The deed of a Notary: Legal service without dispute

Introduction of the Presenter
 
Resident country:
Hungary
 
Name of the notarial organization:
Hungarian National Chamber of Civil Law Notaries (MOKK)
 
Personal details:
Dr. Adam Mikó, Deputy Notary 
 
Introduction and preliminary remarks
 
Dear Presidents, Respected and Honored Members of the Congress, Distinguished Guests, Ladies and Gentlemen, Dear Colleagues:
 
It is a great honor and privilege for me to have this opportunity today to be able to address you as one of the representatives of the Hungarian Chamber of Civil Law Notaries.
 
I feel delighted and humbled to be present in this beautiful city serving as the host of the 26th International Congress of Notaries, which magnificent event is gathering the member chambers of the International Union of Notaries, representing five continents and more than 75 countries.
 
Budapest, my hometown and the capital of Hungary is about 3000 kilometers away from Marrakesh, however in spite of the great distance and the various cultural traditions I am confident to state that all of our countries share a significant and fundamental common heritage: the Latin-type notarial system.
 
In our days, this civil law notarial system is designed to provide a clear and reliable framework for citizens to conduct their legal business, and Latin notaries are serving as safeguards for legal certainty in their respective countries.
 
The civil law notary is a highly trained public official who drafts private agreements into legal language and then functions as an archivist of the authentic deeds he or she creates. As a result of this special status, the properly signed contract executed before a civil law notary is an authentic act, a public deed which is empowered with direct executive force and which shall be deemed to be an authentic proof of its contents.
 
Based on the aforesaid, the notary can be considered as a guarantor of the civil rights and as an impartial arbitrator of the contracts stipulated in notarial deeds. Through this, notaries ensure legal certainty and prevent litigations or lawsuits which result from the disputes arising between the contracting parties.
To the best of my belief, from a universal viewpoint the activity of a notary actually enhances the moralization of contractual relations. It is not a coincidence that an old Hungarian idiom says: “It doesn’t matter if you are in the confessional in front of a priest, or in the office in front of a notary: In either place you have to tell the truth.”
 
The Hungarian notariat plays a significant role in relation to the legal system of Hungary. Civil law notaries are also respected legal professional within the framework of the European Union as much as they are in Africa or Asia. Citizens in civil law jurisdictions such as France, Spain, Italy, the New World nations of the Caribbean and Latin America have been visiting notaries to execute agreements since time immemorial.  
 
In my presentation I would like to underline the significance of the notarial tradition with regard to the creation of authentic deeds based on a national level. However, I humbly hope that the conclusions arising from the experiences of a Hungarian notary might be interesting for other colleagues around the world. Nevertheless, with respect to the global recession of our times I would be anxious to demonstrate that the long-standing motto of the Hungarian notaries shall be more relevant today, than it has been ever before, because our motto is:  “Legal service, without dispute.”    
 
The notary as an authority in Hungary
 
The Hungarian National Chamber of Civil Law Notaries represents all of the 315 notaries serving their duties within the Republic of Hungary. In addition, the organization also includes the candidate notaries and assistant or deputy notaries working in the offices of the Hungarian civil law notaries.
 
The civil law notary is an independent and impartial legal authority within the framework of the Hungarian legal system. Notaries in Hungary practice their competences based on public law delegation, on behalf of the State, which appoints them and provides them with a public official status. As a result of this, notaries shall not be instructed by other authorities, and their procedures and competences are solely defined and governed by the law.
 
Therefore, on the basis of this special legal status notaries shall confer authenticity regarding to the legal acts and agreements they prepare for their clients.  In relation to the procedure of a civil law notary, authenticating an act shall mean to fully and impartially record and express the intended purpose of the parties in accordance with the applicable legal regulations.
 
