An estimated seventy percent of the world’s population today lives in countries or jurisdictions where the Latin notariat is practiced, as contrasted with the United States and other common law countries’ notary. A United States notary public has been defined as:
[A]n official of integrity appointed by state government—typically by the secretary of state—to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents. These official acts are called notarizations or notarial acts. Notaries are publicly commissioned as “ministerial” officials, meaning that they are expected to follow written rules without the exercise of significant personal discretion, as would be the case with a “judicial” official.1
As apparent from this definition, the functions of a notary in the United States are ministerial and mechanical in nature. In contrast, Professor Pedro Malavet of the University of Florida College of Law, a leading comparativist of notarial law and practice, described the Latin notary as the:
[L]egal professional [exclusively] charged with the public function of receiving, interpreting, and giving legal form to the intent of the parties, preparing the documents pertinent to the desired end, giving them authenticity; and conserving the originals and issuing copies that attest to their content. This function includes the authentication of facts.2
To this definition, the Superior Council of the French Notariat (Conseil Supérieur du Notariat) adds:
The notary [is] a professional who can confer the character of authenticity to deeds. He has to the power to confer the character of authenticity to deeds by signing and adding his seal to instruments. By doing so, he officially recognises the wishes of the persons signing and personally guarantees the content and the date which appear on the act. This act is recognised as having the same authority as a court decision.3
As legal advisors, drafters, authenticators, record keepers, collectors of transactional taxes, and (in some jurisdictions) escrow agents,4 Latin notaries often draft and/or officiate the execution of many economically significant contracts in civil law jurisdictions.
This chapter will inquire into the role of Latin notaries in commercial transactions in increasingly commercialized societies, or societies in which real estate mortgages (once upon a time the queen of all security interests and the object of much individual attention by Latin notaries and land registrars) are now massively and quickly traded or collateralized, much as if they were commercial goods or paper. Hence, if up until the middle of the twentieth century, the real estate transactions that were the principal source of revenue of the Latin notary reflected a society where movable property (as contrasted with real property) was, as in the medieval saying, “vile” property (res mobilis, res vilis), presently much of the wealth and assets of commercial societies is movable or personal property, including the rights to real property. This was not the society or marketplace for which the Latin notary was designed.
Classical Roman law, with its reliance on “typified” contracts,5 needed its notaries (some of whom were known as Tabelliones)6 to enforce untypified contracts and especially contracts in which the exchanges of performances were not contemporaneous. Notarial documents and their ritual formalities, many of which echoed those of the stipulatio, enabled the enforcement of otherwise unenforceable promises such as the nuda pacta.7
During the middle ages, the role of notaries gained momentum, especially after the creation of notarial schools and the enactment of notarial laws that standardized entrance and performance requirements much as with guilds.8 The compensation of 217these was also guild-like: Notarial charges were fixed by tariffs and not by negotiations.
While Latin notaries have been traditionally associated with real estate transactions,9 during the sixteenth century, when Holland became Europe’s premier commercial power, Dutch notaries were heavily involved in drafting commercial contracts and their offices were where much of the commercial negotiation and deal making took place.10 Among the commercial contracts drafted by Dutch notaries were sales involving the future delivery of Baltic grain and North Sea herring.11 Because many of these contracts had to be concluded within a short period of time, they quickly acquired a standardized format. As noted by Dutch economic historians, trade “influenced commercial law and practice, as the thousands of notarial contracts and innumerable agreements to buy and sell at the Beurs encouraged uniformity, purchase by sample, and transparency in the distribution of information.”12
This open-ended approach to the drafting of notarial documents contrasted with the “strictly structured” notarial document pioneered by Bolognese notaries in the thirteenth century.13 Their document included a reference to the request by the contracting parties for the notarial drafting and referred to an audience with the notary in which the parties described their proposed contract or legal transaction. This audience was intended to elicit some of the factual background of the transaction and its terms and conditions. Once they were established, the notary asserted that he had read his proposed draft to the parties who signed it in his presence and gave them a copy of the notary’s document.14
With some adjustments, this medieval method of drafting was adopted by France’s notaries and was followed by other European and Latin American nations. In due course, provisions of France’s Notarial Law of 180315 and its Code Civil of 180416 were also adopted elsewhere, although using a terminology that was not always uniform. For example, Article 1317 of the Code Civil defined generically the document issued by notaries as an “authentic act” while the Spanish Civil Code referred to the same notarial document as “documentos” or “escrituras.” Nonetheless, the definition of the acte authentique in Article 1317 was the model used in Spanish and Latin American laws and practices:
The acte authentique is one drawn up by public officials having the right to draw up documents in the place where the document was executed, and with the solemnities required.17
Please note that implicit in these components are pre-existing and “required solemnities.” For example, when drafting a notarial deed of sale of land, some of the solemnities peculiar to this type of contract in representative Latin American jurisdictions include: (1) the notary’s identification of the parties based upon their acceptable identity documents; (2) his statement that he has ascertained the parties’ capacity to enter into contracts (which, as will be discussed in the appendix, at times requires the notary to go beyond what may appear in the party’s identification document); (3) a detailed legal description of the land (including cadastral surveys when these are available); (4) the terms and conditions of the sale; (5) the parties’ acknowledgment that they paid taxes and other charges required by law; (6) the notary’s reading and explanation of all the stipulations; and (7) the attestations of the parties and witness, acknowledging having read the document and having understood the explanations, followed by their signatures and by the notary and his signature.18
As will be discussed shortly, documents so issued enjoyed a presumption of truthfulness and proper formalities or solemnities (presumptio veritatis et solemnitatis). Or, as stated by a Canadian commentator: “whatever is written thereon is taken for the truth, and the act is considered to have been drawn in proper form until the contrary be clearly proved.”19
In contrast with real estate transactions, the French Code de Commerce did not require formalities, not even as much as a writing, to prove and enforce its “acts of commerce.” As stated by its present Article L110–3: “With regard to merchants, their transactions may be proven by any means unless the law specifies otherwise.”20 As will be discussed in a later chapter on the Napoleonic codification,21 this liberal policy acknowledged both a transactional reality and the minor legal importance attributed by the French codifier to many if not most of its commercial contracts. Further, these transactions were associated with a profession regarded by the bourgeois and the landed gentry as undignified, if not dishonest or usurious.
In contrast, French notaries were tasked with documenting or attesting to non-commercial life’s most significant acts or events, such as births and deaths; marriages or their dissolution; gifts; gratuitous loans and wills; agencies as well as the creation, modification or termination of professional or “civil” associations; and the acquisition, 219sale and mortgage of real property. In performing these drafting and attestation services, notaries charged officially fixed honoraria.22
Still, life has its own inexorable ways and by the middle of the nineteenth century, France as well as the rest of Europe embraced an economy whose sales and credit transactions had to be executed quickly, informally, and preferably in a standardized and inexpensive form. At the same time, urban real property, despite its Code Civil label of “immeubles” (meaning immovable), was beginning to be sold, leased and mortgaged in large numbers and for commercial purposes.
Latin notaries became the drafters of those commercial contracts whose transactional value required they be executed in an acte authentique or escritura publica. To many would-be creditors, the payment of a significant honorarium was justified because these notarial documents empowered them to file actions for summary judgments concomitantly with attachments of the defendants’ real or personal property. This feature of the notarial documents labeled them as “self-executory,” (“Titulos Ejecutivos”) for the defenses allowed against them were very few and exceptional in nature. Among them were the defendant’s full payment of his obligation, the falsity or forgery of the document relied upon by the plaintiff and the obligor’s contractual incapacity or duress when entering into the formal obligation.23
As noted earlier, the French-Latin notariat spread far beyond France and Southern and Central Europe (the ancestral place of birth of this notariat) to the Americas, among other continents. Thus, similar or closely related versions of the Latin notariat are presently found in locations as distant from Napoleonic France as the state of Sonora, Mexico,24 and the city of San Jose, Costa Rica (about which more later). Accordingly, the notarial law of Sonora defines a notary and his functions as follows:
Article 5. A notary is a law school graduate who has been granted the public faith [of the government] (fe pública) to authenticate those acts and facts which interested parties wish or ought to authenticate in accordance with the law; he is also the person in charge of receiving, interpreting and providing the necessary legal or voluntary formality to juristic acts, thus being in charge of drafting the legal instruments appropriate for such a purpose and conferring authenticity upon these instruments.25
Article 6. The notary, while performing his functions, shall act as a legal advisor of the parties who appear before him, guiding their choice of the most appropriate legal means to attain their lawful purposes, shall prepare the necessary documents, shall draft the instrument and shall explain the value and legal consequences of the acts and facts that are granted or take place before him and his public faith; the parties’ signatures shall be executed before him, he shall make copies of the instrument and shall preserve the original.26
These provisions track the broader definition of the Latin notary provided by the principles of the International Union of Notaries (UINL),27 a private but influential organization of Latin notaries worldwide: “Notaries are professional lawyers and public officials appointed by the State to confer authenticity on legal deeds and contracts contained in documents drafted by them and to advise persons who call upon their services.”28
Authentication is at the heart of the Latin notary’s functions, especially as a recipient of the “public faith” (publica fides) of the state. As such a recipient, the notary attests or bears witness to the veracity of those facts he is capable of ascertaining in accordance with criteria set forth by notarial laws, the civil codes and, less frequently, the commercial codes. In addition, he attests to the legality of the transaction.
