by Miran Ferlan, Hans Mattsson
and Radoš Šumrada
Real Property Transfers and Property
countries with private land ownership, methods have to exist
for transferring ownership from one person to another. Changes
of ownership ought reasonably to be smooth and rapid to a
greater or less extent, but in a changeable society this is
not enough. There also has to be a possibility of changing
property structure. It must be possible to create, redistribute
and amalgamate properties, thus changing the territories in
which ownership is exercised. These activities also contribute
to methods for producing new properties, which sooner or later,
will be put on the market. The utopian ideal is for each area
of land somehow to be in the hands of the party best able
to use it. It is the task of the property market to achieve
this. At the same time, land use has external consequences.
This being so, changes cannot always be wholly entrusted to
individual players. Public control may be needed to safeguard
common interests. This control can vary in extent but should
not be unwieldy.
If economic development is to prevail in a society, efficient technical
and social processes are needed for underpinning continuous
social change. It is a reasonable proposition that, the faster
the pace of economic development, the more flexible the processes
of change should be. The technical processes comprise such
factors as production technology and logistics, while the
social ones include factors as leadership, negotiations, the
writing of contracts and bureaucratic routines. Few would
deny that the general need for efficient processes also include
various parts of the real property sector.
Thus we have two processes which ought reasonably to function in market
economies based on private ownership of real property, namely
processes for changes of ownership and for property formation.
If these two processes do not run smoothly, existing structures
of ownership, property divisions and land use are liable to
impede development instead of supporting it.
The purpose of this article is to expound models for international
comparisons of property transfer and property formation. These
two phenomena will be jointly referred to as transaction processes.
A third process, hinted at above and concerning changes of
land use through legally binding plans, permit decisions etc.,
will not be dealt with except insofar as it affects the two
transaction processes under consideration.
Comparisons of property transfer and property formation are a scientific
end in them. Comparative work can also play an important part
in a country’s construction of more efficient legislation for
the processes. But if the work is to be used for achieving more
efficient transaction processes, it has to be viewed in a wider
national context, to avoid the risk of introducing legal rules,
which look good in one jurisdiction but can have devastating
effects in another.
Thus understanding of a country’s code of rules can be
obtained through in-depth studies, but at the same time one
risks getting bogged down in details without arriving at any
useful comparisons. One way round this is to decide at an early
stage of things what one proposes to compare, i.e. what is judged
to be important. The intention, after all, is, by using reasonably
simplified methods, to identify manageable and comparable conditions
in different countries so that the person making the comparison
will not need to master the whole body of each country’s property
law. Comparisons have to be standardised, despite the risks
that this entails.
Concepts Used and Relations Between Them
This study is based on a system approach
where events are highlighted and therefore some concepts and
their use have to be clarified. A system is seen here as an
organised complex of related components whose purpose is to
reach a final result.
The components are seen as subsystem with specific sub
The components (subsystems) consist of elements, which are the smallest
parts to be observed. In our case the smallest element is
an activity within a process, so in this essay the word “activity”
is used instead of “element”, since we will be using activity
diagrams for process descriptions. The activities can end
up with a judgement for further investigation, a product (e.g.
a map), a decision (e.g. contract signing), etc. They can
be informal, helping the parties to come to formal decisions,
and formal, so that the results of the process will be legally
Activities, then, are the smallest elements of our process analyses.
When activities are being analysed, in principle they can
be broken down infinitesimally, and so the breakdown has to
be halted at a reasonable level, in keeping with the purpose
defined for the study. This has its problems, because the
question is where the breakdown is to be terminated, e.g.
which things are to be included and which excluded. Ultimately
it is the outcome that decides whether the processes have
been successful, even if uncertainties remain and new questions
If, in the end, systems in several countries can be described in a
similar graph, we have got a model. As it is the goal of this
study to create two transaction models (one for sale and one
for subdivision), our use of model must also be explained.
Our model is an applied abstract supplement, which is formed
of a graphical and descriptive specification of selected parts
(domains) of reality. It represents simplified mapping of
activity environments into conceived and interpreted notions.
The aim of the models is to help us to understand and shape
both the problem and its solution domain. If our modelling
approach is successful, it makes the process transparent and
comparable between countries.
Actors and objects are also included in the modelling as they influence
or guide the process. It is both actors servicing and serviced
by the processes. The processes are constructed by and for people
with different interest and they have rights or interests to
Instance 1. Purchase of a detached house with
land. It is assumed that an estate agent is involved and that
the purchase is to be financed with a bank loan.
Instance 2. Subdivision of unbuilt land for
building purposes. It is assumed that the owner retains both
the subdivided property unit and the original property.
Instance 3. Combined purchase and subdivision. It
is assumed that a purchase of unbuilt land for building purpose
will be co-ordinated with the subdivision of the land.
The first two instances have been chosen to illustrate common situations
in the property market. The third is presumably less common,
but illustrates the possibility of combining the first two
instances in one process.
The three instances will be described as they occur in two countries,
Slovenia and Sweden. To this end, basic, standardised activities, together with actors,
will be defined to indicate the general system. The activities
are plotted in chronological order with the aid of activity
charts, at the same time, as their purpose is made clear.
Knowledge of the constituent activities and of how they are
usually combined can be derived from legislation, literature,
and interviews with professional practitioners and one’s own
The country descriptions will be followed by comparisons between the
countries, to see whether a common model can be set up which
includes basic components (subsystems). Differences of principle
appearing between the two countries will then be commented
on, as this is a kind of test of the relevance of the model.
Is it possible to compare and draw conclusions from the models?
of the Work
We shall begin by describing the components to be used in the
analysis that follows. The actual comparisons begin with a description
of normal activities in connection with purchase and subdivision
in Slovenia and then in
Sweden. After the country descriptions have been completed, the comparison
will be made and models constructed. Lastly the models (including
weaknesses) will be investigated and commented on. 
Components of Purchase
Basically, a normal purchase of an existing property can be described
as follows. Vendor and buyer try to find each other with the
aid of an estate agent. At the same time the buyer has to
investigate the property including legal and other cadastral
data and the possibilities of financing the purchase with
a bank loan. In certain locations, sale may be subject to
public restrictions. If the purchase can be completed, a contract
is signed and the purchase price paid over. Legal expertise
may be involved. Lastly the purchase is formally registered.
The activities leading to the signing of the contract of sale can be
summed up as market-oriented, contract drafting and, where
applicable, public control. The drawing up of a contact is
a form of decision, which changes the legal situation (i.e.
ownership is transferred) and registration is a completion
measure to make the purchase public. Five basic components
of purchase can therefore be more systematically analysed.
There are at least two forms of policy, which can affect property acquisition.
One of them is concerned with securing a particular land use,
the other with who shall be entitled to own a property. The
first form can be instanced with a municipality having been
given a right of pre-emption because land is in future to
be applied to a certain local government purpose. The second
form is social, i.e. land policy favours certain groups of
the population at the expense of others. For example, a local
resident may have first refusal of a property, which is coming
up for sale. The result of the control is to force the players
in the market into a certain kind of behaviour, so that transactions
help to underpin the achievement of society’s general objectives.
Marketing activities comprise the activities that take place when seller
and buyer are trying to find one another in a market. As a
result, both vendor and buyer - but also creditor - come into
contact with more players in the market, and are thus given
the opportunity of maximising the fruits of their endeavour.
Activities proceed both in the property market and in the
credit market. Ultimately the parties can negotiate on conditions
of sale and also judge the possibility of financing the transaction.