Furthermore, civil law notaries in Hungary are obliged to proceed in cases within their competency, thus they are forbidden to refuse their services to any client requesting them. On the other hand, Hungarian notaries shall refuse to collaborate in any improper, unfair, illegal or immoral transactions. These circumstances are the sole exceptions from the compulsory procedural obligations of a notary. In this latter case, the refusal of the notarial collaboration shall be based on a formal resolution passed by the notary. The parties requesting the notary to proceed are entitled to appeal against this dismissive resolution at the competent courts supervising the notarial activity. Actually, the formal refusal of the notarial collaboration is a very important and unique legal institute within the European Judicial Area. It evidences, that even in case of creating a notarial deed which represents the individual intentions of the parties, the Hungarian notaries are entitled to pass formal resolutions which are contradictory to the will of its clients. This special attribute evidences and underlines the public function and the executive power of the notary.  
 
In conclusion of the aforementioned regulations, the notary in Hungary is an official person appointed by the Minister of Justice, that is to say a public authority performing official legal service. As a natural consequence, the notarial activity in Hungary is not subject to the freedom of competition. It also follows from these special attributes that the number of the Hungarian notaries is limited, and it is set forth by the relevant statutes. Furthermore, on the basis of the aforesaid statutes, the notary public shall be entitled to receive a government-regulated fee as well as an additional remuneration of its expenses in relation to the notarial activity.  In general, the client initiating the proceedings of the notary is obligated to pay the tariff mentioned above. In accordance with the obligations set forth by the tariff regulations, multiple clients or multiple concerned parties bear a joint responsibility concerning the payment of the notarial fees and expenses.
 
To sum up briefly, the notary is an authority performing public service in Hungary, its competence and procedures are strictly regulated by the law.
 
The procedure of the notary regarding notarial deeds
 
In accordance with the provisions set forth by the Act 41 of 1991 on Civil Law Notaries (hereinafter referred to as the Notaries Act), the deeds created by a Hungarian civil law notary are authentic public deeds, in case the procedure of the notary meets the legal requirements set forth by the same statute. Nevertheless, Hungarian notaries are not even entitled to prepare private deeds or agreements for their clients.
 
While creating a notarial act, the notary is first and foremost obliged to examine the legal capacity and the real contractual intentions of its clients. Furthermore, the identification of the clients shall be executed through the Electronic Personal Data and Address Register, which is an online system operated by the Ministry of Internal Affairs. Each and every Hungarian notary is obliged to establish direct connection to the electronic state registers with the help of a qualified electronic signature. Through these registers the identity of the clients and the validity of their personal identification cards shall be verified. Certainly, the online verification enhances legal certainty and prevents illegal transactions.
 
Following the identification procedure, the Hungarian civil law notaries shall provide their clients with correct and understandable legal advice. In addition to that, notaries are obliged to give a clear and impartial legal explanation regarding the agreements concluded in the form of a notarial deed. Thus, the activity of the Hungarian notaries enables clients or consumers to understand the features and risks connected with a certain legal transaction. In order to ensure this, notarial deeds shall be drafted in a clear and precise language, and the notary shall also guarantee that its clients fully understand the legal content of a given agreement. Therefore, notaries in Hungary are only entitled to create such authentic acts, which are fully congruent to the common will and intention of the contracting parties.
 
The notary shall also read the act aloud in the presence of the parties, and the clients are obliged to sign the deed exclusively in the presence of the notary. Following the conclusion of the authentic act the notary affixes its official, distinctive signature and seal to the public deed.
 
Thanks you these regulations, in my humble opinion it is most likely impossible that a client leaves a notary’s office with the impression that he or she did not perfectly understand the content of a given notarial deed. Personally, I provide the necessary legal explanation in each and every case, even if the clients do not want me to do that.
 
After preparing a notarial deed, the notary must guarantee the publicity of the authentic act to third parties and the State, primarily by registering it to the public registers that exist for this purpose. The notary is also responsible for the custody of the document, thus notaries must keep the original acts in their archives for indefinite time and upon the requests of their clients they shall issue authentic copies. Furthermore, from the 1st of January, 2004 each Hungarian civil law notary is also obliged to forward a digitized copy of the notarial deed to the so-called Digital Notarial Archive with the application of a verified electronic signature.
 