What are the facts that the Latin notary is allowed to authenticate? As stated by Article 5 of the Sonoran Notarial Code, the notary can authenticate “those acts and facts which interested parties wish or ought to authenticate.”29 To deal with this broad grant of authority, Article 7 of the Notarial Law of Sonora points to the tools that the notary can rely on when attesting to the veracity of facts:
Article 7. As the person in charge of authentication, the notary, at the request of the interested party, affirms, subject to his [notarial public] faith, the 221veracity of what he sees, hears or perceives by his senses and the certainty and evidentiary weight of the declared intent of the parties in the [notarial] instrument drafted by him.30
Hence, as an officially empowered witness, the notary is instructed to rely on his sensorial perceptions and to assess the certainty and evidentiary weight of the parties’ declared contractual intent.
According to the UINL, the authentication that notaries set forth in their attestations and certifications does not amount to full proof; courts should grant them instead the status of rebuttable presumptions.31 According to this view, then, a judicial declaration of invalidity, certification or attestation of a notarial document reverses these presumptions and renders the authentication meaningless for all practical purposes.32
Professor Malavet offers a more nuanced view when he points out that “[i]n France, a notarial document and the facts included therein, are automatically admissible into evidence and only upon judicial declaration of invalidity does the document lose its [self-enforcing] nature.”33 Indeed, the sweeping language of the first paragraph of Article 1319 of the Code Civil supports Malavet’s assertion:
An authentic act gives full faith to the agreement it encompasses both as between the contracting parties and their heirs…. (L’acte authentique fait pleine foi de la convention qu’il renferme entre les parties contractantes et leur heritiers)34
The words “full faith” (pleine foi) would support Professor Malavet’s reference to an automatic admissibility as evidence which, while not the equivalent to an irrefutable presumption, places a heavier burden upon he who tries to undo its effects. It would seem that where a buyer “B” of property “X” sells or mortgages to a third party “C” what he thought he acquired based upon the automatic admission of the notarial authentication of validity of his purchase, his resale or mortgage to C will not be as easy to undo as it was when the same transaction was subject ab initio to a rebuttable presumption. In contrast, the first sentence of Article 1218 of the Spanish Civil Code is more circumspect on the scope of the notarial full faith and authentication:
Public documents provide evidence, even against third parties, of the fact that motivates their execution and of their date of execution.35 (Los documentos públicos hacen prueba, aun contra tercero, del hecho que motiva su otorgamiento y de la fecha de éste.)
The circumspection of the Spanish approach is apparent in the italicized words of Article 1218 above. Only “the fact that motivates their execution”36 and not the contents of the document, including the parties contractual intent, are deemed prima facie evidence.
The difference between the French and Spanish rules on the admissibility of their notarial evidence, and especially on the enforceability of the contract whose conclusion they witnessed, can be illustrated by the following example. A notarial document contains both a loan and a mortgage agreement between “A” and “B.” The facts that motivate the execution of such a deed are A’s desire to borrow a certain amount of money from B and to provide him with the security of a mortgage. Conversely, from B’s standpoint, the admissible facts are his desire to extend such a loan and to become a mortgagee-secured creditor.
According to Article 1319 of the Code Civil, the notarial document they signed gives full faith to their security agreement. What does this full faith mean? At a minimum, it must mean that the parties entered into an enforceable agreement between themselves and presumably with effects upon third parties. However, in Spain, the notary’s authentication does not extend to the validation of the mortgage, even between the contracting parties, let alone third parties. For under Spanish law, the enforceability of their agreement requires the land registrar’s determination that the seller has the right to mortgage based upon the chain of title recorded in the land registry. Indeed, the Spanish Law of Mortgages (Ley Hipotecaria)37 makes it clear that whatever the parties agreed to in their purported mortgage agreement, it would have no legal effect either between A and B or with respect to C (e.g., a bona fide purchaser of the mortgaged property) until it was recorded in the land registry.38
In other words, unlike the self-enforcing nature attributed by French notarial law to the French notarial document (as in the phrase “and only upon judicial declaration of invalidity does the document lose its [self-enforcing] nature”39), the Spanish land registrar, by rejecting what he considers an improperly executed mortgage, can deprive the notarial document of both a recordable and enforceable status and thus of its self-enforcing nature. One must conclude, then, that under Spanish law, where the parties to the loan agreement and mortgage are concerned, the public faith of the notarial document is subordinate to the superior public faith vested upon the land registrar, unless a court reverses the latter’s determination.
As was discussed in the previous section, whatever is the legal or metaphysical source of the Latin notary’s full or public faith, its impact upon authentication is objectively measurable by what is admissible as evidence under the applicable 223presumption. This is true either with respect to the veracity of transactional facts or with the meaning of the parties’ contractual intent.
According to the Superior Council of the French Notariat (Conseil Supérieur du Notariat), the French notary “personally guarantees the contents and the date which appear on the act [and] [t]his act is recognized as having the same authority as a court decision.”40 This assessment would bring the notarial attestation close to the status of an irrefutable presumption. On the other hand, if one reflects on the reasons for the circumspection of Article1218 of the Spanish Civil Code, one may well conclude that its drafters had good reasons to remain circumspect on the scope and effects of the notarial authentication. The negative experience of the Cour de Cassation with a doctrine that equated the intent attested to by notaries in actes authentiques to the effectuation of justice between the parties is further evidence of the wisdom of circumspection.
Given the higher likelihood of enforcement of statements or promises made before notaries than those made informally, would it be correct to equate the notarial publica fide with the judicial adjudication of the rights and duties of the parties to a notarial document? Did the legislature grant adjudicative powers to the notaries by making the literal meaning of what was stated in their contracts the untouchable version of the parties’ intent? After all, Article 1134 of the Code Civil had declared lawfully executed agreements as the law between the parties.41 Why not elevate the status of that contractual law to the status of a just adjudication of disputes concerning the parties’ intent? Despite what may have been wished by notaries and doctrinal writers, the answer, over time, has been in the negative.
A respected early twentieth-century French commentator coined the phrase “contractual justice” (“justice contractuelle”) to highlight the strong judicial reticence to interpret or re-interpret what the notary attested to as having been agreed to by the parties in their acte authentique.42 This policy of reticence to tinker with the literal meaning of notarial contracts was also applied by the Cour de Cassation to other, less formal written contracts, including the so-called contracts of adhesion.43 Yet, while the 224Cour de Cassation was partial to literal interpretation as a tool of legal certainty and predictability, it was not about to give up its power to interpret contracts, even if this power was reduced to determining what was the “true” literal meaning.
Lest one loses sight of what is at stake in the literal interpretation of commercial notarial language, it is worth noting that a literal reading of commercial contractual language is often at the expense of the intent reflected in the parties’ contractual conduct. Such conduct is apparent in the parties’ course of performance of the contract in question or in their course of previous dealings. It is also present in the usages of the trades involved, which are usually the most trustworthy sources of the meaning of commercial terms and transactional practices.44
In principle, the Latin notary is well situated to attest to the existence of some of the facts that he or she witnessed relying on the sensorial perceptions of Article 7 of Sonora’s Notarial Law. With the aid of “what he sees, hears or perceives by his senses,” he can safely attest, say, to the physical presence of the persons who identified themselves as the parties to the contract, or to what they said they had agreed to after he read them the draft contract, and so on. But can he safely attest to the legal implications of facts when such an attestation requires either knowledge of other facts he is unaware of or knowledge that only an expert in those implications would have?
I just asked a leading question, but given the persistence of notarial attestations that disregard the limits of the notarial factual and transactional knowledge, it is a question worth asking. Consider, for example, an actual case related to me by the late Justice of the Supreme Court of Sonora, Lic. Carlos Cabrera.45 A notary public in Sonora was asked by a victim of an automobile accident to attest to the damages that appeared to have been suffered by the body (carroceria) of his vehicle, and also to the location of tire markings at the sight of the collision. After describing the damages that appeared to have been suffered by the body of the plaintiff’s vehicle, the notary added that “by observing the strong tire markings left by the vehicle that hit the other on the latter’s driver’s side, it was apparent that the strong marks made on the pavement by the tires of defendant’s [hitting] vehicle were caused by a sudden, almost desperate attempt to stop the vehicle before it hit the plaintiff’s vehicle.”46 Lic. Cabrera rightly characterized such an attestation as improper by going beyond what the notary’s senses enabled him to see, hear or smell. Further, he attested to causation, to which only an expert on tire markings and vehicle accidents could attest.47 He then asked me if the attestations he criticized qualified as what U.S. litigants and judges referred to as hearsay evidence in a U.S. television program many watched in Mexico.