For various reasons, a preliminary contract of sale is often used as
a means of binding the parties as work continues for a final
agreement. This clarifies the terms of contract, including
the conditions for a loan. In addition, this presents an opportunity
of avoiding the situation where one party incurs expenses
because the other party has withdrawn the proceedings before
they are over.
The contract of sale is the final purchase document. The parties are
agreed on all conditions and they enter into a binding commitment
which includes the conditions of sale and if needed financing.
The signing of the transaction results in the transition being
finally confirmed, so long as the agreement is legally valid.
In this connection the purchase money is paid over. Mortgage
activities can be seen as a part of this component but it
had also been possible to treat it as an own component. The
reason could be to analyse the complexity of combining purchase
and loan contracts in the same process. The same can be said
about rights and encumbrances, like easements.
Purchase registration comprises the activities associated with the
entry of the change of ownership into a public register. As
a result, the transaction becomes transparent and in a lot
of countries also protected against third party.
Functions for Property Formation
Property formation is described with the aid of subdivision procedures.
A new property has to be defined somehow. A society’s land
policy can affect the possibility of doing so. Moreover, it
has to be decided that, with effect from a certain point in
time, an area of land is to be separated from the original
property and constitute a legal entity in its own right. This
new property has to be made public by registration. Congruently
with the above component description, we have four basic components
of property formation. The component marketing activities
can be excluded, because the chosen subdivision case is subject
to the property owner retaining both the original property
and the subdivided one. Later, of course, he can sell one
or both of them, but then we will have a process of sale.
When the diagrams for subdivision are developed, the activity
diagrams are expanded by introducing actors and roles.
Property formation can be entirely free, but it can also be controlled,
directly or indirectly, so that newly formed properties will
comply with society’s land policy. Land policy can be aimed
at the formation of properties and at the use to be made of
them. The policy may, for example, be to counteract the formation
of properties, which are unduly large or small. As a consequence
of control, the new property structure will agree with society’s
Property formation involves the definition of new boundaries. These
have to be surveyed. In addition, perhaps new rights need
to be formed - a right of way, for example - and perhaps others
have to be removed. Mortgage loans are another type of encumbrance,
which can be affected. In connection with property formation,
therefore, legal and territorial consequences have to be investigated
and taken into account before a decision is made. Rights management,
however, need not be a part of the subdivision process but
can be dealt with separately, though this latter eventuality
does not eliminate the necessity of taking rights into account,
one way or another, during the actual subdivision procedure.
The formation of an independent legal unit, i.e. the formation of a
new property, is an act that needs to gain force of law. Some
form of decision thus has to be made whereby a new division
into property applies from a certain point in time. As a result,
a new, unambiguous and well-defined property is obtained which
is separate from the original one. The new property must be
capable of carrying rights of its own.
Properties in the western world are usually registered, with the result
that the extent and legal content of the new property and
the original one are known to the market and public authorities,
which facilitates both the buying and selling of them and
the borrowing/lending of money on the security of them.
The components chosen are to be used to describe subdivision as well
as purchase processes in such a way that the activities and
decisions included in the processes will be comparable between
countries. Thus the components are used to illuminate similarities
and differences. Responsible individuals and organisations
are also included in the process descriptions, so as to add
a further dimension to the inquiry, namely that of how a transaction
“jumps” between different people and instances. Leaps of this
kind affect the efficiency of a process.
There are, however, possible additional but excluded components in
the models. Processes for appealing public decisions will
not be dealt with, because they are national in the sense
of tying in with a national structure indicating how appeal
proceedings are to be conducted in courts and other bodies,
rather than being uniquely designed on the basis of purchase
and property formation procedures. Payment flows and taxes
are given summary treatment in the text and figure descriptions
prepared, but are not allotted a component of their own. This
is because they often form part of one or several of the components
It should also be noted that the basic components dealt with in this
article are biased, since they emerged as work proceeded and
are based on the countries investigated. But they have been
included by way of introduction, so as to make the subsequent
descriptions easier to understand. Certain components may
presumably be altogether absent in a third country, while
there may be additional components that have not been observed
in this study. If, however, a model for comparisons is being
developed, it has to start with a concept and then be supplemented
by means of continued tests and analyses. It should be added
that the figures and descriptions presented have been simplified
and standardised as far as possible, in an attempt to highlight
the basic principles. Much has been omitted, especially unusual
activities not shedding light on the principles of a country’s
Slovenia belongs to the countries with the German legal provenance
where it is important that all real rights can be acquired (two
conditions) with a promissory legal deal and by public announcement
through the registration in the Land register. Generally, the
ownership rights gained through the registered transfer process
are well protected and safe. Today in Slovenia the legislation regarding property transactions is regulated by several
laws that guard relationships between involved parties and pertain
to the purpose and usage of land. The Slovenian system of cadastre
is a dual one consisting of:
-Land registry and
cadastre and Building cadastre.
Both are established by different organizations and in different historical
periods and nowadays are maintained also by two separate ministries.
The Land register is a part of the local courts under jurisdiction
of Ministry of Justice. The Land and Building cadastre is
under the Ministry of the Environment and Spatial Planning.
The Land cadastre was established at the beginning of the
19th century. Slovenia was at that
time part of the Austrian Empire and cadastre is derived from
that origin. With the new legislation (after 2000) the new
Building cadastre was established. Data recorded in the Building
register includes data on buildings and parts of buildings.
The Slovenian Land register as well as the Land and Building cadastre are kept in two
different digital databases. Both are declared and established
as public registers. The role of the modern Land register
together with the Land and Building cadastre is to secure
property rights and to relate these rights to their holders
and to support different levels of state and municipal administration.
Slovenia has a long
history of land registry system (since 1871), which guarantees
the security of real rights (ownership, mortgage, land charge,
easement and right of superficies or building right). The
rights in the Land register can be acquired, transferred and
extinguished upon a proposal (owner) or on official duty (court’s
decision, cadastral offices or state body final decisions).
The relevant documents must be enclosed to the inscription
proposal at the local court. Unregistered rights are not protected
against a third party. Even if the modern Land register is
changed to the digital form all data are still not up-to-date.
A lot of backlogs still wait for entry and update and the
quality of data is only gradually improving.
Encumbrance is a right on the basis of which the owner of an encumbered
property is bound to future charges or services. An encumbrance
may be established on real property for the benefit of a specific
person or of the owner of a specific property. Easement is
a right held by one person to make use of the land of another
for a limited purpose. The Slovenian legislation distinguishes
between real and personal easements. Real easements are created
mainly to regulate neighbourhood relations. The purpose of
real easements is to enable better use or exploitation of
land. The main real easements are established for a right
to way. A real easement is created:
-By law (electrical power line easements, water easement etc.),
-On the basis of a legal transaction; it’s mainly used for public
utility infrastructure. In these cases, easements seldom enter
into the Land register.
decision of a state body (e.g. court or administrative body).
easements are established for the
benefit of an appointed person until the holder's death (time
duration for a legal person may not be longer than thirty
years). Personal easements are strictly personal and un-transferable;
they are meant for enjoyment (usufruct) and use of the object
of a real right or for the right of habitation. Personal easements
are usually registered in the Land registry.
Mortgage is the most common method of financing real estate transactions
as a lien on a real estate. The acquisition of a mortgage
on the basis of a legal transaction requires entry in the
Land register. A mortgage is established to secure a claim
until its final repayment. If a claim is partly repaid, the
mortgage is not reduced. If a property, encumbered with a
mortgage, is subdivided, each part of the property is encumbered
with the mortgage in full. A mortgage also encompasses the
accessories owned by the pledger, even if e.g. a new house
was built after the mortgage had been established. If a real
property is mortgaged to two or more mortgagees the order
in which they are repaid in full is determined by the time
when the mortgage was created. The Slovenian legislation distinguishes
different type of mortgages, such us joint mortgage, maximum
mortgage and super mortgage.
the Law of Property the land debt was introduced. The Slovenian
land debt has a lot in common with the German Grundschuld.
