title to the property purchased. The process is completed by registering the contract at the Registry of Mortgages, which results in the transfer being effected. The parties concerned meet at the Public Notaryís office where the contract is read out and they place their signatures on the contract and the Public Notaryís Registry Book. Payments by the Purchaser to the Vendor are made on the basis of their contract at the Public Notaryís office. The Public Notary issues official receipts upon request.
Following the signing of the contract the purchaserís lawyer takes it to the Registry of Mortgages and affects the transfer of the property in the purchaserís name by issuing the appropriate certificates.
It is customary, when buying built property, which is at its early stages of construction, to sign a Private Agreement laying out the terms of the sale and for the official contract to be signed later on. This Private Agreement is binding only as a usual contract and does not provide any party with specific performance rights. Hence, in the event that the contract is breached by either party, the injured party is only entitled to damages. A reputable developer will always treat such Private Agreements as if they were the proper contract deeds and will never entertain thoughts of breaching them whatever the extra profit.
Payments of Transfer Tax must take place prior to the signing of the contract deed. Should the signing of the contract deed be cancelled for whatever reason while Transfer Tax has already been paid, the Tax is refunded after making the appropriate application to the Tax Authorities.
In some cases purchasers opt to declare as the contract amount, the Government- issued values, for tax purposes, the so-called "ObjectiveValues". These are calculated on the basis of Governmental Data by the Public Notary and the Inland Revenue Service. The "objective value" of each property is calculated according to a specified formula and a price per sq.m for the location and particular characteristics of a property. The advice of your lawyer is highly recommended on this issue.