In response, I sent him a comment found in McCormick on Evidence which addressed the distinction between hearsay evidence and evidence proffered by a 225witness who lacked firsthand knowledge of the facts.48 According to Dean McCormick, a witness is qualified to testify to facts susceptible of observation only if it appears that he had a reasonable opportunity to observe the facts.49 Accordingly, if a witness testified that an airplane arrived at a certain time and date at a certain airport, but the witness was in a distant city when the arrival took place “and could therefore only have spoken from conjecture or report of other persons,” the proper objection is not hearsay, but want of personal knowledge.50 In contrast, if the witness testifies that his brother told him that he was on the previously mentioned flight and that it arrived at the time stated by that witness, the proper objection is that such a testimony would be that it is based on hearsay. In Dean McCormick’s words:
The distinction is one of the form of the testimony, whether the witness purports to give the facts directly upon his or her own credit … or whether the witness purports to give an account of what another has said and this is offered to establish the truth of the other’s report.51
In response to Dean McCormick’s comment, Justice Cabrera noted that in his opinion, notarial attestations were being given too much credit by courts as factual or documentary evidence even though many of them lacked personal knowledge or transcribed hearsay version of facts.52
Professor Malavet draws attention to the procedural preference in civil law countries for documentary evidence and for the role of the Latin notaries as trustworthy suppliers of such evidence. Thus, properly empowered public officials are allowed to certify or guarantee the facts stated in the document to which it is attached. Conversely, he notes, common law lawyers are suspicious of authenticated documentary evidence because of its “hearsay concerns and the general common-law preference for in-court testimony [which] justify the inadmissibility of notarized documents as proof of the matter therein asserted.”53 I should add, parenthetically, that many Latin American countries are gradually abandoning the traditional, mostly documentary evidence trial in favor of adversarial trials in which evidence is provided by different sources whose credibility is challenged by the oral and public examination as well as the cross-examination of witnesses.54
As with a notary’s (non-expert) attestation of the causation of an automobile accident in Justice Cabrera’s inquiry, the most that a Latin notary could say about the intent of many a contemporary commercial contract is that he read its terms and conditions to the parties and stated that they understood them and considered themselves bound by them. He cannot attest that they did, in fact, understand the meaning of all the terms and conditions any more than he can say that about himself. 226Truth be told, only some of the parties or intermediaries who regularly participate in these complex transactions possess the requisite knowledge to understand all the stipulations associated with, say, the purchase of “derivative” rights or “credit default swaps” or swaps of interest rates or foreign exchange streams of income, including standard provisions on “credit events,” “net-net netting,” etc.55
Conversely, assume that the contract in question is a garden variety real estate transaction with which a Latin notary is familiar, but that following a not uncommon contractual practice in countries like France, Spain and their former colonies in Africa and Latin America, the contract in question hides or “simulates” the true intent of the parties. Please recall that the practice of simulating the execution of ostensibly intended but truly unintended contracts was conceived precisely to hide the true intent of the parties. In such a transaction, is the Latin notary in a position to attest to the true intent of the parties?56
Or, assume that one of the parties consented to the terms of a contract that, in his honestly mistaken opinion, reflected faithfully the usage of the trade in question. As will be apparent when we discuss the meaning of good faith and reasonableness in the interpretation of commercial contracts in United States law, the interpretation of a given term or clause by a usage of trade often supersedes, in the eyes of the courts, the parties’ understanding of their individual intent.57
Finally, assume—as is most commonly the case with commercial contracts—that such a contract starts out as a promise or an act of performance by one of the parties only to be followed shortly thereafter by the other parties’ promises or acts of acceptance and that during the relatively short life of their contract (as contrasted, say, with the decades of life of a real estate mortgage or easement), their terms and conditions change with each reciprocal act of performance. Assume also that during the entire life of this commercial contract, no formal document was drafted until the parties appeared before the notary and that the clearest indication of what they agreed to do is found in their course of performance and previous course of dealing—not in an a priori ceremonial formulation of a contract.58 Could a Latin notary realistically and cost effectively decipher the intent of such quickly malleable transactions?
These, among other difficulties with the Latin notary’s attestation of the parties’ intent in contemporary commercial transactions, render their authentication of these transactions uncertain at best. As will be discussed shortly and in the Appendix, the costliness and ineffectiveness of the Latin notary’s participation in commercial transactions is being questioned by nations with legal cultures as diverse as those of, for example, Mexico and Sweden.
In Germany, as in other Latin notariat countries, the notary (Notar): (a) satisfies himself as to the identity of the parties that appear before him; (b) verifies that these 227parties are competent to enter into the agreements they seek to notarize; (c) explains to the parties to a contract the contents and legal implications of the instrument; and (d) has the parties and witnesses (where required) sign the contract or other notarial document before him.59
Based upon my own experiences with Latin notaries, the German notaries seem to be the ones most attuned to the nature of contemporary commercial contracts. As in France, Spain and Latin America, German notaries play a central role in real estate and corporate transactions of monetary significance, as well as in family and succession matters. Unlike their French colleagues, however, the German notaries seem to have a closer connection with the transactional realities of the marketplace.
For example, the German notary’s involvement with the customs and practices of the real estate market makes him aware of transactional facts that are likely to be ignored or disregarded by his French and Spanish counterparts. Since he “handles all aspects of the documentation and effectuation of the transaction”,60 he is charged not only with drafting the real estate contract, but also with checking land registries, working with mortgaging banks, and even holding deposits on behalf of buyers. Thus, the German notary “acts as an independent neutral ‘lawyer for the situation’ and takes into account the mutual security interests of all parties (seller, seller’s creditors, purchaser, purchaser’s financing bank).”61 Most importantly, he acts as a facilitator of transactions. For example, where a French, Spanish or Mexican notary would not find it possible to help enforce the seller’s supposedly firm promise of selling Blackacre until the actual sale agreement was executed, the German notary would make the enforcement of the seller’s firm promise possible by acting as the functional equivalent of an escrow agent.62 As described by real estate transactions manual:
Recommended Procedures to Hand-Over of Title Through a Notarial Intervention
In some cases, hand-over (Grundstücksübergabe) before payment is agreed. Under German law, this frequently creates the problem that the transfer of ownership represents an advance performance by the seller for which he still has no security. In this case, provisional payment of part of the purchase price is a solution. This money can be deposited with the notary or paid into a special account (Sperrkonto) to which the buyer only has access in the event of the complete reversal of the transaction.
Furthermore, to protect the buyer, it is frequently recommended that he should not pay the purchase price direct to the seller but deposit it with the notary. Notary custody (notarielle Verwahrung) gives the credit institutes and banks the necessary security. Another possibility is to initially pay the 228purchase price into a special account to which the seller only has access under conditions previously defined in detail (Sperrkonto).
…
[A]nother approach to securing the seller’s rights is frequently chosen: the conditional transfer of property (Eigentumsumschreibung unter Vorbehalt). The conveyance of ownership is already agreed in the purchase contract. However, the notary is instructed by both contracting parties jointly not to file the application for the transfer of property with the land registry office … until payment of the purchase price has been verified to the notary. In such cases, a firm promise of payment or confirmation of financing by the bank involved often are considered to be sufficient.63
The German notary’s role in this transaction reflects both his active participation as a facilitator of an option to purchase or promise of sale that has remained unenforceable to this day in many a Latin notariat jurisdiction and his thorough familiarity with transactional practices, their purposes and functions.
The preceding discussion of the Latin notary’s attestations of transactional facts and contractual intent showed that they are unsuited for the needs of certainty and predictability of the contemporary commercial and financial marketplace. Some countries whose notaries are still members of the Latin notariat have introduced some important variations to it. For example, in 1992, Mexico created the profession of the “public broker” (corredor público), which was intended to be a less formal and less costly and dilatory version of the “public notary” (notario público).64 Sweden, in turn, liberalized the practice of the notarial profession to the point that most of its real estate transactions in Sweden are handled by real estate brokers and not by notaries.65
In principle, the Latin notary, as a provider of legal certainty, should be a major contributor to national and regional economic development. Yet, is he such a contributor? Or is his intervention so formal, dilatory and costly that it outweighs his possible contribution? These questions are constantly raised when a new commercial law institution such as commercial loans secured with the assets of the debtor-merchant are required to be documented or authenticated by notaries.
Bear in mind that many of the contracts of the contemporary commercial and financial marketplace require specialized knowledge to understand what the parties are doing, let alone intending to do. In addition, it is a marketplace formed in significant measure by strangers or parties who do not know one another and for that reason distrust each other. Thus, this marketplace places a premium on reliable transactional data and is in dire need of trusted and knowledgeable intermediaries 229who bridge the gaps of insufficient or uncertain information and distrust accurately and inexpensively.
Notaries public could play such a role in some commercial transactions, but they must expand their factual and legal knowledge of the transactions in which they participate and reduce the cost of their participation. They can no longer confine themselves to ascertaining the formalities of traditional sales of real property, including the recitals of ritualistic clauses. They must think of themselves as professional intermediaries with considerable awareness of the transactions and sectors in which they participate. This requires them to be fully familiar with the intent of archetypal parties for the sectors in which they may wish to specialize, an intent that is derived primarily from the parties’ prior dealings and the usages of their respective trades.
With such knowledge at hand, notaries could serve not only as drafters or counsel for the drafters of agreements, but also as trusted escrow agents and paymasters. This function would be especially helpful with executory contracts or with contracts whose conditions require that performance be established by independent experts, but whose payment would be effectuated or directed by notarial paymasters familiar with the required experts’ certifications. Please note that in that capacity, notaries will not act as inspectors of the quality or quantity of the contractual performance any more than a letter of credit banker would when examining the documents tendered by a beneficiary. Their function, then, would be to ascertain that the documents required by the escrow agreement are the same that were tendered to them, and they would do so based upon their knowledge of these certifications and of the usages of the trades or professions involved. Clearly, this role would require a greater degree of notarial specialization than is presently in existence.
The legal institutions associated with the Latin notariat, as any other legal institutions, cannot help but to be influenced by the attitudes and values that are reflected in a nation or region’s legal culture. To date, the formalism and solemnity of the Latin notariat’s documents and attestations have proven highly compatible with the legal culture of Latin American nations, as illustrated by notarial practices in Mexico and Costa Rica, among other Latin American nations.