Land debt is an independent claim or charge. That means
that a property owner defines a desired sum of money and the
amount is not bound to any conditions. Thus, the land debt
is independent of the existence of claim. The existence of
land debt does not occur if entry into the Land registry has
occurred previously, but by issuing a land debt letter through
the notary to the owner of property, who can make further
The building right is also a new right in the Slovenian legislation;
it gives a juridical or physical person the right to build
a structure above or beneath the real property (parcel). It
is generally established for not more than ninety-nine years.
Leasehold (obligation rights) is entered into the Land register only
if the lease period is longer than one year. For the specific
use of agricultural land for vineyards, orchards, hop gardens
etc. the minimum period of leasehold is prescribed by law
and it amounts to 25 years for vineyards, and 20 years for
orchards and hop gardens.
pre-emption right is the right by which a beneficiary has
an advantage but not an obligation to buy a specific property
at a certain price. The pre-emption right is a privilege of
being prior to others in claiming property that is subject
to pre-emption. Such right can be defined by law or imposed
by a contract. Important for the property transactions in
urban area are the pre-emption rights on cultural heritage,
either by the state or by the municipality, and the municipal
pre-emption rights for the future development of urban areas.
The vendor and the buyer initiate the sale case of the selected
parcel. They may need legal expert assistance for the purchase
process. If the vendor and the buyer want to have support from
an expert (surveyor, technical expert, lawyer, notary, real
estate agent etc.), they hire such assistance. The vendor must
be owner shown by the registration in the Land registry or (if
the land registry is not up-to-date) by former purchase contracts
(sometimes a whole chain of purchase contracts), which should
already be in the process of formal registration. There can
be a number of persons owning a parcel jointly. Therefore, the
vendor as well as the buyer can be a group of people (physical
persons) and/or juridical persons. Before the final contract
a pre-contract can be signed. The pre-contract activities may
include one of the following: offer or demand, public auction,
tendering, negotiation and letter of intent.
The transfer of ownership of a whole parcel basically means registration
of the change of title and is carried out among the vendor,
the buyer, the notary and the Land registry. If the vendor
wants to avoid possible conflicts with the neighbours, a surveying
service for the settlement of boundaries is an additional
option. That means explicit collateral establishments of definitive
boundaries in the field.
Sales concerning agricultural, forest or water land (pre-emption rights)
are different from sales of a parcel for building purposes.
The legislation regarding agricultural, forest or water land
(Act of agricultural land, Act of agriculture, Act of forest
land, Water Act) allows using such land as to their nature.
The administrative authority for agriculture defines the pre-emptive
buyer and gives him the permission to acquire agricultural,
forest or water land. When the buyer of agricultural land
is confirmed the purchasing process is the same as presented
The mediation of real estates is foreseen by the special Act on Real
Estate Agencies. With the new possibilities (internet and
web) the role of real estate agencies has also become more
evident. The most important step for a real estate agency
is to establish contact between the person placing an order
(the vendor) and any third person (possible buyer). The real
estate agency also makes further contacts and mediation between
the seller and the possible buyers. The persons employed by
real estate agencies and holding the license of the Ministry
of Environment and Space can only perform activities concerning
real estates. Representatives of such an agency should also
participate in all negotiations and prepare the legal contract
(sale, purchase, lease, rent etc.). A limited payment is also
provided for any real estate mediators, and amounts to up
to 4% of the contracted purchase value (without VAT).
The Slovene case of ordinary purchase of a detached house with land,
without pre-emption, is shown in figure 1 as a UML activity
diagram. In case of a mortgage on the parcel in question appropriate
agreements must be made in advance among the vendor, the buyer
and the mortgagee. In practice, however, such parcels are
rarely included in the transfer of land. When selling a parcel
for the building purpose plan information for such purchase
is required. According to the planning restrictions in force,
the municipal authority informs the buyer if any pre-emption
rights exist. The beneficiary of such rights, and thus the
potential first buyer, is the municipality or (rarely) the
state. If the municipality renounces its legal pre-emption
claim, this must be made official in written form as a provision
that - together with the plan information - becomes a constituent
part of the purchase contract. The pre-emption rights are
excluded in case of a purchase or a gift to close relatives
(parent/child). A problem arises if the municipality
has interests in land (building sites). If this is the case
the owner must first send his purchase offer to the municipality.
The seller and the buyer must meet and initiate the purchase process.
It is not necessary that they know all the details about the
transfer of property; a notary has the duty to check all the
property data and explain the purchase contract to all the
parties involved. The buyer should examine the parcel for
any possible deviations from the normal conditions. The buyer
should also check the land register data on the parcel. The
buyer and the vendor may write a pre-contract, which they
both sign. It is also possible to agree (with the pre-contract)
on some partial prepayment or security deposit. Such a deposit
is an instrument to secure the rights of both vendor and buyer
if they resign from the pre-contract. A security deposit is
paid to the vendor and can’t be exceed the purchase price
for over 10%. In case of a mortgage on the parcel appropriate
agreements must be pre-arranged among the vendor, the buyer
and the mortgagee.
A purchase requires a written document (contract). The buyer and the
vendor prepare the contract, preferably with the assistance
of a legal expert (notary, lawyer etc.). The notary must check
its contents (identifications of all parties and properties
concerned, signatures etc.). He is also bound to explain all
parties their rights and obligations. The final contract must
specify at least the following items:
statement of sale (declaration of transfer),
names and addresses of contractors,
-Identification and description of real property (data from
Land Registry and Cadastre),
-Purchase price and terms of payment,
and manner of real property transfer in possession,
permission for Land registry (intabulacia),
for mistakes and disputes,
-Covering of expenses (taxes),
of validity of the contract,
-Place and date of signing the contract,
buyer and the vendor sign the contract (the purchase deed).
The vendor must pay the property transfer tax (unless it is
defined otherwise in the contract) to the tax authority concerned,
which also checks the contract sum against the assessed market
value of the property. At this moment the tax authority can
decide that a sworn appraiser will assess and define the market
value. This can cause a delay of 15 days. The tax authority
also registers the purchase price in its database (Property
tax register). The notary finally authenticates the contract.
After the authentication of the contract, the transfer of the
purchase sum to the vendor is carried out according to the terms
of payment. The date of the final contract is the date of the
transfer of possession. The transfer of ownership is finally
fulfilled at the date of registration.
payment details for the property acquired are determined in
the final contract. Usually the buyer pays the whole amount
to the vendor on the day when the notary authenticates the contract,
unless the explicit contract terms of transaction are defined
otherwise. Such a delay in payment enables the vendor to see
to any required mortgage loans with his bank, what is possible
only if the final contract is complete and authenticated. In
connection with the pre-contract and the later contract, the
buyer and the vendor negotiate with the mortgagee. The buyer
can take over the loan (hypothec), or the vendor has
to pay off the loan together with the purchase sum.
The buyer can (it’s not mandatory) submit a registration request (form,
final contract etc.) to the Land registry for the registration
of his ownership (within six months from the contract date
at the most). Upon the registration the Land registry issues
an invoice for the registration of the title and the buyer
(the new owner) pays it before the registration starts. The
Land registry changes the ownership and updates the data in
the Land registry database. After the registration of the
title the new owner is protected against any third parties.