Inasmuch as the procedure of the notary meets the above mentioned requirements, the act of the notary shall be deemed as an authentic public deed.
 
Authentic notarial acts have in many ways the same attributes as a judicial judgment and shall not be contested, except by judicial means. And what are these important attributes of such an authentic act?
 
First and foremost, the public deeds created by a Hungarian notary are directly executable and enforceable. At the same time, notarial deeds also have an authentic probative value which applies in relation to the judicature and the public administration in addition to all third parties.     
 
Based on the aforesaid, through the assistance of the Hungarian notaries the number of lengthy and expensive court procedures can be reduced. Furthermore, the contribution of the notaries improve the efficiency of future foreclosure proceedings, thus it enhances the activity of mortgage lenders and other investors. Accordingly the vast majority of mortgage lending institutions are in favor of concluding mortgage loan contracts in the form of deeds created by civil law notaries. Therefore, the pursuit of the Hungarian notariat increases the legal certainty of creditors and it accelerates the satisfaction of creditors' and investors’ rights.
 
In conclusion, the civil law notaries in Hungary function as an impartial third party who drafts contracts and other legal documents into clear and precise language that is fair to both sides. The Hungarian notarial system is designed to preclude a controversial process wherein parties bring in their separate lawyers poised to formulate a favorable deal for their clients. In addition to his role as drafter and mediator, the Hungarian notary identifies and guarantees the identities of parties to acts, witnesses the agreement, reads the act aloud to the parties, and affixes his official, distinctive signature and seal to it. These safeguards exist to prevent unjust or illegal agreements by parties not well known to each other from leading to litigation later. In this way, Hungarian civil law notaries shall provide stability in society and protect the sanctity of contracts.
 
The importance of Public Registers
 
As I briefly mentioned before, Public Registers play an important role in relation to procedure of a notary. Since 2004, every Hungarian notary is obliged to possess a qualified electronic signature, which ensures the secure and encrypted connection to these electronic registers.
 
As a general rule, we can classify these registers into two categories: On the one hand, in case the register is maintained by the State or a public administrative agency (for instance Register of Companies or Real Estate Registers), the notary is not only authorized but it is also obliged to investigate the relevant content of the requested register. On the other hand, in case the register is maintained by the Hungarian National Chamber of Civil Law Notaries, the proceeding notary is obliged to record the necessary facts, rights or obligations into the register in question.          
 
On the basis of this classification, I would like to briefly introduce the individual public registers. The first group contains all those registers, which are operated by the State.
 
The first public register in this group is the Electronic Personal Data and Address Register, which is an online system operated by the Ministry of Internal Affairs. Each and every Hungarian notary is obliged to establish direct connection to the electronic state registers with the help of a qualified electronic signature.
 
In case a notary creates an authentic deed, it is obliged to examine the personal data and address records in order to verify the data provided by the client in proof of its identity and home address and to confirm the validity of the identification document or residence document of the client.
 
The notary shall inform the person affected before commencing the verification procedure indicating its purpose, methodology and contents, the obligation to refuse notarial collaboration in case the identification document is invalid or fake, and concerning the processing of the data obtained. Data and information for the above-specified control shall be requested by way of electronic means, with the notary’s official electronic signature affixed to the electronic request.
 
The authority to which the request is submitted shall check the validity of the certificate of the notary’s official electronic signature affixed before complying with the request, and shall refuse to supply the requested information if the certification-service-provider has suspended or revoked the certificate in question. Furthermore, if the notary experiences in the verification procedure that the identification document had been reported lost, stolen or destroyed, and there is no indication in the records that it was found or recovered, he shall immediately notify the competent police department in order to prevent any illegal use of the identification document and shall deliver the identification document in question to the police department. This notification shall not be treated as an infringement of the notary’s confidentiality requirements.
 