Notarial practice in Mexico is state governed, as is true of all other Mexican states. The State of Sonora has two main sets of laws that govern this profession: (1) the previously mentioned Notarial Law of the State of Sonora,67 which governs all formal and substantive aspects of the notarial profession, including the process for 230obtaining authorization to practice as a notary, their rights and duties, their use of the special notarial paper for their documents and archives, their seals, and the list of minimum requirements that need to be observed in every public deed they draft; and (2) the Law that fixes the notarial fees for the State of Sonora.68
During the month of June of 2008, I interviewed Lic. Eduardo Estrella Acedo. Lic. Estrella is a close friend whom I have known and respected since I first met him in 1969. At that time, he was president of the Sonora Bar Association and a practicing notary public. Since then, he became president of Instituto Tecnológico de Sonora (ITSON), one of Sonora’s most respected universities, and deputy governor and mayor of Ciudad Obregon. He is now in private practice as a notary public in Ciudad Obregon and continues to be one of the most respected lawyers and notaries in Sonora. What he says candidly and forthrightly in this interview should explain why he is so respected.
Boris Kozolchyk (hereinafter BK): How did you become a notary?
Lic. Eduardo Estrella Acedo (hereinafter EE): I was appointed by Governor Luis Encinas.
BK: Was there a public examination or competition at that time or was the appointment a decision of the governor?
EE: There was no examination process; the governor appointed whoever he thought was competent.
BK: Is that process of appointment still in effect?
EE: Yes, but only after the examination process has determined who are the successful candidates. In 2008, we had in excess of 100 practicing notaries in Sonora and the governor felt that there were too many of us for a population of roughly two million. If you compare it to the State of Baja California, where the population is ten million and the number of notaries is ten or so, you will see what an enormous disproportion this is.
BK: What are other important qualifications?
EE: Candidates must undergo an eight-year period of study, during which time they apprentice for five years (aspirantes) with a notary. After the initial period of five years, they have the right to take the final examination as notarial candidates (titulares). However, the governor has also suspended these examinations until further notice.
BK: Does this very cumbersome process (first law school, then the clerkships, then two sets of examinations) weed out the incompetent ones?
EE: Some, but not all.
BK: Is there a continuing legal education requirement?
EE: Yes. The National Association of Notaries (Asociacion del Notariado Mexicano) provides interactive computerized courses to the notaries. This is, in principle, a very nice effort. At the end of this course, you get a certificate of 231qualification, but very frequently people pay attendance fees and do not attend. In Sonora, I have proposed a similar plan, but with stricter attendance requirements, to the College of Notaries of the State of Sonora, but it has not been accepted by them yet.
BK: Can the College of Notaries expel incompetent or bad faith notaries?
EE: It can. It does have a procedure to investigate accusations of malpractice or incompetence, but once it is completed, it must ask the state government to proceed with its own findings and decisions.
BK: Has the government taken one of these cases to its conclusion?
EE: Yes and no. It did take one such a case to its conclusion, but it was decided not on the merits, but on political grounds.
BK: Let me ask you some questions on publica fides, and please respond in whatever order you please: (1) What is your definition of a notary’s publica fides, fe pública? (2) The Unión Internacional del Notariado states, with regards to fe pública, that publica fides gives the notarial attestation or certification a presumption of truth and of legality.69 Thus, “[t]he facts included in the notarial document are presumed to be true. The legality and proper form of the juridical act it reflects are likewise presumed.”70 However, a judicial declaration of invalidity reverses these presumptions.71 Do you agree with such a description of fe pública, or do you have your own? Finally, (3) As a notary, are you willing to assume responsibility for the truth of facts other than those you can physically ascertain, such as the presence of the parties, their apparent identities and their apparent state of mind, or are you willing to assume more? Please notice the use of the term “apparent” and tell me if you agree with it. When I was drafting some international customs for bankers who had the duty of checking the compliance of documents with requirements in letters of credit, I suggested the use of the term “apparent” as it applied to the compliance of the documents for reasons similar to those that I believe permeate a notary’s attestation of facts.
EE: Article 7 of the Ley del Notariado of Sonora states that a notary can only attest to the veracity of the acts that he can perceive by the use of his senses. This is the general principle that I follow whenever I have to attest to the occurrence of acts or events with the understanding that the senses may deceive you. I am also guided by the fact that public faith amounts to a rebuttable presumption of veracity or legality. This gives me comfort. Finally, public faith also extends to my determinations of the legality of the document, clause, or statement, based upon my knowledge of the law of contracts, powers of attorney, business associations, mortgages or whatever. I agree with your use of the term “apparent” and like it. One can only go by appearances, such as of mental sanity or lucidity of the party appearing before you. After all, you are not a psychiatrist or a handwriting expert. All you can say is that the contracting party appeared to be sane or that the signature she was affixing to a document appeared to be her signature. Because of the rebuttable presumption attached to my certification, I can say that the party acted in a manner that denoted mental competence or that she 232affixed her signature. Perhaps someone, an expert in signatures, can later prove that the signature of the party in question was forged by an impostor.
BK: Are you aware of cases of bad faith behavior by notaries?
EE: Yes. Unfortunately there are a good number of them.
BK: Can you give me some examples.
EE: One of those cases involved a forgery of parts of a contract of sale before a notary that was optically scanned and reproduced in a manner to appear as a power of attorney in favor of an unintended beneficiary. The fraudulent notary actually scanned parts of the public deed of sale and made it appear as a power of attorney.
BK: How could such a forgery be prevented?
EE: By the constant alertness and vigilance of the notary. I will give you a recent example that involved one of my powers of attorney. A colleague in another city in Sonora who knows me professionally called me and asked me to verify whether I had been the notary before whom a certain power of attorney had been issued. I immediately checked the number of the deed against the numbers in my record (protocol) and verified that it was a forged power. The numbers did not match. My colleague was definitely quite alert and vigilant and it paid off.
BK: Is this a frequent occurrence?
EE: Unfortunately, yes. A good number of fraudulent notarial deeds are created by impersonators, people who pretend to be “A” and provide an identity document that belongs to someone else, “B,” on the basis of forgery of the identification number. Recently, I heard of a notarial clerk who prevented such a practice by looking carefully at the date of issuance of a driver’s license being used by the party appearing before the notary claiming to be someone else. The clerk noticed that the driver’s license had been issued a day or two before the appearance and that raised his suspicion because as a rule, such licenses are used as identification devices by people who have held them for much longer periods of time.
BK: Do you rely on some specific indicators to prevent such frauds?
EE: Yes, I have adopted the practice of incorporating the photographs of the contracting parties as part of their notarial deeds. For example, the Mexican voting ID card requires a photograph of the voter. I require it and I append it to all my deeds or powers, and I ask all the witnesses to produce it as well.
BK: Is this a requirement of the notarial code?
EE: Not in so many words, but this code requires that the parties be identified by the notary and leaves it to the notary to employ his own indicators or due diligence in ascertaining the identity of the parties.
BK: How about the mental capacity of the parties? How do you establish it?
EE: By talking with them extensively before the drafting or signing of the notarial act. I ask them questions until it is clear to me that they are lucid and in full command of their faculties. At times, when I have had doubts, I have requested a medical or psychological examination and incorporated the medical certificate as part of the contract.
BK: With what other attestations or certifications do you employ the greatest care?
EE: With ascertaining the legality of the contract and that all the formalities that pertain to the various documents or acts have been complied with.
BK: Do you yourself attest to being a witness to the occurrence or performance of certain acts or the occurrence of certain events?
EE: Yes. Occasionally, we are asked to attest to the service of process upon a defendant in an important lawsuit or that a certain amount of money has been delivered to a contract party or to a third party, or that a certain document has been delivered or produced.
BK: In other words, you attest that a payment has been made or that a payment that was due was not made as in the case of the protest of bills of exchange or promissory notes or checks?
EE: Correct.
BK: Is there a national identity number in Mexico as in some Central American countries?
EE: No. Some Sonora identification numbers exist, but unfortunately, they are being forged much too frequently. This is why it has become common for notaries to require the presentation of two identification documents and why I add photographs.
BK: You told me a few days ago that there is malpractice insurance for Mexican notaries issued by some Mexican insurance companies whose premiums are payable in U.S. dollars. Do you have one? If not, why not?
EE: Yes I do. It is becoming more and more common to do so. Unfortunately, or maybe fortunately, notaries are becoming targets of malpractice lawsuits.
BK: Can you practice throughout the entire state?
EE: No, only in my assigned region of the state. I believe that we should be allowed to practice throughout the entire state and have made such a proposal to the state authorities, but this proposal, together with the others on continuing education, was rejected.
BK: Can you see notaries becoming experts in identifying the elements of important commercial documents and certifying them? For example, Party A produces a document that appears to be a valid proxy that enables Holder X to vote in corporate elections. Or, having examined Deed X, Document D appears to be a valid certificate from a fiduciary requesting payment of a certain amount of principal and interest due with respect to Mortgage Y or Government Bond Z, much as you do presently with powers of attorney.