The Land registry informs the buyer (the new owner) and the
vendor about the entry of the new ownership by means of a
decree. The appeal period totals eight days beginning on the
day when the decree is received. When the appeal period ends
the Cadastral authority is informed about the new ownership
and it updates the cadastral databases.
With the request for the entry in the Land registry the existing easements
on the parcel (serviant and dominant) are transferred together
with the ownership. Any possible arrangements of new easements
or expiries of old easements are settled either by the purchase,
by a special contract or by the court decision; they are normally
registered in Land registry. The buyer must pay the real property
profit tax if the new purchase contract for the very same parcel
is concluded earlier then three years from the previous sale.
The owner may decide to subdivide a part of a parcel to form a new
parcel. The ownership must be registered in the Land registry
or proved by former purchase contracts that are already in the
process of formal registration. The newly formed parcel will
be entered into the cadastral database, mapped in the cadastral
map and registered in the Land registry. The planning authority
may impose limitations to subdivisions on building sites or
even prevent them. Such decisions are made according to the
planning or other regulations of the sector. Figure 2 shows
a general Slovene subdivision case of a not yet built up parcel
for building purposes, in form of an activity diagram.
The owner submits a request for a subdivision to the selected surveying
company, which selects a responsible surveyor working for
the company who is legally responsible and technically carries
out the subdivision. The responsible surveyor collects data
about the parcel (Land registry, Cadastral databases and analog
cadastral maps) and investigates the subdivision case from
the legal point of view. If needed the responsible surveyor
consults the owner. The responsible surveyor examines data
and prepares a specific strategy for each case accordingly
to the conditions and circumstances.
permission is needed for the subdivision, the responsible
authority issues the required permission. If this authority
is of the opinion that the planned subdivision impedes appropriate
use of the area it denies permission. The authority’s denial
is final, the subdivision case thus concluded. Also the owner
can stop the subdivision procedure at any time during the
process until the cadastral authority’s final decision comes
into effect, but he is also responsible for all arising expenses.
If a surveying company ascertains that the subdivision case
is not possible, it forwards the case to the Cadastral authority,
which investigates and takes further measures in order to
resolve the case.
the old boundaries now forming the newly subdivided parcel
are undefined or unclear, the responsible surveyor begins
a special procedure for the definition or reestablishment
of the old boundaries (partially or completely). The neighbours
will be summoned to participate in the field procedure; later
on they can also make an appeal against the surveyor’s and
the Cadastral authority decisions (oral hearing or written
provision) and forward it to a law court. In case of illegally
defined boundaries of the subdivided the parcel, a simultaneous
procedure of setting up the definitive boundary points for
the parcel must be carried out; its is parallel to the procedure
The responsible surveyor sets up the new and the old boundaries in
field and measures the parcel. In the office he calculates
the data and updates the cadastral map for the new parcel.
The surveying company elaborates a detailed report on the
subdivision and prepares the subdivision invoice. The owner
pays the subdivision costs to the surveying company. The surveying
company delivers a detailed report to the owner and, if needed,
the surveyor interprets it to the owner. The owners can authorize
a surveying company to take all further necessary registration
In due period the owner or the surveying company (as the owner’s representative)
sends to the Cadastral authority a formal request for the
entry of the new parcels; it encloses a detailed report. Such
a request must be submitted within six months from the last
field measurements. The cadastral authority issues an invoice
for the subdivision registration and the owner pays the expenses
for the formal entry. If the owner does not submit an entry
request to the cadastral authority within six months, the
responsible surveyor must carry out a rollback process (removal
of new boundary marks) at the expense of the owner.
The cadastral authority performs formal audition (revision) of the
case regarding the fulfilment of various conditions and the
technical quality of the detailed report. In case of disputed
old boundaries the cadastral authority invites the owners
and the neighbours to the cadastral office for oral hearings
(administrative procedure). Together they try to find the
best solution for the disputed boundaries. In case of disagreement
the case is decided by the court with the help of a special
court expert for cadastre (appointed surveyor). The subdivision
is carried out in the field even if the old boundaries are
The cadastral authority issues a written provision (cadastral authority
decision), which is sent to the owner and the neighbours.
When the owner receives it the fifteen days’ period for public
appeals for the subdivision begins. The owners and the neighbours
are summoned to examine the boundaries solution and can also
dispute the decision of the cadastral authority. Laws permit
appeals against any administrative procedure.
The subdivision is formally concluded at the end of the appealing period.
The cadastral authority concludes the subdivision case and
updates the cadastral databases. A detailed report is stored
in the official archive. The cadastral authority sends the
owner a notice and the data (copies of relevant documents)
regarding the parcels concerned. The cadastral authority also
sends the case provision and the relevant data regarding the
subdivision to the Land registry that updates the Land register
database. If the original parcel is burdened by mortgages
and easements the Land registry must transfer these rights
from the original parcel to their new parts in whole. Unfortunately,
in Slovenia the surveyor
is not directly involved in the consideration of mortgages
and easements for any cadastral procedure, such as subdivision.
Figure 3 shows the Slovene registration principle for subdivision
(the situation beforehand on the left and afterwards on the
right hand side).
and Subdivision Combined
The vendor (owner) of the parcel sells a part of the parcel; it shall
be subdivided and registered as a new parcel and the buyer
registered as the new owner of the subdivided parcel. The
purchase of a part of an existing parcel first initiates the
subdivision, followed by the cadastral registration of the
new parcel. After the purchase of the newly formed parcel
the registration of its new ownership in the Land registry
If someone wishes to buy a part of a property, the procedure will therefore
be a combination of the two processes described above. The
Slovene combined purchase and subdivision of unbuilt land
for building purpose is shown in figure 4. We assume that
such a transaction involves an urban site for construction
development (Instance 3 in chapter System approach). Normally
the seller and the buyer deal in direct contact with each
other, without an estate agent being involved, but with possible
assistance of a legal expert (notary). Creditors are also
unlikely to be involved until later on when the building development
is about to begin; this is normally after the entire process
of the subdivision and the sale of the parcel had been completed.
The parties sign a pre-contract of sale on the basis of which
the vendor applies for the subdivision procedure. The subdivision
application must be made within six months otherwise the purchase
will be void or the subdivision must be repeated. If the subdivided
property is an urban site, the municipality can intervene
to exercise its right of pre-emption. Pre-emption here means
that the municipality takes over the purchase on the same
terms as the original sale. This, however, is rare.
The selected surveyor carries out the complete subdivision procedure
described above. When the procedure is complete the buyer
signs the act of sale with the vendor and pays the purchase
price, unless this has already been done before or during
the cadastral procedure. After the procedure of the subdivision
registration at the Cadastral office has been completed, the
duties and taxes paid, the purchase contract signed and the
signatures authenticated by the notary, the new owner applies
for the registration of the title to the Land registry. Then
the new owner is registered and the vendor invoiced for administrative
By way of introduction, here is a description of the Swedish property
register (fastighetsregisteret). The register comprises
an entry section (inskrivningsdelen) and a general
section (allmänna delen). The entry section mostly
contains particulars of owners, charges and rights which have
been created by agreement and without any involvement of the
authorities, but which the parties have nonetheless wanted
to register. The general section contains particulars of property
formation (fastighetsindelning) and rights formed in
connection therewith. These two parts of the register are
co-ordinated, and the property, with its register designation,
is the basic unit of all registration. So there can be no
registration until a property has been formed and allotted
a register designation, except that a preliminary entry can
be made in both sections of the register, to signal that something
is in the making. Registration in the entry section is managed
by the land registration authority (inskrivningsmyndigheten),
while registration in the general section is managed by surveyors
of the National Land Survey (lantmäterimyndigheten)
at the time of property formation.
