What is the land and mortgage register, and why does its absence reduce a property’s value?

What the land and mortgage register is and who keeps it

The land and mortgage register is a public record disclosing the legal status of a property: who owns it, what rights and encumbrances burden it, and whether any proceedings are pending against it. It is kept by the land and mortgage register divisions of the district courts with jurisdiction over the location of the property, and for years now it has existed in electronic form, available online to anyone who knows its number.

Every land and mortgage register consists of four sections. Section one identifies the property: its exact location, its area and the manner of its use, together with the rights attached to ownership, such as a share in the common property where premises are held in separate ownership. Section two names the owner or the perpetual usufructuary. Section three contains limited rights in rem other than mortgages, such as easements or life estates, along with restrictions on disposing of the property and notes of pending proceedings, including enforcement. Section four is for mortgages, that is security for debts, mainly loans.

What protection the land and mortgage register gives

The land and mortgage register is not merely a formal record; it is also a real instrument of legal protection, and for both sides of a transaction.

First, there is a presumption that an entry in the register corresponds to the actual legal status. This means that in a dispute it is the person claiming something different from the contents of the register who has to prove it, not the other way round. For an owner this makes asserting and defending their rights considerably easier.

Second, and this matters even more in practice, there is what is known as the warranty of public credibility of land and mortgage registers. Anyone buying a property in good faith on the strength of the contents of the register is protected even if it turns out that those contents did not match the actual legal status, for example if the seller formally had no right to dispose of the property and the buyer could not have known. There are several exceptions to this rule, among them where the register carries a note of pending proceedings to change an entry, or where the acquisition was gratuitous, but as a rule it is this warranty that allows a buyer to rely reasonably on what the register shows, instead of reconstructing the entire legal history of the property on their own.

Why the absence of a land and mortgage register reduces a property’s value

A property with no land and mortgage register, or with a register that does not reflect the current legal status — because, say, the estate was never formally divided or ownership was never transferred after a purchase made years ago — is usually worth less than a comparable property with clear legal title. Several factors add up to this.

The greatest practical problem is that the purchase cannot be financed with a mortgage loan. A bank secures its loan precisely by entering a mortgage in section four of the land and mortgage register, and where no register has been opened there is nothing to enter it in. That automatically removes from the pool of potential buyers everyone who planned to buy with a loan — today the overwhelming majority of buyers on the housing market.

The second factor is the absence of the warranty of public credibility described above. With no register there is no such protection, and the buyer has to establish and verify the ownership history themselves, usually with a notary’s help, on the basis of other documents: old notarial deeds, inheritance orders, contracts from decades ago. That lengthens and complicates the transaction, and for many buyers it simply raises the sense of risk enough that they walk away.

Then there is time. Opening a land and mortgage register from scratch — assembling all the necessary documents, filing the application with the court and waiting for it to be considered — can take many months. Few buyers on the open market are prepared to wait that long, especially if they are financing the purchase with a loan whose approval depends on the legal status of the property.

As a result, the pool of realistic buyers for a property without a land and mortgage register narrows almost entirely to cash buyers willing to wait for the legal status to be put in order — and that, just as with shares in co-ownership or properties burdened with other legal problems, translates into a markedly lower achievable market price.

Do you have a property with no land and mortgage register? It need not be an obstacle

Many owners give up on the idea of selling because they assume that the absence of a land and mortgage register is an insurmountable problem. In practice it can usually be put in order; it simply takes time, a knowledge of the procedure and the right set of documents — which is precisely what many owners want to avoid.

At Remedy we deal with exactly these cases. Acting under a power of attorney, we assemble the necessary documents and file the application to open a land and mortgage register on your behalf, and then buy the property without you having to wait for the whole procedure to finish. If your property has no land and mortgage register, or its legal status has not been updated for years, write to us and we will see what can be done.

This article is for general information and does not constitute legal advice. Any matter concerning the legal status of a particular property is worth discussing individually.