EE: You know that in Mexico since the 1990s, we have a professional division between notaries and public brokers (corredores públicos) and it is reflected in the type of contracts or documents with which we deal. Ours are “civil” transactions governed by state law (mostly state civil codes) and theirs are commercial transactions governed by federal commercial law (the federal commercial code). The documents or attestations that you describe seem to fall within the purview of commercial documents handled by these public brokers. The dividing line, as you point out in your writings, is not as clear as many people think. For example, what about mortgage bonds or notes 234stemming from mortgage deeds executed before public brokers? Mortgages, as you know, are governed by the state civil codes. On that basis, some Mexican courts have rejected the intervention of public brokers with respect to mortgage deeds, bonds, etc. The same thing is true with the contract of agency or “mandate,” which is governed by the state civil codes.
BK: Do you think that the notarial profession is vulnerable in Mexico, and if so, what are the vulnerable areas?
EE: I believe that the Mexican notariat is vulnerable first where it functions as a “hereditary aristocratic” institution. In some states, it is handed down by father to son, and by son to grandson. It should be based upon merit and only merit. Secondly, I believe that the notariat is vulnerable where the services rendered by the notary do not correspond with what he charges for them. Some time ago, there was a national meeting of notaries in Mazatlan. A rather unpleasant, but very telling incident took place following the presentation by a well-known and rather wealthy notary from Mexico City whose office bills out many millions of pesos per month in notarial fees. His topic was the notary’s certification. After he finished his talk, a notary from the State of Veracruz asked him how many public deeds he certified as having been executed before him during a day. After the Mexico City notary hesitated, the notary from Veracruz said the following: “Sir, you hesitate to tell us because your volume of daily transactions is such that you often certify that as many as fifty such deeds have been concluded in your presence. You and I know that it is not humanly possible to do so. It takes me and other true notaries an average of thirty to forty minutes just to read a deed. In fact, the work you say you do is done for you by secretaries or clerks. Thus, I conclude that you are not acting as a notary, but as an assembly plant (maquila). So I am a notary and you are a maquila.”
As opposed to Mexico’s divided regulation of the notarial profession by state, Costa Rica has a single set of laws that govern notaries throughout the entire country. The substantive law that regulates all formal aspects of the notarial profession—process of authorization, requirements for drafting public deeds, etc.—is the Notarial Code.73 On the other hand, notarial fees are regulated by a decree issued by the executive branch. This decree not only determines the way in which notarial fees must be calculated, but also includes a section on stamp fees (timbres) for the bar association that must be charged and collected by the notary public for each transaction.74
The following interview with Lic. Joaquín Picado will provide an illustration of current notarial practices in Costa Rica. Lic. Picado is a professor of commercial law at two Costa Rican law schools and a distinguished Costa Rican lawyer who specializes in commercial and real estate law. Lic. Picado holds an LL.M. from the University of Arizona James E. Rogers College of Law International Trade and Business Law 235Program and thereafter served as a research attorney and coordinator of the Securitization Law Project at NLCIFT (The National Law Center for Inter-American Free Trade).
Boris Kozolchyk (hereinafter BK): Back in the 1960s, when we were doing research on land titles in rural Costa Rica, we found a peculiar notarial deed in the form of an affidavit that was labeled “Of Affection and Care” (Afecto y Manutencion). In it, the affiant promised to take care of the needs of the beneficiary, a designated lady and her immediate family, for an unlimited period of time. Upon further inquiry, it turned out that the affiant was a married man and the beneficiary, his mistress and children from the affiant. When I inquired about its enforceability, I was told by the notary who issued it that he had explained to the parties that the document may not have the full force of a contract, but they insisted on it being in notarial form. To me, this was an indication of the weight attributed to notarial deeds among ordinary Costa Ricans. Are notarial deeds still held in such esteem today?
Lic. Joaquin Picado (hereinafter JP): I’m not so sure about the reputation of notaries in our days. There is no question that there are a good number of reliable notaries in Costa Rica. Yet, I know of notaries who are in jail for repeated fraud and embezzlement. In fact, I know of one who is still in jail. It has gotten to the point that land registries keep a “black book” of suspect notaries. When these registries receive a notarial deed from these notaries that conveys land, creates a mortgage, or subdivides a plot, they examine it very carefully and look for indications of fraud or misrepresentation.
BK: What do you think is responsible for this deterioration? When I lived in Costa Rica in the 1960s, all lawyers were automatically notaries and you seldom heard of notarial misdeeds. In fact, the only misdeed I heard about occurred in some Costa Rican consulates where consuls were bribed to ante-date or post-date deeds of transfer of land.
JP: Well, now there are perhaps ten times as many attorneys and notaries in Costa Rica as when you lived there. The legal profession is not as concerned about ethics and professionalism as it is about making money, sometimes at any cost. On the other hand, the criteria to qualify as a notary today seems more demanding than when you lived there: the Notarial Code of Costa Rica defines a notary public as a “legal professional, specializing in notarial and registry law, and who is legally authorized to practice the notarial function.”75 Thus, to qualify for the status of a notary public, the Notarial Code requires, in addition to proof of “good conduct,” that he or she be a graduate of an accredited law school with post graduate work on notarial and registry law, be a membership in the Costa Rican Bar Association for at least two years, and to have applied for the position of notary public. He or she must also be a permanent resident in Costa Rica, except for Costa Rican consuls in foreign countries, and have a “correct” command of the Spanish language.76 Interestingly, a foreigner who fulfills the above requirements can be a Costa Rican notary as long as in his country of origin, Costa Rican notaries would be entitled to the same treatment.77
BK: So, it is your opinion that the ethics of the notarial profession in Costa Rica could definitely stand improvement?
JP: Yes. The directorate in charge of disciplinary action needs to be much more active in preserving notarial discipline. The open system of access to the notariat had a positive aspect which was to reduce notarial fees through stiff competition among notaries and, as I said, it was in effect at a time of much higher professional ethics. Do not forget that a positive aspect of a more closed system of access, in which notarial practices can be inherited by the notary’s heirs, is that the closed system has greater self-discipline. Those who inherit notarial practices tend to be more careful in their handling of their client’s affairs because they have a family reputation to protect.
BK: What do you see as positive developments in the practice of the notarial profession?
JP: I see technology, and especially electronic technology and the notarial access to databases, as a very positive development, one that enhances the practice of the profession and the legal certainty of transactions.
BK: Can you provide some examples?
JP: Yes. Now we have immediate access to databases in the registry of persons, business associations, intellectual property law, pledges, real property, and cadastral surveys which enable us to check, say, a person’s name or identification number when that person appears before us. The same is true with companies, with the description of land in a deed, and so on. This availability of information imposes a higher duty of diligence on the notary, but it is a welcome one.
BK: Do you carry malpractice insurance as carried by some notaries in Mexico?
JP: Yes. Notarial due diligence is now supported by malpractice insurance policies issued by a quasi-official banking and insurance agency in Costa Rica. This insurance covers the damages suffered by defrauded parties. Unfortunately, because the insurance system is a state system, and a highly bureaucratic one at that, it does not exercise much discipline. Notaries who have committed malpractice are not automatically denied renewal of their existing policies. Yet, the notarial association can expel the notary or subject him or her to criminal sanctions.
BK: Which documents or statements do you most frequently verify?
JP: The identification numbers and filed information on the identity of the parties, their powers of attorney, the previous deeds on the same property, and other data available in databases of the various registries for cross-reference purposes.
BK: How seriously do you take your certification of a contracting party’s state of mind?
JP: Very seriously. I have had cases where a person appearing before me appears to be of sound mind, but upon further inquiry, turns out to be legally incapable. For 237example, if I have a contracting party or a testator beyond the age of seventy years or so, I try to engage them in conversation for a while. In one instance, a party who appeared to be of sound mind answered comfortably the first set of questions concerning her name, residence, etc. However, when I asked her about her husband, even though the identification information I obtained from one of the databases indicated that she was a widow, she referred to her husband in one of her answers to me as “still working in our farm.” I immediately decided not to be the notary for the transaction.
As the reader compares these interviews, it will be useful to attempt to inquire into the validity of the interviewees’ perceptions of the notarial and socio-economic reality around them. For example, do their perceptions on the consequences of open or restricted access to the notarial professions coincide? If not, whose version of consequences sounds most plausible? What do you think about the requirement of appointment to the notarial profession? What do you think about the former Sonoran governor’s policy of only appointing notaries in cases of death or incompetence? Is the reader convinced that it is really necessary to pay a significant fee to a notary public to be able to obtain their services as agent or attorney? Or to convey land? Or to sell one’s home or place of business? What is wrong with using the various tried and true standard forms for “trust deeds” or “warranty deeds” or “quit claim deeds” that can be so readily found in stationary shops or real estate brokers’ offices? Could the need for a Latin notary be the result of a highly distrusting society and marketplace? As noticed throughout this chapter, St. Augustine had a valid point when he noted that in a world of sinners, there was a need for a trusted third party. However, given the content of the preceding interviews, could it be that many trusted third party notaries can no longer be trusted?