Transfer processes have been designed to support the aim of the property
register always being kept up to date on rights of ownership
and division into property units. In addition, the content of
the register must be accessible to the general public, so that
they can at any time check charges and appurtenances, e.g. before
the property is bought/sold or mortgaged. One of the register’s
important functions, then, is that of facilitating transactions
in the property and credit markets. Registration also facilitates
official control in the property sector. It should be added
that register maintenance is not burdened with taxation matters.
True, property values are entered in the register, but only
the total assessed value of each property, and this is taken
from a separate property tax assessment register.
Leaseholds (arrende) and rental (hyra) tenures are seldom
entered in the property register, because here the law guarantees
tenants’ rights against third parties without any need of registration.
Easements (servitut), on the other hand, are entered
as a rule, because unregistered easements are not protected
against a third party in cases of bona fide purchase
and attachment. Because easements are important for the rest
of this description, we should begin with a few words about
their creation, alteration and cancellation.
An easement entitles the owner of a property (the dominant tenement)
to dispose of another property (the servient tenement) in
some respect. There are two forms of easement, namely contractual
(avtalsservitut) and official (officialservitut).
Contractual easements result from the owners of two properties
agreeing in a contract that one property is to be charged
(encumbered) with an easement in favour of the other. This
can apply to the whole property or a certain part of it. The
agreement can be entered in the land register to secure it
against third parties. The order of priority of contractual
easements in relation to other charges depends on the date
of entry in the land register. A contractual easement can
also be cancelled by agreement between the parties themselves.
Official easements too are usually based on an agreement made
between property owners, but they are created by order of
an authority or a court of law. An official easement refers
to a particular area of land. Usually it is created in a cadastral
procedure (fastighetsbildningsförrätting) by a cadastral
authority, e.g. in connection with land subdivision, and acquires
superior title in the property, so that in practice it cannot
be eliminated by bona fide purchase or attachment.
If it is to be altered or cancelled, a new official decision
has to be made. In a survey procedure, contractual easements
can also be amended or cancelled. The creation of official
easements, like the amendment and cancellation of both contractual
and official easements, can also take place against the wishes
of property owners, in the course of a cadastral procedure
by a survey authority.
There are also rights that are similar to Roman rights of superficies
like utility easements (ledningsrätt). Such a right
is created in a cadastral procedure.
The aim is for the property register to reliably indicate the current
ownership of land. This in turn has resulted, for example,
in the following standpoint. A promise of sale is not binding.
The parties are not bound until a written contract of sale
has been signed by both of them. Written options to purchase
property at a future date are not permitted (there must be
no “suspended” sales). Conditions of rescission are permitted
for a period of up to two years. Ownership registration must
be applied for not more than three months after completion
of a purchase. Only after registration is a purchase protected
vis-à-vis third parties. Purchase of part of a property
(an area of land) must be followed by subdivision or some
other change in the property division. Application to this
end must be filed with a cadastral authority within a certain
length of time, otherwise the purchase will be void. Property
formation is effected by surveyors employed by a public authority.
Property purchase in its basic form is clearly standardized and easily
transacted. Only a few particulars need to be stated in a
deed of sale, namely the property concerned, a declaration
of transfer, the vendor’s and buyer’s particulars and signatures,
witnessing of the vendor’s signature and approval of the sale
by the vendor’s spouse, if any. The purchase price also has
to be shown. These, then, are the minimum statutory requirements,
but further conditions may be included in the sale. As has
already been made clear, the endurance of the purchase (the
possibility of repurchase) cannot be left open for more than
two years. The buyer sends the deed of sale to the land registration
authority, for registration of himself as the new owner. The
buyer is then secured against a third party and is entitled
to grant rights charged to the property and to mortgage the
property. The parties can retain a lawyer or some other person
to assist with the formalities, but this is not necessary.
An agricultural lessee with a leasehold residence, like the tenant-owner
association in an apartment building, has a right of pre-emption
(hembud) in certain cases if the property is put up
for sale. In addition, a municipality can have a right of
pre-emption (förköp) over land in certain special circumstances.Purchases
of agricultural land and forestland may be subject to the
grant of a permit in certain regions. Companies are not entitled
to purchase such land without selling off the corresponding
acreage at the same time. In a number of municipalities, purchases
of rental housing are subject to the grant of a permit. In
practice, both pre-emption and permit procedures are uncommon.
As security for a loan, the property owner applies to the land registration
authority for registration of a mortgage and is issued with
a mortgage deed (pantbrev) showing the amount of security.
The priority of the mortgage in the event of attachment is
decided according to the registration date. If the owner later
wishes to borrow money on the security of the property, a
special contract is drawn up with the creditor and the mortgage
deed surrendered to the creditor as security for the loan
up to the amount which the deed indicates. Thus the loan document
itself is merely an agreement between borrower and creditor
and is not registered. Instead the mortgage deed surrendered
to the creditor constitutes security for the loan. When the
loan has been repaid the mortgage deed reverts to the property
owner, who can re-use it for a new mortgage. Several mortgage
deeds can be obtained on the same property, and security is
determined according to the order of priority for payment.
Nowadays the mortgage deed held by a bank is usually in electronic
form (datapantbrev), instead of being printed on paper.
This kind of mortgage deed is entered in the mortgage deeds
register (pantbrevsregistret) in the form of an imaginary
“cyber-deed” and is transferred between creditors by means of
entries in the register.
After this general description of the conditions of purchase and mortgage,
let us turn to consider a typical instance of the normal purchase
of a permanent home (see Instance 1 in paragraph System approach).
We will assume the involvement of estate agents, a property
inspector and credit banks. Our description is partly illustrated
in figure 5. If the property is less than 3,000 sq. m. in area,
there can be no question of pre-emption and no permits are necessary.
The vendor contacts an estate agent and they sign a contract setting
forth the conditions of the assignment. Normally, then, the
vendor contacts the estate agent, but he has responsibilities
towards both vendor and buyer, and he must help with drawing
up the contract of sale if necessary.The estate agent advertises
the property, e.g. in the daily papers and on the Internet.
Through the estate agent the vendor and potential buyers come into
contact with each other. If the potential buyer is interested
in the vendor’s property, he inspects it, often with the assistance
of an inspector specialising in house inspections. The buyer,
as being in his own interest, usually pays for the inspection.
Not having enough money of his own to pay the full price of
the property cash down, the buyer gets in touch with a bank
to enquire about the possibilities of borrowing money to finance
the purchase. If he is judged creditworthy, he will be promised
a loan and will thus be enabled to go ahead with the purchase.
If the vendor and buyer, with the estate agent as intermediary, finally
agree on the conditions of sale, they often sign a pre-contract
of sale (köpekontrakt), i.e. a preliminary document
of sale setting forth the terms of the transaction. Two people,
if any, witness the vendor’s signature and that of the vendor’s
spouse. The transaction is binding on the parties and the
buyer is protected against the vendor’s creditors. Often a
deposit is paid, usually 10 per cent of the final purchase
price. The possession date (the date when expenses and income
relating to the property pass to the buyer) can be fixed in
the contract, otherwise it is the date of signing the final
deed of sale.
Before signing a final deed of sale (köpebrev), the parties
normally meet at the bank to which the property will be mortgaged.
