It is noted that these two institutions, complementing each other, serve both to protect citizens' property rights and to ensure safe and stable civil turnover. In its ruling on the application of legislation concerning the good faith of third parties when acquiring property rights to real estate, the Supreme Court emphasizes that the proper application of the bona fide acquisition doctrine depends not only on the conduct of the parties but also on the proper performance of duties by registration and notarial authorities.
The main task of the registering authority is to carry out state registration of rights to real estate and to ensure recognition and protection of these rights. The State Register is not just a database but an institution of public trust. Participants in civil turnover rely on register data when making decisions regarding property. Therefore, the registration authority should not limit itself to the formal acceptance of documents and registration; it must verify the legal grounds of the submitted documents, investigate contradictory or suspicious cases, and take appropriate measures when necessary. Failure to properly perform these duties may entail liability established by law if damage is caused to individuals.
In judicial practice, a number of problems related to state registration of rights to real estate are observed. These circumstances directly affect both the security of civil turnover and the rights of owners and acquirers of property. In particular, the following violations are most common:
- unjustified registration in the name of a person who is not the owner;
- delays in registering the rights of persons who lawfully acquired property;
- registration of rights of several persons to the same real estate object (double registration);
- failure to enter or untimely entry of objections regarding real estate into the register.
Such cases are not only one of the main causes of subsequent disputes but can also jeopardize the rights of both actual owners and persons acquiring property in reliance on register data.
Before certifying a contract, a notary must verify a number of important issues. First of all, it is necessary to establish whether the person disposing of the property has the authority to sell it. In addition, the presence of a mortgage, pledge, seizure, or other encumbrances on the property should be checked, as well as whether the property was acquired during marriage. This information, reflected in the register, must be clearly explained to the parties.
However, the notary's duty is not limited to formal verification. The Supreme Court emphasizes that the notary must also ascertain the true will of the parties and their intention to conclude the contract. He must ensure that the parties understand the legal consequences of the document being signed, and if signs of fraud, pressure, or threats are detected, he must not certify the contract.
Practice shows that in some cases, participants in civil turnover do not formalize their legal relations in accordance with their actual content or cannot do so. One reason for this is the inability of the parties to legally express precisely what type of contract they need. In other cases, it is due to an unjustified refusal to formalize transactions that do not contradict the law but are not widely used in notarial practice.
One common case in practice is the formalization of real estate (land, house, etc.) belonging to the borrower (or his relatives) in the name of the creditor (or another person designated by him) through a sale and purchase agreement to secure a debt. That is, instead of using mechanisms provided by law, such as pledge or mortgage, the borrower formally sells his real estate to the creditor, although the actual purpose is to secure the debt.
Although at first glance this method seems convenient for the parties, it can subsequently lead to serious legal problems. The main risk is that, since the contract is formally concluded as a sale and purchase, the object legally passes into the ownership of another person. In the event of a dispute, the debtor usually claims that this contract was actually concluded not for sale but as a debt security, while the other party denies this.
In this case, the burden of proof lies with the plaintiff. The plaintiff must provide reliable evidence that the contract was concluded not with the intention of sale and purchase but as a debt security. This, in most cases, creates a fairly heavy burden of proof for the plaintiff. The Supreme Court emphasizes that in such situations, the notary should not limit himself to a formal approach but should ascertain the true will of the parties and the legal result they wish to achieve, take necessary steps within his authority, and, if necessary, propose to the parties the type of contract that corresponds to their goals and ensure its formalization.
One of the issues causing disputes in property transactions is the use of powers of attorney.
The Supreme Court notes that the notary is not obliged to contact the person who issued the power of attorney every time when selling property on its basis. Nevertheless, when issuing a power of attorney, the legal consequences that the power of attorney may entail must be explained in detail to that person.
At the same time, if the notary identifies circumstances clearly indicating that the legal transaction being conducted contradicts the interests of the principal (owner), he must take necessary measures to establish his true will. For example, when using a power of attorney issued by spouses to each other during marriage, after divorce, when selling real estate at a price many times lower than its value, or when alienating real estate based on a physical power of attorney issued in a foreign country, the true intention of the person who issued the power of attorney must be established by telephone call, video link, or other possible means.
If the notary determines that the transaction is legally risky, he must inform the buyer about this. A person who insists on proceeding with the transaction despite the warning about risks will subsequently have to bear the consequences of those risks themselves. If the notary intentionally or negligently fails to properly perform his duties, and as a result, damage is caused to a person, he bears civil liability in the manner prescribed by law. If other persons are also involved in causing the damage, joint and several liability arises. In this case, the injured party may file a claim only against the notary, only against other responsible persons, or against all of them simultaneously.
In cases where the notary's professional liability is insured, a claim for damages may also be brought against the insurer. In practice, there are cases where parties conceal their true intentions from the notary. If fraud, threats, or other illegal actions were intentionally concealed by the parties and it was objectively impossible for the notary to detect them, the subsequent discovery of these facts does not entail liability for the notary.
The notary is liable only if he committed violations that were obvious in advance, which he should have known about or could have seen.
Thus, according to the Supreme Court's position, the security of real estate turnover also depends on the activities of the register and notarial system. The registration authority must ensure the correct registration of rights, and the notary must examine both the legal status and the true will of the parties. Violation of these duties may lead to compensation for damage caused to individuals.