Swedish notaries are far less numerous and far less involved in civil and commercial transactions than their Latin counterparts. While drafting the Apostille Convention of 1961,78 the Hague Conference on Private International Law surveyed 238the role of notaries as certifiers of public documents worldwide. In 2013, there were approximately 250 notaries in practice in Sweden79 (there are presently 14 notaries in Stockholm).80
Various reasons account for the sharp differences in the number of notaries and scope of their work between Sweden and other Latin notarial countries. One is implicit in the Swedish notarial law itself. Swedish law requires that each municipality have at least one notary (referred to as notarius publicus) and that the notary be appointed by each county’s Administrative Board (Länsstyrelsen).81
The fact that the Swedish legislator did not seem disturbed by having such a low minimum number of notaries for each county, regardless of its size or number of inhabitants, shows that notaries are no longer significant. The second reason for having fewer notaries is that Sweden, as well as other Scandinavian nations, looks upon restrictive policies on professional practice with disfavor and highly respects notaries.82
Accordingly, no centralized register exists in Sweden for its notaries. Also, traditional sources of notarial revenues in Latin notarial countries, such as real estate transactions and protests of unaccepted or unpaid negotiable instruments, are now being handled in Sweden (but not exclusively) by real estate brokers and governmental agencies, respectively.83 Predictably, as government agencies became involved in formalizing the protests for default on commercial paper, the number of notarial interventions sharply declined in the 1980s.84 Similarly, and as a result of the policy of 239liberalization of access to professional work, Swedish real estate brokers and not notaries are now acting as conveyancers of most of their nation’s real estate.85
The declining role of Swedish notaries in real estate transactions is described by Peter L. Murray, an English comparative real estate lawyer and consultant to the Conference of European Civil Law Notaries, as follows:
In studying the Swedish situation, one fact jumped out. In most of the other countries under consideration, only 50–70% of transactions involve the use of real estate brokers. Many sales are negotiated directly by the parties, who then go to conveyancing professionals for the actual transfers. In Sweden, on the other hand, virtually all sales of residential real estate involve the services of brokers….86
By adding to this fact the finding by ZERP’s Study that civil law notaries are no longer in practice in Sweden, the conclusion can be drawn that an alternative to the notarial profession already exists in a civil law country.
In August 2006, the Competition Directorate of the European Commission requested a comparative legal and economic study of the various services involved in conveying land in the European Union from a consortium of research institutions coordinated by the Centre of European Law and Politics at the University of Bremen (ZERP) (hereinafter ZERP-Study).87 Its purpose was to help assess the impact of regulations on the efficiency and performance of the conveyancing services. ZERP prepared a detailed questionnaire to gather reliable information on present regulations of these services in the twenty-one EU countries.88 Prior to this study, the European Commission had shown an interest in liberalizing and harmonizing the professions within the European Union. There were those “intent on lobbying in Strasbourg and Brussels in favor of the abolition of monopolies enjoyed by notaries in EU civil law jurisdictions, and most specifically resulting from the nationality requirement imposed [upon notaries] by many Member States.”89
ZERP’s task was indeed daunting because of the diversity of functions assigned to the same professionals and the similarity of tasks assigned to different professionals within the European Union. In addition, different standards of diligence were required from the same professionals and similar standards were expected from different professionals. As if this were not enough, the practice of the various professionals often 240differed from what was stated in their governing law. A brief comparison of the findings in Austria, Belgium and Sweden will illustrate the difficulty of the task.
In Austria, the finding on “civil law notaries” was that:
[T]here is no legally mandatory professional to intervene in conveyancing. All steps of conveyancing can be done by the parties themselves, including the mandatory certification of signatures (which can be done at court) and the application for recording a title (with the land register). In practice, however, in more than 90% of all real estate transactions, it is a civil law notary or an advocate who drafts the sales contract, carries out preliminary checks, gives legal advice, certifies the signatures and coordinates the execution of the contract.90
This requirement was insisted upon by the banks that financed the purchase price. When this was the case, the notary or advocate also acted as a professional escrow agent. In addition, civil law notaries in Austria were expected to play a central role in the taxation phase of the transaction. As in Mexico, the land transfer tax is normally calculated by the civil law notary as the draft person.91 As with other Latin notaries, “the Austrian notary is under a duty to comply with professional standards … to maintain confidentiality, to act impartially, and to advise the parties objectively.”92
In contrast, the presence of the notary is mandatory in Belgium.93 Since only authentic deeds or documents could be registered with the Mortgage Registry Office, a notary, as a public officer, or a judge had to be involved. Without such an authority involved, the transaction had no effect against third parties.94 Moreover, in certain sales such as foreclosure auctions, the notary was the only person authorized to write the “articles and conditions of sale” (cahier des charges) and carry out the sale.95
As compared with the long list of functions of English notaries in Brooke’s Notary,96 the National Notary Association’s listing of the functions of a United States notary is quite modest:
A Notary Public is an official of integrity appointed by state government—typically by the secretary of state—to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents. These official acts are called notarizations or notarial acts. Notaries are publicly commissioned as “ministerial” officials, meaning that they are expected to follow written rules without the exercise of significant personal discretion, as would be the case with a “judicial” official.97
Professor Malavet’s historical account of the functions of United States notaries supports the National Notary Association’s description:
[I]n the North American colonies, where today each state has its own notary legislation, the occupants of the colonies that would become the United States of America: … had little use for the services of a Notary Public…. Most agreements for the purchase and sale of land were made public in open court. The buyer and seller met before an official, such as a judge, to advise him of their intention to make an agreement. The judge would make the agreement official and in full force and effect simply by recording the terms in his court record.98
The increase in trade between the North American colonies and Europe attracted notaries public. They drew up and witnessed agreements for the purchase and sale of merchandise or certified protests of unaccepted or unpaid bills of exchange drawn on United States importers of British goods. Unlike their English Scrivener-notary counterparts, they did not organize themselves into exclusive or non-exclusive regional or national associations.
The United States notary has remained a clerk with purely ministerial duties. He or she attests to oaths and signatures in his or her individual capacity and not as an employee of the state. As defined, in prototypical fashion, by Arizona law: “An Arizona Notary Public is a public officer commissioned by the Secretary of State to perform notarial acts. A notary is an impartial witness.”99
As mentioned earlier, the qualifications of such a public officer are modest: he or she is required to be a resident of the particular state for income tax purposes who is at least 18 years old, is a citizen or permanent resident of the United States of America, and has not been convicted of a felony.100 Once an applicant meets these qualifications, he is required to purchase a five-thousand dollar bond in duplicate form from an insurance agent (which costs approximately thirty dollars). He obtains a check or money order for forty-three dollars (which comprises twenty-five dollars for the filing fee and eighteen dollars for the filing of the notary bond) and within two or three weeks of mailing the application and the money order or check to the secretary of state’s office, he will receive the commission to act as a notary for a period of four years. A notary may wish to buy additional insurance against negligent “errors or omissions,” but this is not a mandatory requirement. The final expenses include the purchase of 242the notarial seal (approximately thirty dollars) and a journal (twenty dollars) to record summarily the notarial acts.101
Clearly these are not prohibitive requirements, and equally clearly, no special notarial, legal, or any other kind of training is required. Where publica fides is concerned, nothing in the Arizona statutory law seems to indicate that notarial acts, attestations or certifications would carry an evidentiary weight different from that of any other “impartial witness.”102 The clerical-ministerial status is equally true in former French and Spanish colonies in the United States. “Louisiana, originally a pure civil law jurisdiction, still retains much of its civilian tradition, but the function of the notary has diminished in importance over the years. Indeed, the truly civilian notary has substantially disappeared….”103
As was the case with the English Scrivener notaries’ attempt to approximate the functions of Latin notaries, some states in the United States have enacted statutes allowing the appointment of attorneys as civil law notaries with the power to authenticate documents and transactions.104 Yet, because these attorneys lack publica fides, they are far from being able to discharge the functions of Latin notaries.
Upon evaluating the present day functions of Latin notaries, does the reader conclude that the price paid for their services represents sufficient value to their clients and to society at large? Conversely, does the limited role of notaries in the United States (to administer oaths and take affidavits, to take acknowledgments of deeds and other instruments, and to perform other acts specified by the law of the notary’s jurisdiction) make sense given that other agents have to be contracted to fulfill the other functions that a Latin notary alone would handle? Overall, is it more expensive to use a single Latin notary or several transactional agents? Jonathan Taylor, a student reader of this chapter and book concluded that:
The bottom line comparison is that while the Latin notariat is the product of a guild system which assigns exclusivity to those who qualify for admission to that profession or guild, regardless of market considerations, the U.S. notarial system is more market oriented and assigns Latin notarial functions to other professions or intermediaries such as attorneys, real estate agents or brokers, title insurance companies, escrow agencies, and so on, based on the marketplace participants’ determination of who provides them with the needed service at the lowest cost.
Do you agree with this comparison?
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1 National Notary Association, What is a Notary?, http://www.nationalnotary.org/resources_for_notaries/what_is_a_notary/ (last accessed Nov. 1, 2013).
2 See Pedro A. Malavet, Counsel for the Situation: The Latin Notary, A Historical and Comparative Model, 19 Hastings Int’l & Comp. L. Rev. 389 (1996) (a historical overview of the Latin notariat and a comparative study of its profession and practice from a U.S. legal perspective) [hereinafter Malavet, Latin Notary]; see also Pedro A. Malavet, The Foreign Notarial Legal Services Monopoly: Why Should We Care?, 31 J. Marshall L. Rev. 945, 952 (1998).
3 Conseil Supérieur du Notariat, Press Kit, http://webcache.googleusercontent.com/search?q=ache: v3_YIS-0VqIJ: www.uinl.net/DOCUMENTOS/ARCHIVOSWEB/Dossier%2520presse%2520de%2520la%2520profession%2520220608_UK-UINL%2520(EN).doc+%22Because+the+notary+provides+a+public+service,+ payments+made+to+notaries+are+strictly+regulated+notaries+charge+clients+a+fixed+rate%22&cd=1& hl=en&ct=clnk&gl=us (emphasis added) [hereinafter Conseil Supérieur].