They have also phone contact with the vendor’s bank. The purchase
price is paid over, in a purely formal sense, by the bank
to the buyer, who in turn remits it to the vendor and to his
creditor. In reality, most of the money is transformed between
the banks after oral agreement between them. Any mortgage
document is transmitted in the opposite direction. Since banks
usually hold electronic mortgage deeds, application to the
land registration authority will be simply for a note to be
made of the mortgage having been transferred from one bank
to another. The buyer can also negotiate to take over existing
loans, on the same terms as applied to the vendor. A deed
of sale is signed, confirming that the purchase price has
been paid and the purchase completed. The deed of sale is
also witnessed and the creditor bank is instructed to apply
for title registration, to request an entry in the register
if possession of a mortgage deed is transferred from one bank
to another, and if necessary to obtain further mortgage deeds.
These instructions to the bank provide it with an assurance
that ownership registration will be requested for the purchase
and that any new mortgages will be duly affected.
The land registration authority registers the change of ownership,
whereupon the new owner becomes entitled to request a mortgage.
The authority enters any new mortgages in the real property
register and either issues a mortgage deed as proof of the
mortgage or makes an electronic entry in the land register.
The land registration authority informs the buyer (but not
the vendor) that his ownership has been registered and bills
him for the administrative handling charge and for stamp duty.
The transfer tax on the purchase is 1.5 per cent of the purchase
price for a natural person and 3 per cent for a legal person.
The stamp duty on mortgage deeds is 2 per cent of the mortgage
Registration of new ownership and entry of mortgage deeds usually take
place on the same day that the request is received by the
authority. Charges and taxes are paid subsequently and thus
have no effect on the registration procedure. In this way
the land register can always be kept up to date, so long as
the documents sent to the land registration authority are
legally correct and are sent for registration without delay.
This is in the interests of both buyer and bank, to prevent
double sale and to prevent the former owner mortgaging the
property he has already sold.
The property is bought and sold with all appurtenant and encumbering
rights and public restrictions, except for unregistered easements
of which the buyer had no knowledge and could not reasonably
have been expected to know about.
If the vendor makes a profit on the sale, the profit is taxable. The
vendor declares the profit to the tax authority after the
purchase has been completed. The authority works out the capital
gains tax payable and this is paid by the vendor. Thus the
tax aspect has no effect on the purchasing procedure but is
a subsequent matter between the vendor and the State. In other
words, all charges and taxes are paid subsequently and cannot
delay the transfer of ownership.
If pre-emption rights should be applicable, then the municipality has
to decide within three months if it wants to take over the
purchase. That shall be decided during the registration procedure.
Subdivision (avstyckning) is a
process whereby an area is detached from an original property
(Instance 2). The area thus detached is termed a “lot” (lott)
until registered as a property in its own right. During the
subdivision process the original property is called a “residual
property unit” (stamfastighet). After the lot has been
registered, the residual property unit retains its register
designation and all other characteristics not transferred to
the lot as a result of the subdivision decision (figure 6).
A cadastral authority can only handle subdivision. This is a national
authority except in about 40 municipalities with cadastral
authorities of their own. The cadastral authority surveyors
are completely independent in their decision-making. When
making a subdivision order, the surveyor can also make decisions
concerning easements, mortgage conditions, uncertain boundaries
etc. The surveyor must consult the landowners and authorities
concerned. The new property is entered by the surveyor in
the real property register, together with new or modified
rights. The changes included in the surveyor’s decision but
affecting conditions in the land register are recorded, however,
subsequently by the land registration authority.
Let us now take a closer look at the subdivision process (figure 7).
An application for subdivision must always come from the person
wishing to have the measure taken. He has to describe the
area he wants parcelled off, preferably with the aid of a
map or sketch map. The purpose of the subdivision, i.e. future
land use, also has to be specified. The application is filed
with the cadastral authority within whose jurisdiction the
land is situated. The authority appoints a surveyor to take
charge of the procedure. In principle the surveyor then has
to carry out the subdivision as requested by the applicant,
or else reject the request if it is impossible to realise.
It is not uncommon, however, for the surveyor to advise on
alternative solutions to make an otherwise impossible transaction
possible. The surveyor himself organises the subdivision process
as convenient, i.e. is not bound by a statutory procedure
for the transaction.
After first checking the applicant’s authority to apply for a cadastral
procedure, the surveyor makes initial investigations. This
can be done by phoning the person concerned, visiting the
site, making a legal search of records and checking any plans
already adopted for the area concerned. The surveyor also
considers whether he needs to consult other public authorities
and hear their opinion on the subject, e.g. the county administrative
board (länsstyrelsen) on the subject of environment
protection and heritage management, and the road authority
on matters of exit. The most important thing, however, is
to consult the municipality in order to assess the purpose
and design of the lot to be parcelled off. In principle, the
same assessment has to be made concerning the residual property,
to ensure that it will also be suitable after the lot has
been detached from it.
The surveyor is responsible for the appropriate parties being consulted.
If the subdivision is technically feasible but affects existing
or new settlement, the municipality may ask for the matter
to be referred to it for a written statement. Refusal of municipal
consent precludes the subdivision. Consultations with public
authorities are a land policy safeguard for which the surveyor
is ultimately responsible.
In addition to this land policy check, an assessment has to be made
of the legal and technical qualities of the subdivision lot.
The legal assessment may concern the need for new easements
for the detached lot and for the residual property unit, e.g.
road, well and sewerage easements. If the residual property
unit has an easement, a share in a joint facility (i.e. a
facility owned by several properties; gemensamhetsanläggning)
or a share in a joint property unit (samfällighet),
it has to be decided whether any of the rights are to be transferred
to the subdivision lot or shared between the properties in
a certain proportion. Otherwise they remain with the original
property. It is also possible for a new joint property unit
to be formed in favour of the properties together, in which
case participatory shares have to be determined. If the original
property is charged with an easement or right of user, the
surveyor can certify that these are to be removed from the
lot or the residual property unit if in future the rights
will only be located on one of them. Otherwise the rights
will be charged to both properties. Mortgages in the original
property can also be certified away in the subdivision lot,
subject to certain conditions, e.g. their removal from the
lot being manifestly of no importance to the mortgagee, or
the mortgagee having consented to the removal of the charge
One interesting fact is that the mortgagees are not interested parties
in the Swedish process and, consequently, cannot be summoned
to meetings. Any contacts between the mortgagee and the surveyor
are instead conducted in writing.
The subdivision lot has to be measured and mapped. If a boundary is
uncertain, the surveyor can summon the owners of the neighbouring
properties with uncertain boundaries to decide where the boundary
is to be located. If the matter is of a complicated nature
or includes boundary definition, the surveyor usually calls
a meeting of affected property owners and other right holders
so that any points of uncertainty can be resolved in the presence
of all concerned.
The transaction is formally concluded by the surveyor’s decision. This
can be taken at a meeting of the landowner(s) but also without
any such meeting taking place. The surveyor decides boundaries
and future charges, as well as the appurtenant rights. As
we have already seen, he can also eliminate by certification
rights and charges entered in the land register. The land
registration authority then deletes them from the register
on the strength of the surveyor’s decision. Localised public
restrictions remain in their original location, i.e. the property
whose land comes within the restricted area. After making
his decision, the surveyor makes a preliminary entry for the
lot in the real property register. The computer system contains
controls so faults shall not be easily entered in the register.
After the decision the landowner, in common with any neighbours who
have become embroiled in the process, is entitled to appeal
the matter within four weeks. Failing this, the transaction
acquires force of law, whereupon the surveyor finally enters
changes in the residual property and the lot in the real property
register as a new property unit and the subdivision is complete.
