Friday, July 01, 2005
Privatizing Romania’s Land Registries: An Evaluation
By: Paul Holden, ERI
For: The World Bank, 2002.
Well defined property rights are the foundation of sound economic systems. In particular, secure registered titles for fixed property encourage investment in land and buildings, support financial market development and promote more equal distribution of wealth. In many developing and transitional economies, property rights are insecure, often held by tradition or occupational right, and do not allow borrowing using property titles as security. In this, Romania is no exception. The current system of titling and registration used in much of Romania is working poorly and the institutions which underlie the system are similarly not performing well. This report evaluates the proposal of the Ministry to reorganize titling and registration of immovable property in Romania. Its purpose is both to provide an overview of the system currently operating as well as to analyze the proposal from an institutional, economic, legal and technical perspective. It focuses on the costs of titling and registration and whether the system promotes a well functioning land market. Its approach will be to look at issues such as; the effectiveness of the government institutions that are involved in titling and registration; the degree to which the system has backlogs; whether there are opportunities for corruption; the cost and time it takes to exchange property and register it; and how well disputes are resolved and the amount of time it takes to do so.
The paper evaluates the economic and institutional implications of the current system. Overall the purpose of this paper is to come to a judgment on the costs and effectiveness of the existing system. It evaluates the current proposals for change and recommends modifications to the draft law that should assist in establishing an effective, low cost system of titling and registration that provides the foundation for secure rights for immovable property and the foundations for the development of the financial system. The paper starts with a review of the way in which titling and registration now occurs in Romania. It analyzes the shortcomings of the system and identifies some of the costs that these incur. It also discusses some of the institutional characteristics of the system of property titling, because these determine the feasible options for reform. It describes how the World Bank supported project on titling and registration is addressing these issues. A discussion of the economic and institutional issues involved in the privatization of the notaries then follows, since this experience should provide some guide to the effects of privatizing the registries in Romania. The paper then looks at some of the economic and institutional implications of the main features of the Draft Law on the privatization of the Registries. In order to draw lessons from other countries’ experiences, the paper then describes the systems of titling and registration in; Spain which has a system of private registries; Peru, which has recently undertaken a successful and unconventional property titling and registration program; the United Kingdom; Norway; and Ontario, Canada. Lessons for Romania from the experience of these countries will be highlighted and analyzed. The paper goes on to look at alternative models of systemic reform, which might have applicability for Romania, and points out the advantages and disadvantages of each. It summarizes the issues and alternatives for Romania as it proceeds with the reform and strengthening of rights over immovable property. The paper summarizes the debate and the conclusions of the expert group that examined the draft law during June 1999, which were discussed at a workshop held in the outskirts of Bucharest. It concludes with a series of recommendations that were regarded as the minimum that must be implemented if the draft law is to have any chance of being successful in its aim to improve the land registration system in Romania.
For: The World Bank, 2002.
Well defined property rights are the foundation of sound economic systems. In particular, secure registered titles for fixed property encourage investment in land and buildings, support financial market development and promote more equal distribution of wealth. In many developing and transitional economies, property rights are insecure, often held by tradition or occupational right, and do not allow borrowing using property titles as security. In this, Romania is no exception. The current system of titling and registration used in much of Romania is working poorly and the institutions which underlie the system are similarly not performing well. This report evaluates the proposal of the Ministry to reorganize titling and registration of immovable property in Romania. Its purpose is both to provide an overview of the system currently operating as well as to analyze the proposal from an institutional, economic, legal and technical perspective. It focuses on the costs of titling and registration and whether the system promotes a well functioning land market. Its approach will be to look at issues such as; the effectiveness of the government institutions that are involved in titling and registration; the degree to which the system has backlogs; whether there are opportunities for corruption; the cost and time it takes to exchange property and register it; and how well disputes are resolved and the amount of time it takes to do so.
The paper evaluates the economic and institutional implications of the current system. Overall the purpose of this paper is to come to a judgment on the costs and effectiveness of the existing system. It evaluates the current proposals for change and recommends modifications to the draft law that should assist in establishing an effective, low cost system of titling and registration that provides the foundation for secure rights for immovable property and the foundations for the development of the financial system. The paper starts with a review of the way in which titling and registration now occurs in Romania. It analyzes the shortcomings of the system and identifies some of the costs that these incur. It also discusses some of the institutional characteristics of the system of property titling, because these determine the feasible options for reform. It describes how the World Bank supported project on titling and registration is addressing these issues. A discussion of the economic and institutional issues involved in the privatization of the notaries then follows, since this experience should provide some guide to the effects of privatizing the registries in Romania. The paper then looks at some of the economic and institutional implications of the main features of the Draft Law on the privatization of the Registries. In order to draw lessons from other countries’ experiences, the paper then describes the systems of titling and registration in; Spain which has a system of private registries; Peru, which has recently undertaken a successful and unconventional property titling and registration program; the United Kingdom; Norway; and Ontario, Canada. Lessons for Romania from the experience of these countries will be highlighted and analyzed. The paper goes on to look at alternative models of systemic reform, which might have applicability for Romania, and points out the advantages and disadvantages of each. It summarizes the issues and alternatives for Romania as it proceeds with the reform and strengthening of rights over immovable property. The paper summarizes the debate and the conclusions of the expert group that examined the draft law during June 1999, which were discussed at a workshop held in the outskirts of Bucharest. It concludes with a series of recommendations that were regarded as the minimum that must be implemented if the draft law is to have any chance of being successful in its aim to improve the land registration system in Romania.