4 See Boris Kozolchyk, Enhancement of Mexican Commercial Adjudication by Improved Transactional Fact-Finding, Application of Equitable Principles, and Drafting of Standard Contracts and Best Contractual Practices, 27 Ariz. J. Int’l & Comp. L. 339, 463–64 (2010) (discussing notaries acting as escrow agents). See also Ley del Impuesto sobre la Renta [LIR] [Income Tax Law], Diario Oficial de la Federación [DO], 1 de Enero de 2002 (Mex.). Article 154, in its relevant part, states: “In transactions documented in Public Deeds (escrituras públicas), the provisional payment [of taxes] shall be done through a statement that must be filed within fifteen days following the date in which the deed or minute was signed. Notaries, brokers, judges and other holders, to whom the law grants notarial powers, shall be responsible for calculating the relevant taxes due and shall pay it to the relevant authorities.” Id. art. 154. See also Codigo Fiscal de la Federación [CFF] [Federal Tax Code], Diario Oficial de la Federación [DO], 31 de Diciembre de 1981 (Mex.). Article 26 provides that individuals or entities to which the law grants the power to withhold or collect taxes are joint and severally liable to taxpayers, for the payment of the relevant taxes. Id. art. 26. And for a description of the French notaries’ role as tax collectors, see Gisela Shaw, Notaries in France-An Unassailable Profession. Or are they?, 13 Int’l J. Legal Profession 243, 249 (2006) (“The state benefits in a number of very tangible ways from the activity of notaires. Firstly, notaires calculate and collect state taxes and legal charges (now also including VAT) for each and every transaction performed.”).
5 See supra § 4:4(D)(3)(e) (discussing typified contracts and the link of their requirements to the availability of specifically designed actions and defenses).
6 See Tabelliones, Encyclopedia Brittanica, http://www.britannica.com/EBchecked/topic/579695/abelliones (describing tabelliones as “a humbler class of paid legal documentary experts … who were useful in nonlitigious transactions.”).
7 See supra § 4:4(D)(2).
8 Malavet, Latin Notary, supra note 2, at 416–20.
9 Approximately fifty percent of French notarial work involves real estate sales and mortgages, leasing, and construction.
10 Jan de Vries & Ad van der Woude, The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500–1815 139, 150, 414, 491, 523 (1997).
11 Id. at 150.
12 Id. at 141.
13 Malavet, Latin Notary, supra note 2, at 419.
14 Id.
15 Loi Contentant Organisation du Notariat, Loi 25 Ventôse an XI [French Law on the Notarial System], Mar. 16, 1803.
16 C. Civ. (Fr.) (Barrister 1804).
17 C. Civ. (Fr.) art. 1317 (Dalloz 1992–93). Compare this definition with that of the “documento público” of Article 1216 of the Spanish Civil Code of 1889: “Son documentos públicos los autorizados por un Notario o empleado public competente, con las solemnidades requeridas por la ley.” (Public documents are those authorized by a Notary or public employee with the solemnities required by the law) C.C. (Spain) art. 1216 (1889). For a similar use of the term Escritura Publica see, for example, Article 1230 of the Spanish Civil Code of 1889. A direct translation of the French Acte Authentique (Actos Autenticos) was used in the regulations for the recording of documents in the Spanish civil and real property registries. See, e.g., Reglamento del Registro Civil [Rules of Civil Registration] arts. 38, 42, 43 (B.O.E. 1958, 206) (Spain).
18 The incomplete summary of recitals and terms and conditions in the principal text is based upon the notarial practices that I have observed in Latin American countries.
19 Notaries, Their Origin and Office, 45 Canada L. J. 279 (Henry O’Brien ed., 1909).
20 C. Com. (Fr.) art. L110–3 (2012) (emphasis added) (author’s translation). The original version of this provision was Article 3 of the Code de Commerce of 1807. C. Com. (Fr.) art. 3 (1807).
21 See infra chs. 8–10.
22 For a description of present day honoraria, see Conseil Supérieur, supra note 3, at 4 (“Because the notary provides a public service, payments made to notaries are strictly regulated; notaries charge clients a fixed rate.”).
23 See Cod. Com.(Mex.) art. 1397 (1889).
24 Ley del Notariado para el Estado de Sonora [Notarial Law of the State of Sonora], Boletín Oficial del Estado de Sonora, 4 de Enero de 1996 (Mex.) [hereinafter Sonoran Notarial Law].
25 Id. art. 5 (author’s translation). In contrast, the 1803 French Law on the Notarial System defines notaries as: “public functionaries designated to receive all acts and contracts to which the parties must or wish to impart the authentic character of a public act and to guarantee the date, keep it deposited and issue copies and testimonies.” Malavet, Latin Notary, supra note 2, at 422. Note that other than the reference to the requirement of a graduation from a law school, the remainder of the Mexican definition comports with the function of providing public faith (implicitly associated with a public functionary) and other essential functions set forth in the French Law on the Notarial System.
26 Sonoran Notarial Law art. 6 (author’s translation).
27 Unión Internacional del Notariado (U.I.N.L.), http://uinl.net/presentacion.asp?idioma=ing& submenu=UINL. In addition to the UINL, some European nations belong to the Council of the Notariats of the European Union [hereinafter CNUE]. See About Us, Notaries of Europe, http://www.notaries-of-europe. eu/about-us/overview. This is a regional organization of European notaries. It covers most of Europe, with a few exceptions such as the United Kingdom, Ireland, and all of Scandinavia. Yet, all the European members of the CNUE are members of the UINL. In addition, Switzerland, Macedonia, Moldava, Monaco, Russia, San Marino, Turkey and the Vatican are members of the UINL. Those European nations that are not members of the CNUE are not members of the UINL either, with the exception of the London Association of Scrivener Notaries, which is also a member of the UINL.
28 U.I.N.L., http://uinl.net/notariado_mundo.asp?idioma=esp&submenu=NOTAIRE; see also Conseil Supérieur, supra note 3 and accompanying text; Malavet, Latin Notary, supra note 2, at 431 (defining a notary as “a legal professional specially designated to attest the acts and contracts that persons celebrate or perform, to draft the documents that formalize the latter and to give legal advice to those who require the services of his office.”).
29 Sonoran Notarial Law art. 5 (author’s translation).
30 Id. art. 7 (emphasis added).
31 Malavet, Latin Notary, supra note 2, at 444.
32 Id.
33 Id.
34 C. Civ. (Fr.) art. 1319 (Dalloz 1992–93) (author’s translation).
35 C.C. (Spain) art. 1218 (emphasis added).
36 Id.
37 Ley Hipotecaria [Law of Mortgages] (B.O.E. 1946, 58) (Spain).
38 See Kozolchyk, Mexican Land Registry, at 316. The current Spanish Mortgage Law, under Articles 20 and 145, requires the drawing of a notarial document and its recording in the land registry for the mortgage to be enforceable among the borrower and lender, as well with respect to the bona fide purchaser. Ley Hipotecaria arts. 20, 145. As pointed out above, the language of this statute is quite similar to that of Article 873 of the German Civil Code. Kozolchyk, Mexican Land Registry, at 316 n.40 (“For voluntary mortgages to be perfected, it is necessary (1) that there is an agreement expressed in a public deed, (2) that the deed be recorded in the Land Registry set forth in this law.”).
39 Malavet, Latin Notary, supra note 2, at 444 (citation omitted).
40 Conseil Supérieur, supra note 3, at 1 (emphasis added).
41 See infra ch. 8 (on the codification of the Code Civil).
42 See Kozolchyk, Commercialization, at 13–15 (discussing the meaning and effect of the doctrine of “justice contractuelle”).
43 See Vera Bolgar, The Contract of Adhesion—A Comparison of Theory and Practice, 20 Am. J. Comp. L. 53, 67–68 (1972):
But in the field of contracts, the Court of Cassation steadfastly clings to the letter of article 1134, according to which contracts legally executed are the law as between the parties, and disregards the requirement expressed further in this article—namely, that they should also be performed in good faith…. Consequently, the Court almost invariably reverses the more liberal decisions of the lower courts rendered under their famous pouvoir souverain d’appreciation—a sovereign power of interpretation which, however, extends only to the interpretation of facts—on the ground that considerations of equity would “denaturalize” the clear and precise terms of the original contract.
(citations omitted). Since that time, and mostly as a result of the consumer protection movement that spread through the nations of the European Union, the Cour de Cassation has liberalized its “justice contractuelle” approach to adhesion contracts, among others.
44 See infra ch. 23 (discussing the role of course of dealing and usage of trade in the interpretation of commercial contracts); see also infra ch. 24 (discussing the role of standard and best practices in shaping a commercial transactions law that can contribute to economic development).
45 Letter from Lic. Carlos Cabrera Sr., Justice of the Supreme Court of Sonora, to author (Oct. 12, 1976) (on file with author).
46 Id.
47 Id.
48 II McCormick on Evidence 131 (Kenneth S. Broun ed., 6th ed. 2006).
49 Id.
50 Id.
51 Id.
52 Id.
53 Malavet, Latin Notary, supra note 2, at 442–43 (citations omitted).
54 The NLCIFT is presently training judges and lawyers in Mexico and Colombia to enable their participation in the new “oral” or adversary civil, commercial and criminal trials.
55 See, for example, the schedule of events in a typical conference of the Inernational Swaps and Derivatives Association (ISDA). ISDA, http://www2.isda.But in the field of contracts.org/.