The landowner receives a copy of the documents and the surveyor
enters the new boundaries on the digital register map.
The land registration authority is notified electronically of the new
property and changes to the original one. The land registration
authority staff log the owner of the new property (who in
this particular case is the same as the original owner), delete
any previously entered contractual easements and other rights
which are not to be charged to either of the two properties
(the residual property or the subdivision lot) and delete
any charges on the new property which the surveyor has deleted
Maps, a description of rights, minutes of proceedings etc. are sent
to be scanned and entered in a digital archive, while the
original documents are stored in a safe repository. The tax
authority is informed of the transaction and eventually carries
out a tax assessment of the new property and of the original
one as now modified.
Lastly it should be mentioned that the landowner pays the transactional
costs after the event (when the decision has been finalised).
Thus the process is not delayed by financial dealings between
landowner and authorities. If the property owner does not
pay what is due from him, other processes will take over,
but these, of course, do not affect the property formation.
and Subdivision Combined
If someone wishes to buy part of a property,
the process will be a combination of the two processes described
above. We assume that the transaction involves an unbuilt site
for development (Instance 3). Normally vendor and buyer deal
with each other directly, without an estate agent being involved
(figure 8). Creditors are also unlikely to be involved until
later on, when building development is about to begin, which
is normally after the entire process of sale and subdivision
has been completed. The parties sign a contract of sale, on
the basis of which the buyer or vendor applies for a subdivision
procedure. The application must be made within six months, otherwise
the purchase will be void. The surveyor carries out a complete
subdivision procedure and the only additional point compared
with the process described above is that the surveyor also assesses
the validity of the contract of sale. When the procedure is
complete the buyer pays the purchase price and finally signs
the deed of sale with the vendor, unless this had already been
done before the cadastral procedure, at the same time applying
to the land registration authority for registration of title.
This being unbuilt site, the municipality can intervene to exercise
its right of pre-emption after registration of title has been
applied for. First, though, there are certain conditions,
which have to be met, such as the land being needed for urban
expansion. Pre-emption here means the municipality entering
into the buyer’s stead and taking over the purchase on the
same terms as the original sale. This, however, is very uncommon,
and pre-emption occurs, at most, in ten sales per year.
The new owner is then registered and invoiced for transfer tax and
administrative charges. The profit on the sale is declared by
the vendor and tax paid on it as already described. The cadastral
authority also informs the tax authority that the original property
has been altered and a new property formed. The tax authority
values the two units and puts a tax assessment value on them.
So, as in the previous examples, in this combination of purchase
and subdivision all matters of charges and taxes payable are
sorted out afterwards and have no effect on the change of ownership
or on property formation.
The components initially devised for modelling transactions
are summed up in fig. 9. The usefulness of the components for
comparisons is to be finally tested. This is done by inserting
the activity diagrams from Slovenia and Sweden parallel and in compressed form in a general component model, the
purpose being to see whether differences in the main principles
of the national transaction systems are clearly and plainly
The processes compared, over and above a simple sale, are the sale
of a detached housing property, the subdivision of an undeveloped
plot and the sale of an undeveloped part of a property (Instances
1-3, above). These processes will also be commented on from
a market perspective, given the claim, in the introduction
to the article, that the property and credit markets benefit
from swift processes. Actors in these markets, however, may
be interested in other aspects than swiftness, such as security,
i.e. no party incurring an unforeseen loss in the process.
The number of comparative figures may seem rather high, but this is
prompted by an endeavour to evaluate the usefulness of the
models. It should be mentioned before going any further that
the comparisons have been based on partly different methodologies.
The first, for simple sale, is based on text comparisons,
the second, for ordinary sale, is based on a comparison of
figures supplemented by comparison of texts, the third, for
subdivision, adds actors, and the fourth deals with heavily
compressed activities. In this way we can see what the different
model constructions lead to.
Two comparisons will be made concerning sale. The first shows a sale
in its simplest and purest form, in order to highlight principles.
This information is extracted from earlier text, but this
is not easily done. The country descriptions, therefore, could
be rewritten to show this simplest instance and a figure added.
We have deliberately refrained from doing this, so as to show
how hard it can be for the curious to check figure 10 in relation
to the preceding text.
A simple sale includes preparations for the purchase (pre-contracting),
purchase (contracting) and registration (fig. 10). Pre-contracting
is much the same in both countries. During the contact phase,
on the other hand, a number of vital differences emerge. In
Slovenia, transfer tax
is payable just after the final signature, while in Sweden tax is paid afterwards.
Then again, in Slovenia a special profession
- the notary - has to be involved and must confirm the sale
by verification, whereas in Sweden two witnesses
verifying the sale are sufficient to confirm that the vendor
has title. Practically anyone can be a witness to the signatures
of the parties on a contract. The tax question and the notaries
make the sale a slower process in Slovenia than in Sweden. The Slovenian process probably comes more expensive to the parties,
because a notary has to be engaged, even in cases where he
is not really needed.
There is yet another difference. In Slovenia the purchase
money is often paid after the contract of sale has been signed,
with the result that completion of the sale can be delayed
pending payment (which is most often due within 28 days).
However, the Slovenian parties are in control of the process
and can hasten it by instant payment. Remittance, on the other
hand, is a prerequisite of the deed of purchase in Sweden, with the result
that, in practice, the purchase money is paid simultaneously
with the signing of the contract and the purchaser can immediately
apply for registration of title.
We conclude that sale in the two countries involves basically the same
components and activities, but that the way in which they
are structured and combined through public regulation facilitates
more easily administered transfer processes in Sweden, enabling
the actors in the property market to operate faster and at
lower cost. Swiftness can be said to be achieved at the cost
of security, in that the parties may inadvertently frame contracts
which do not correspond to their wishes or, due to ignorance,
are not formally correct, and that the state risks having
difficulty in collecting the transfer tax.
The next analysis concerns an ordinary purchase of a single-family
housing property (fig. 11). This information is taken from
previous figures (figs. 1 and 5) and their accompanying texts.
The figure will be simplified in cases where there are striking
similarities between the two countries. This is done by capturing
bundles of activities in an overarching activity when the
bundle is essentially the same in both countries. Marketing
activities are the same in the descriptions for both countries
and can therefore be summarised in the overarching activity
of marketing. The growing complexity of the sale when estate
agents and banks are included in the process does not therefore
emerge from the comparative figure, concealed as it is by
the summarising activities. This can be acceptable, however,
since the comparisons are meant to indicate similarities and
differences, and for a more detailed view of events one need
only consult one of the country descriptions. On the other
hand a different type of complexity is highlighted, namely
the possibility of a normal sale involving questions of land
First of all we may note that the Slovenian process begins with the
vendor having to ascertain whether any private person or other
party has a right of pre-emption, in which case that person
or party must be given first refusal. He will then be dependent
on existing rights of pre-emption, as the property cannot
be put on the market before the right holders have confirmed
in writing that they are not interested in buying. In Sweden the vendor can
put the property on the market straight away.
The marketing activities which follow in order for vendor and purchaser,
and also credit-provider, to find each other are, as we earlier
remarked, strikingly similar and are therefore summarised
in the figure as marketing, without further comment.
Once vendor and purchaser have found each other they often sign a pre-contract
so as to somehow bind them to each other and thus give each
other the confidence to move on. In both countries a deposit
is often paid in this connection, as a measure of security
for the vendor. This is a risk premium that accrues to the
vendor if the purchaser backs out. There is a palpable difference
here. In Sweden the pre-contract is viewed as a contract of sale, even if the sale
has not been finalised and there must in principle be reversion
clauses in order for cancellation of the contract to be possible.
