AMONG the
many parties who are protesting reforms intended to make France’s economy more
competitive are notaries. In Italy, too, the government is attempting to trim
the rules of the profession.
In USA,
notaries’ main job is to certify documents and this requires few
qualifications. In France and Italy, however, as in much of Europe, valuable
assets (houses, companies, shares and so on) cannot change hands without a
notary’s approval. Entry to the profession is by a rigorous exam. The number of
notaries is restricted, as is the region in which they can work; some of their
fees are fixed, too.
In France
there are also rules about who can own notary firms (notaries, of course) and
who else can work in them (not lawyers, accountants or other professionals). A firm
of notaries can only change hands with the approval of the professional
association.
All these regulations add to costs and shelter notaries from competition, making the profession very lucrative. In 2010 the average self-employed French notary earned €190,812 ($265,309). In Italy, in 2013, the figure was €210,400. The average profit margin of French notaries in 2010 was 35%. In 2009 legal fees added 1% to the bill for buying a home in France and 2% in Italy, compared to just 0.25% in Britain. Between 1981 and 2011, fees paid on French housing transactions, which account for half of notaries’ revenues, rose by 68%.
All these regulations add to costs and shelter notaries from competition, making the profession very lucrative. In 2010 the average self-employed French notary earned €190,812 ($265,309). In Italy, in 2013, the figure was €210,400. The average profit margin of French notaries in 2010 was 35%. In 2009 legal fees added 1% to the bill for buying a home in France and 2% in Italy, compared to just 0.25% in Britain. Between 1981 and 2011, fees paid on French housing transactions, which account for half of notaries’ revenues, rose by 68%.
The French
reform will increase the number of notaries in certain parts of France. Their
fees will be more transparent. Better yet, notaries will be allowed to open
practices with accountants and lawyers in a bid to provide a one-stop-shop for
clients, which should help to lower transaction costs. But the law that
included these measures was so controversial that the government did not risk
putting it to a vote in the National Assembly; instead, it pushed it through by
decree.
In Italy,
successive governments have reduced notaries’ privileges. Currently, for
example, you can buy a used car without a notary. In 2012 the government of the
day abolished fixed minimum fees.
The current
Italian government wants to allow notaries to practice anywhere in Italy rather
than in a designated region. It also wants to permit lawyers to sign off on
certain transactions that are currently the exclusive preserve of notaries,
such as the sale of non-residential properties worth less than €100,000 and the
registration of particular types of companies.
Notaries
argue that allowing transactions to take place without their oversight will
increase the risk of fraud. The World Bank, after all, considers Italy’s system
of property registration superior to Britain’s or Germany’s. “In a country in
which there are so many things to change,” says Eliana Morandi, an Italian
notary, “it is irrational to start with the one thing that works.”