56 See § 1:2(E) on contractual simulation.
57 See infra ch. 23:9(G)(4).
58 See infra ch. 22 (for the various scenarios of formation of commercial contracts).
59 For basic descriptions of the functions of the German Notar, see Signature Certification and Full Notarization of a Document, Germany.info, http://www.germany.info/Vertretung/usa/en/05__Legal/02__Directory__Services/05__Certificates__Documents/Notarization__Signature__Certification.html; see also Der Notar, The German Way & More, http://www.german-way.com/germany-notar.html.
60 Peter L. Murray & Rolf Stürner, The Civil Law Notary-Neutral Lawyer for the Situation 52 (2010).
61 Id. (emphasis added).
62 See Boris Kozolchyk, Comparative Law on a Standard Option Contract for the Purchase of Real Property and a Guide of Best Contractual Practices, 27 Ariz. J. Int’l & Comp. L. 441, 442 (2010); Boris Kozolchyk, German Notarial Practice, 27 Ariz. J. Int’l Comp. L. 463 (2010).
63 Id. at 463–64 (citing Real Estate Investments in Germany, Transactions and Development 104 (Michael Multze et al. eds., 2007)).
64 See Ley Federal de Correduría Pública [Federal Law on Public Brokers], Diario Oficial de la Federación [DO] 29 de Diciembre de 1992 (Mex.).
65 See infra § 7:5(A)(4).
66 Interview with Eduardo Estrella Acedo, Notary Public, Ciudad Obregón, Mexico, in Tucson, Ariz. (June 24, 2008).
67 See supra n.29.
68 Ley que Establece el Arancel para los Notarios del Estado de Sonora [Law that Determines Notarial Fees for Notaries in the State of Sonora] Boletín Oficial del Gobierno del Estado de Sonora, 29 de Diciembre de 1989 (Mex.) [hereinafter Sonoran Notarial Fee Law].
69 Malavet, Latin Notary, supra note 2, at 444, 448.
70 Id. at 444.
71 Id.
72 Interview with Joaquín Picado, Notary Public, San José, Costa Rica in Tucson, Ariz. (June 24, 2008).
73 Codigo Notarial [Notarial Code], La Gaceta, 22 de Mayo de 1998 (Costa Rica) [hereinafter Notarial Code of Costa Rica].
74 Arancel de Honorarios por Servicios Profesionales de Abogacia y Notariado [Honorarium Fees for Advocacy and Notarial Professional Services], La Gaceta, 18 de Mayo de 2011 (Costa Rica) [hereinafter Decree on Notarial Fees in Costa Rica].
75 Notarial Code of Costa Rica art. 2.
76 Id. at art. 3.
77 Id. See also Codigo del Notariado [Honduran Notarial Code], La Gaceta, 17 de Enero de 2005 (Hon.). Article 60 states:
The parties may agree in their contracts to submit, before a notary public, the procedure for the execution of security interests, whether in moveable or immoveable property, in which case they shall also agree on the minimum price of the immoveable property granted as collateral and of the method for notification, following the procedure set forth in the present Law.
(Author’s translation).
78 Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, Oct. 5, 1961, 33 U.S.T. 883, 527 U.N.T.S. 189, available at http://www.hcch.net/index_en. php?act=conventions.text&cid=41. The Hague Conference on Private International Law, on its website, previously provided the following description with regards to said Convention:
The Hague Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (Hague Apostille Convention) facilitates the circulation of public documents executed in one State party to the Convention and to be produced in another State party to the Convention. It does so by replacing the cumbersome and often costly formalities of a full legalization process with the mere issuance of an Apostille (also called Apostille Certificate or Certificate). The Hague Apostille Convention only applies as between States parties….
This quotation continues to be found on notarial websites around the world. Steps to Proper Notarization, American Association of Notaries, http://members.usnotaries.net/news.asp?AssetID=576. Simply put, this Convention makes it possible to authenticate public documents issued in a signatory country “A” thereby readying them for execution in signatory country “B.” It requires that each country designate the certifying or attesting officials empowered to carry out such a function by affixing a special stamp and seal. Both the United States and Sweden are signatory parties to the Hague Convention. As just noted, under this Convention, each signatory nation selects what authority within its borders is empowered to fix a special stamp or “apostille” that attests to the authenticity and validity of the document in question. In the case of Swedish public documents, the Government of Sweden chose Swedish notaries public as their officials, who are designated to certify the authenticity of Swedish public documents, seals and signatures by affixing an apostille. In the case of documents originated in the United States, their certification for use in countries signatories to the Hague Convention is done by one of the officials in the jurisdiction in which the document has been executed. As pointed out by the United States Department of State through the United States Embassy in Sweden:
There are three levels of U.S. authorities competent to issue an Apostille certificate depending on what jurisdiction executed the documents: 1. State, territories, and Other jurisdiction: Each state and other jurisdiction in the U.S. have an office that can issue an Apostille certificate…. 2. Federal Executive and Administrative Agencies: You must obtain the seal of the federal agency that issued the document before the U.S. Department of State Authentications Office can affix an Apostille to the document…. 3. U.S. Courts: Clerks and Deputy Clerks of the Federal Court System can issue Apostilles.
Notary Public Services, Embassy of the United States Stockholm, Sweden, http://sweden.usembassy.gov/consulate/acs5.html.
79 Designated Competent Authorities, Hague Conference on Private International Law, http://www.hcch.net/index_en.php?act=authorities.details&aid=348#46547.
80 I am grateful to Elin Hofverberg, an LL.M. student from Sweden, whose paper submitted for my course on Comparative Commercial Law contains valuable information on the Swedish and Scandinavian notaries, including the role of the European notaries and their organization. Elin Hofverberg, A Comparison between Latin and Non-Latin Notariats—The Role of the European Notaries and their Organisations (Apr. 9, 2008) (unpublished substantial paper, University of Arizona, James E. Rogers College of Law) (on file with author and NLCIFT). But see Centre of European Law and Politics (ZERP) et al., Conveyancing Services Market (Dec. 2007), available at http://ec.europa.eu/comm/competition/sectors/professional_services/studies/csm_study_complete.pdf (categorically stating that there are zero civil law notaries in Sweden) [hereinafter ZERP, Conveyancing Services] (last accessed Nov. 1, 2013).
81 Hofverberg, supra note 81, at 3.
82 Id.
83 Id.
84 Id.
85 Peter L. Murray, Professor, Harvard Law School, Address at the 20th Conference of European Civil-Law Notaries 3–5 (Apr. 25, 2008), available at www.notar.at/uploads/murraypaper.pdf (on file with author).
86 Id. at 7.
87 ZERP, Conveyancing Services, supra note 81.
88 The questionnaire was sent to national reporters in Austria, Belgium, the Czech Republic, Denmark, England and Wales, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Poland, Portugal, Scotland, Slovakia, Slovenia, Spain, and Sweden. Id. at 21–22.
89 Gisela Shaw, Notaries in England and Wales: Modernizing a Profession Frozen in Time, 7 Int’l J. Legal Profession 141 (2000); see also Gisela Shaw, The German Notariat and the European Challenge, 10 Int’l J. Legal Profession 37–54 (2003) (“Only Italy, Spain and Portugal promised to withdraw the nationality requirement to avoid being caught up in the formal warning issued by the EU Commission in November 2000.”).
90 Centre of European Law and Politics (ZERP), Conveyancing Services Market Study, Country Fiches 6 (Dec. 2007), available at http://ec.europa.eu/competition/sectors/professional_services/studies/csm_study_fiches.pdf (last accessed Nov. 1, 2013).
91 Id.
92 Id. at 10.
93 Id. at 21.
94 Id.
95 Id.
96 N.P. Ready, Brooke’s Notary 65 (11th ed., 1992) (cited in Malavet, Latin Notaries, supra note 2, at 441). Brooke’s Notary describes the English notary as an officer of the law authorized to draw legal documents, attest or certify under his official seal the conveyance of real and personal property and power of attorney, and to authenticate such documents as proof of the matters. The notary is also authorized:
[T]o keep a protocol containing originals of all instruments which he makes in the public form and to issue authentic copies of such instruments; to administer oaths and declarations for use in proceedings in England and elsewhere; to note or certify transactions relating to negotiable instruments, and to draw up protests or other formal papers relating to occurrences on the voyages of ships and their navigation as well as the carriage of cargo in ships.
Id. at 20–21.
97 National Notary Association, supra note 1.
98 Malavet, Latin Notary, supra note 2, at 426–27 (citation omitted).
99 Notary Common Questions and Answers, Arizona Department of State, Office of the Secretary of State, http://www.azsos.gov/business_services/notary/notaryqanda.htm.
100 See, e.g., Ariz. Rev. Stat. Ann. § 41–312(E) (2013).
101 See, e.g., id. §§ 41–126(2), 41–312(B), 41–315, 41–319, 41–321; Ariz. Admin. Code § 2–12–1103 (2013).
102 Ariz. Rev. Stat. Ann. § 41–328(B).
103 D. Barlow Burke, Jr. & Jefferson K. Fox, The Notaire in North America: A Short Study of the Adaptation of a Civil Law Institution, 50 Tul. L. Rev. 318, 329 (1976).
104 See, e.g., Fla. Stat. Ann. § 118.10(3) (2013), Fla. Admin. Code Ann. 1N–6.001 (2013); Ala. Code § 36–20–50(3) (2013).