1. Costs & Benefits of Cross-Border Electronic Conveyancing Benito Arruñada Pompeu Fabra University ELRA. Barcelona. May 15, 2014

2. Outline ▪ Economic rationale ▪ Surveying ▪ Local conveyancers ▪ Demand

3. 1. Economic rationale for CROBECO

6. 2. Mandatory surveying? ▪ Negative: costly + no externalities ▪ Costs ▪ Benefits ▪ How they vary with ♦type of asset ♦legal status of the rights ▪ Incidence of surveying on litigation

7. Table 1. Additional cost of a land survey for an average transaction Estimated cost of a survey in Spain (€)514.08€ PurchaseEngland38.08% Netherlands50.78% Purchase and 70% mortgage England30.97% Netherlands31.72%

8. Table 2. Incidence of boundaries on litigation Approximate translation of keywordsAll courts% demarcat* AND “Land Register” 5,2517.55% “first regist*” AND “Land Register” 3,7465.39% “double registration” AND “Land Register” 1,3301.91% “ownership procedure” AND “Land Register” 1,2531.80% “excess of meterage” AND “Land Register” 1,2001.73% parcel* AND “Land Register” 9791.41% Judgments with boundary-related keywords 10,01814.41% Total number of title-related judgments (those with the chain “Land Register”) 69.514100.00%

10. 3. Mandatory intervention of local conveyancers?

11. Table 3. Added cost of a local notary in average transactions PurchaseNotary fee 635.00€ England 46.69% Netherlands 62.23% Purchase and 70% mortgage Notary fees 1,149.97€ England 68.82% Netherlands 70.63%

12. 4. Demand for CROBECO transactions

13. Table 4. Relevance for the Spanish market (2006-13) Nationality of the purchaser Number of transactions % of purchases by foreign nationals % of total purchases UK58,02125.52%1.78% The Netherlands6,1342.70%0.19% Other countries163,18871.78%5.02% Total, foreigners227,343100.00%6.99% Spain3,023,70093.01% Total, purchases3,251,043100.00%

14. Table 5. Purchases according to the nationality of buyers and sellers Nationality of the buyer Total purchases Nationality of the seller same as the buyer Number% Spain1.832.9171,809,03698.70% UK28.00010,47337.40% Netherlands3.90271118.22% France9.8131,90819.44% Germany8.9703,58239.93% Belgium6.05399816.49% Italy5.6475149.10% Sweden4.864103721.32% Ireland2.56825810.05% Norway4.7951,17424.48%

15. Table 6. Foreign residents in Spain (Jan. 1, 2013) Age groups Born in the UK Born in The Netherlands Number% % 1 to 64 years214,83566.90%36,58876.85% more than 65106,30433.10%11,02123.15% Total321,139100.00%47,609100.00%

16. Conclusions ▪ Economics: modest fixed cost to reduce cross-border transaction costs & keeping legal security ▪ Surveying costly & not subject to externalities: should be subject to general law and not be made mandatory ▪ Local conveyancers costly & not externalities: should not be made mandatory ▪ Substantial & increasing demand, given the number of foreign owners and their advanced age

17. Thank you