The above mentioned legal regulations certainly enhance legal security and prevent possible criminal conducts in relation to the misuse of identification documents. 
 
The second important public register in the State-operated group is the Real Estate or Land Register. In the Republic of Hungary the land register is operated on an electronic and on-line basis.
 
Therefore, numerous legal professionals (lawyers, notaries), authorities and financial institutions have encrypted and secure electronic access to the register.
 
For your guidance I would like to kindly inform you, that in order to register the ownership (or other rights) in the Hungarian Land Registry, the written agreement shall be countersigned by a lawyer or the agreement shall be drawn up in a notarial deed created by a notary. Therefore, a valid agreement capable of the registration of any legal title in the Hungarian Land Registry shall be concluded either in a contract countersigned by a lawyer, or in a deed drawn up by a notary. Thus, there is no exclusive obligation that the citizens of Hungary have to turn to a notary in order to transfer immovable property.
 
In case a notary prepares a notarial deed concerning an immovable property, it is obliged toinspect the content of the register through obtaining an electronic land certificate in order to examine the title of ownership and the possible charges and encumbrances in relation to the real property in question. Nevertheless, at present time the registration of ownership, mortgages, or other rights and obligations is not yet possible through electronic means, the proceeding notary (or lawyer) is obliged to file the relevant documents in a paper based form to the land registry.
 
The third important public register in the State-operated group is the Electronic Register of Companies operated by the competent Court of Registration.
 
Since the 1st of January, 2008 the registration procedure is electronic with regard to the foundation, modification and termination of business associations. Hungarian notaries do not have an exclusive competence in relation to the transactions governed by company law, however notaries are always obliged to perform the online legality check of business associations in such cases. As we mentioned before, each and every Hungarian civil law notary and deputy notary possesses a qualified electronic signature of the highest security level. Therefore, the Hungarian Notariat is prepared for the electronic procedures as exclusively applicable according to the newly modified company law. 
 
Following the introduction of the State-operated systems, let us examine the registers which were established and operated by the Hungarian National Chamber of Civil Law Notaries.
 
In 1992, the Hungarian notaries established the Electronic Register of Wills and Testaments, which is an online based electronic system with secure connection to each and every notary.
 
In case a notary draws up any testamentary disposition in the form of a notarial deed, or a private will is deposited in the custody of a notary, in either case the proceeding notary is obliged to register these documents into these electronic records within 72 hours. On the other hand, the competent notary pursuing a probate action or heritage procedure of a deceased person is also obliged to inspect the content of the register in order to find out if the testator left behind a public testament or a private will deposited at a notary.
 
Based on the aforementioned regulations, this Electronic Register of Wills and Testaments prevents the wills from disappearing and facilitates the enforcement of the clients’ testamentary intentions.
 
In 1997, the Hungarian National Chamber of Civil Law Notaries created the Electronic Mortgage Register of the Movable Property Securities.
 
In accordance with regulations set forth by the Hungarian Civil Code, the establishment of a chattel (movable) mortgage or a universal mortgage of floating charges shall be only valid in the form of a notarial deed, thus notaries have exclusive competence to create such mortgage agreements. Therefore, the Hungarian Notariat has also exclusive rights to operate these internet-based and encrypted electronic records, and only the proceeding notary is entitled to register, modify and withdraw movable and universal mortgage securities with regard to this authentic register.
 
This authentic register enhances mortgage crediting through allowing the verification of the reliability of bank customers and it also strengthens the position of the creditors. These records also facilitate the execution of the creditors’ rights regarding movable property securities established for their benefit. This measure introduced by the Hungarian Notariat is also fully in line with the provisions set forth by the European Basel II. Agreement. Nevertheless, small and medium-sized enterprises benefit the most from this register, which business associations play a major role in the Hungarian economy.
 
