Arrunada Seminar: Corrado Malberti (2) – An Empirical Test on the Differences between Recordation and Registration

17 January 2013 at 6:08 am Lasse 1 comment

| Corrado Malberti |

An Empirical Test on the Differences between Recordation and Registration

One key point of professor Arruñada is that “[i]t is safe to assume that recordation is less effective than registration in avoiding title uncertainty”. However, the Author acknowledges that it would be essential to perform some empirical analysis to support his conclusions. Importantly he also acknowledges that comparing the performance of titling systems is a daunting task, and that it should be important to consider the specifics of each country.

To start the debate on this point, professor Arruñada compares simple averages for two samples of European Union countries with different titling systems. The Author discovers that, apparently (at least in Europe), registration systems are not only more effective, but also less costly than recordation systems. However, Arruñada also acknowledges that this data is more a starting point for a fruitful discussion than the end of the debate, since it would be ”premature . . . to interpret these empirical differences as causal effects, given the small samples involved”.

I completely agree with this perspective and, I also believe that, starting from this data, it will be important to further investigate the matter.

However, this also poses the question on which is the direction empirical research should take in future. In fact, it is conventional wisdom among legal scholars that registration is superior to recordation. For example, it was also for that reason that, after the end of WWI, Italy decided to preserve in the new provinces the registration system already in place in Austria-Hungary, and that France decided to maintain the livre foncier in Alsace-Moselle.

Since any generalization concerning the classifications of public registers may have little predictive value on how real legal problems are solved, probably, in future, it will be prudent to carry out empirical analyses that consider homogeneous legal frameworks. This would limit the risks of giving the same label to systems that practically adjudicate disputes in completely different ways. Thus, from this perspective, it would probably be more interesting and valuable to focus the attention on those legal systems, like the French and the Italian, where two different public registers coexist.

Corrado Malberti, Professor in Commercial Law. University of Luxembourg. Commissione Studi Consiglio Nazionale del Notariato.

Entry filed under: - Lien -, Institutions, Law and Economics, New Institutional Economics, Theory of the Firm.

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1 Comment Add your own

1. Benito Arruñada | 25 January 2013 at 3:59 am

Thank you for the comment. Let me first clarify that I do think that “recordation is less effective than registration in avoiding title uncertainty”. My doubts refer to the costs and benefits of different systems and how these costs and benefits vary with the systems’ organization. Organization is, in fact, a major emphasis of the book.

I fully agree on the need to compare similar legal systems. That is why the empirical illustration includes only European countries, which provide a relatively similar level of legal security for property rights. Of course, this could be improved, and the suggestions on the provincial exceptions are well pointed. However, I wonder if these “land registration” provinces are forced by law to adjudicate disputes following procedures suitable for the majority “land recordation” provinces. If this happens, it might be the case that recordation provinces do not allow registration provinces to capture all the potential advantages of land registration, which (having clearer titles) include much faster procedures for, e.g., mortgage foreclosures.