This present year, the Hungarian National Chamber of Civil Law Notaries established the Electronic Mortgage Register of the Motorized Vehicles.
 
This new electronic register complements the Mortgage Register of the Movable Property Securities, because in case the pledged property is a motorized vehicle equipped with a distinctive identification number, then the mortgage can be only registered in this special register. In accordance with the new mortgage regulations of 2010, chattel mortgage concerning motorized vehicles can be also established in the form of private deeds (unlike in the case of other movable properties where the aforementioned exclusive notarial competence applies), and the contracting parties are entitled to file the mortgage agreements electronically to the Electronic Mortgage Register of the Motorized Vehicles. In order to do so, the clients need to purchase a qualified electronic signature, and they shall submit the contract electronically to the Register. If the proceeding notary finds the agreement valid on the basis of a formal inspection, he shall register the mortgage within 2 hours from the submission of the contract. As a consequence of the new register, the mortgage crediting with regard to the automotive-industry shall be improved and accelerated. Nevertheless, the contracting parties do not need to be present before a notary to conclude such a mortgage agreement, and the registration will be executed on the basis of electronically submitted declarations.
 
Another important notarial register in Hungary is the Electronic Register of Partnership Declarations, which was introduced by the Hungarian National Chamber of Civil Law Notaries on the 1st of January, 2010. 
 
In case a couple lives together in Hungary without a formal marriage they are entitled to request the notary to record their partnership in this electronic register. This registration facilitates subsequent evidentiary procedures, proves the fact of the partnership, and through these attributes it enhances legal security.
 
Finally as I mentioned above, from the 1st of January, 2004 each Hungarian civil law notary is also obliged to forward a digitized copy of every finalized and concluded notarial deed to the so-called Digital Notarial Archive with the application of a verified electronic signature. The Digital Notarial Archive was also introduced and established the Hungarian National Chamber of Civil Law Notaries.
 
This register facilitates the change from the paper based deed system to the electronic deeds, and it also ensures the everlasting preservation and subsistence of the notarial acts. The qualified electronic signature of the civil law notaries guarantees that the documents of the Digital Notarial Archive are recognized as electronic and authentic notarial deeds. 
 
Direct Execution of Notarial Deeds
 
The majority of the clients seek out the assistance of a notary in order to prevent costly and lengthy judicial litigation procedures. An average Hungarian lawsuit could last for several years, while the direct judicial execution of notarial deeds provides an express and economically preferential solution.
 
Nevertheless, in parallel with the economical recession, the moral of payments is also drastically declining with respect to various legal transactions. Therefore, it is inevitable for private persons and legal entities to guarantee the performance of their contracting parties. In case of non-compliance or default of payment arising from a given agreement, the judicial procedure does not provide the parties with a quick and inexpensive treatment. And in today’s fast world people are seeking fast solutions. That is where the notary comes into the picture.
 
The decisions of the courts and other judicial forums, furthermore, claims based on certain documents or notarial deeds shall be implemented by court execution proceedings, in accordance with Act 53 of 1994 on Judicial Enforcement (hereinafter referred to as the Enforcement Act).
 
The first phase of enforcement is the ordering of execution. The resolution relating to this act is embodied by the executable document or enforcement order, which can be issued by the competent court or the competent notary, upon the request of the party requesting the enforcement. This request contains a call addressed to the body performing the execution (bailiff, financial institution, the debtor's employer, etc.) in order to perform the execution. Thus, judicial execution shall be ordered by the issue of an executable document or the so-called enforcement order.
Among the executable documents one of the most important subgroup is the concluded notarial deed provided with a so-called enforcement clause, which enforcement clause or writ of implementation is issued by the notary public, who created the deed.
 
On the basis of the aforesaid regulations, in order to be directly executable and enforceable, a concluded Hungarian notarial deed shall be previously examined by the competent notary and it shall be provided with an enforcement clause issued by the same civil law notary.
 
Following the brief legal explanation, let us analyze the criterias in relation to the content of a notarial deed in order to be executable. These prerequisites are set forth by the Notaries Act and by the Enforcement Act. For a Hungarian civil law notary it is highly important to be acquainted with these legal obligations. Frankly said, the conditions of execution are the bread and butter of the notarial deeds.  
 
As a general rule, the enforcement clause or the writ of implementation might be issued if the executable document contains an obligation (thus a ruling against the debtor), is definitive or is subject to preliminary execution, and the deadline of performance has expired. Therefore, contracts stipulating uncertain payment terms, undetermined deadlines of performance or other questionable conditions shall be subject to the refusal of the competent notary issuing the enforcement clause.
 
Beyond the above mentioned generic prescriptions, the Enforcement Act and the Notaries Act contain special regulations with respect to the content of executable notarial deeds.
 
Any notary shall affix an enforcement clause on its own notarial document, if it contains:
a) a commitment for performance and consideration, or an unilateral commitment,
b) the names of the obligee and the obligor,
c) the subject matter, quantity (amount) and legal grounds of the obligation,
d) the manner and deadline of performance.
 
Furthermore, if an obligation is rendered contingent on a condition or date, the occurrence of such condition or date shall be verified by a public (thus notarial) document for the obligation to be executable.
Execution may be solely implemented on the basis of the aforementioned regulations if the claim expressed in a notarial document is subject to execution by court procedure, and if the performance deadline of the claim has already expired.
 
In practical terms, in case a civil law notary draws up a bilateral contract in the form of a notarial deed, he shall be aware of the legal prescriptions mentioned above. The notary is obliged to inform the clients of the rules in relation to direct execution of the notarial deed, and he is also obliged to examine the agreement in the aspect of direct execution. Contracts lacking the requested legal prescriptions shall not be drawn up in a notarial deed, because these agreements are not capable of direct execution.
 
From the viewpoint of consumer protection the above mentioned regulations serve as a very important guarantee anchored by notarial deeds. Based on the aforesaid, the clients shall be insured of the enforceability with regard to the agreements concluded in front of a civil law notary. Nevertheless, this is the exact attribute they are requiring whilst they enlist the services of a civil law notary.  
 
Conclusion
 
Ladies and Gentleman!
 
In my Presentation I attempted to demonstrate the importance of the notarial activity with regard to the Hungarian legal system. In conclusion we can state, that the deed of the notary is a guarantee and security for the investors, and at the same time it is also supporting the economic development of a country through the reliability of public registries and through facilitating contractual performance on the basis of its executive force.
 
Thanks to these favorable attributes, the notarial deed enhances the transparency of transactions by creating legal certainty, both for enterprises and citizens. It also fortifies consumer protection through preventing legal conflicts and it relieves the burden of the judicial courts. It is a perfect tool to exercise preventive justice and hereby to create a stable and predictable legal environment which is required to maintain a successful economy. This is a beautiful task, yet it also means a serious responsibility for us.
 
Dear Colleagues!
 
The topic of notarial deeds is indeed a very interesting one, and we could continue to analyze the Hungarian notarial system on and on for a long time.
 
However my grandfather, who was a defense lawyer specialized in criminal law gave me an important advice, which I should not either forget today.
 
He used to say: If the defender stands a lot in the courthouse, then the defendant sits a lot in the jailhouse.  
 
With this in my mind, I am concluding my presentation. Lastly I would like to thank you all sincerely for your kind attention and for all my dear colleagues I wish a very successful work on this conference and a pleasant stay in this beautiful city. Thank you very much again! 

 

 
© 2013 Dr. Mikó Ádám Közjegyző
Minden jog fenntartva!
Dr. Mikó Ádám Közjegyzői Iroda
Budapest XVI. kerület 2. sz. közjegyzői székhely
1163 Budapest, Veres Péter út 99.
Tel./Fax: +36 1 405 2013, +36 1 403 8727
E-mail: info@miko.hu
 
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