In Slovenia, by contrast,
the pre-contract is not formally binding.
Pre-contract, as we have here termed it, is followed, and completion
of the sale proceeded, by a succession of activities, depending
on how much was settled prior to pre-contracting. This can
mean inspection of the house, sale of the old home, purchase
of a new one, arranging bank transactions etc. This period
can vary in length, depending on what issues remain to be
sorted out. Once everything is settled, the sale must be completed.
In Slovenia, though, there
are a number of separate stages to go through, whereas in
Sweden everyone concerned
(purchaser, vendor, estate agent and bank representatives)
usually attends a single meeting. The purchase money is paid
over, the contract of sale and credit agreement are signed
by the parties and two persons present witness the transaction.
The whole process can be termed instantaneous, and application
for registration of the purchase, as well as an application,
if any, for new charges, can be filed immediately.
Registration is ostensibly a routine procedure in both countries, especially
in Sweden, where it goes quickly. In both countries a check is made of the formal
correctness of the sale. One Swedish aspect will be highlighted,
however, even though it is not conspicuous in connection with
normal house sales. A municipality wishing to exercise its
right of pre-emption has three months in which to decide to
this effect. During this time registration of the sale remains
pending at the land registration authority. A developed house
property less than 3.000 m2 in area, however, is
excluded from pre-emption, and so the municipality is not
normally consulted in connection with a house sale.
The model comprising land policy control, marketing activities, pre-contracting,
contracting and registration highlights both similarities
and dissimilarities between the two countries. It quite clearly
indicates factors of delay in the process in one country compared
to the other and makes clear, for example, that the handling
of land policy issues is based on different principles, causing
them to be addressed at different points in time. On the other
hand figure 11 says nothing concerning what is a reasonable
length of time for the sale process, nor does it have anything
to say concerning security for the parties involved. It is,
however, safe to say that slow processes aggravate the parties’
uncertainty, because a protracted period for transfer of ownership
augments the likelihood of something happening which ought
not to happen.
A number of pivotal questions can be asked as well. Why is a notary
needed in the Slovenian process when the Swedish process apparently
runs smoothly without one? Then again, why do payments have
to be remitted before a service or product is delivered in
Slovenia, instead of
afterwards as in Sweden? Are these differences
due to bad payers, lack of distraint opportunities or tradition?
The comparisons prompt still further reflections. The Slovenian process
especially seems to be delayed by land policy control, insistence
on the involvement of a notary and perhaps also transfer tax
payment. If the right conclusions have been drawn from the
comparisons made here, it should be possible to carry out
efficiency studies in Slovenia with a view
to amending the law and thereby speeding up the processes.
This does not preclude the possibility of the same applying
to Sweden, e.g. concerning
the right of pre-emption, which in practice is hardly ever
exercised. This being so, does the pre-emption cases actually
occurring justify the red tape and uncertainty involved?
The essence of the next model, for subdivision, is a landowner wishing
to detach an undeveloped area from his own land, making two
properties out of one. In addition, the model is expanded
from earlier comparisons by the inclusion of actors. In other
words, the earlier comparative technique has been enhanced
for highlighting responsibilities.
As will be seen from figure 12, all the components - land policy control,
preparation, decision and registration - are present in both
countries. Straight activity comparison shows the constituent
activities to be very similar. Clear differences become apparent,
however, if actors are included for a study of responsibilities.
The first component is land policy control. Slovenia expects the
landowner to get in touch with the authorities, which are
empowered, and duty bound to grant or refuse permission for
a subdivision. If the landowner obtains permission for the
subdivision from the authorities concerned, he turns to a
licensed company. The surveyor who carries out the measurement
must also be licensed.
In Sweden too, the landowner can contact the necessary authorities, but it can
be hard for the individual to tell which are the relevant
authorities to contact. Added to this, the process assumes
a surveyor in the service of a public authority to be responsible
for these contacts, since he has to strike a balance between
private and public interests. In striking this balance, which
can go against other authorities, he must, however, always
comply with laws and regulations. In the matter of urban settlement,
moreover, the municipality has the power to veto subdivision,
i.e. the urban settlement case comes close to the permit procedure
observed by Slovenian authorities. In Sweden the cadastral
transaction moves on through the cadastral organisation after
land policy control, with the original surveyor in charge.
Both the Slovenian and the Swedish surveyor examine the transaction
and measure the new property. One difference, however, is
that the Slovenian surveyor cannot examine charges on the
property and, consequently, is unable to create new rights
or cancel old ones - for example easements. The Swedish surveyor,
by contrast, can create, alter and remove easements. This
can be done on the property concerned but may also involve
land on neighbouring properties with different owners. He
can also examine other rights and charges, such as giving
the new property a participatory share in joint facilities
and joint property units. In certain situations the Swedish
surveyor can also employ coercive methods in pursuit of desirable
and necessary measures, such as the creation of an easement
on a neighbouring property. In such situations he must also
decide on compensation, i.e. if the parties are unable to
agree on this point between themselves. If, moreover, there
are mortgages on the original property, he can eliminate them
in the newly formed property so that it will not be encumbered
by existing mortgages. All changes, however, must be examined
to ensure that no rights are lost by mortgagees or other right
The Slovenian surveyor, lastly, draws up a report that is formally
transmitted to the landowner but in reality is most often
sent straight to the cadastral authority for decision and
registration. The Swedish surveyor, by contrast, retains the
matter for decision and, after the time limit for appeal has
expired, enters the transaction in the real property register.
He is not, however, empowered to enter ownership particulars
in the land register. Instead particulars of the completed
subdivision are automatically transmitted in electronic form
to the land registration authority, which immediately registers
the landowner for the subdivided lot.
One thing shall be added. In both countries, unclear boundaries can
be dealt with during the cadastral process, with the difference
that in Slovenia the surveyor
proposes a boundary, which is then confirmed by the cadastral
authority, whereas the Swedish surveyor determines the boundary.
There are a number of things to be mentioned which are not apparent
from figure 12 but are revealed only by supplementary text
comparisons. In both countries the result is new properties
with their own register designations. The original owner is
registered for both properties. But there is a difference
here. In Slovenia, both properties have rights and charges and no rights are created
between them. In Sweden one of the properties retains the original designation, and rights
and charges are primarily vested in that property unless the
surveyor decides otherwise. In addition, the surveyor can
create rights and charges between the properties. He enters
not only the subdivision but also other rights in the real
property register and enters the properties together with
any easements and other localized rights on the register map.
In Slovenia above all, the rights process is not always concluded after the subdivision
process, because further contacts with land registers may
be needed for the creation of easements, clarification of
charges etc. This, then, comes after registration in the land
cadastre and describes essentially the same process as a simple
sale. But there is an element of risk involved. Questions
are liable to be left unsettled at the subdivision and then
have to be cleared up afterwards. The danger is that they
will remain unresolved.
In Sweden too, a certain amount of work may still remain to be done after the
subdivision, especially with regard to mortgages, if the surveyor
has been unable to remove them during the subdivision process
because the mortgagee risked losing rights. If this kind of
supplementation is needed, then in Sweden too the ensuing
process resembles that of simple sale.
Having now reviewed similarities and differences, we can also observe
that in Slovenia the process jumps about between different actors and in principle
it is the landowner himself who drives the subdivision process
towards a conclusion. Rights-related processes may have to
be added subsequently. The landowner can of course make things
easier for himself by entrusting the job to the surveyor or
another agent. In Sweden a surveyor employed by a public authority is responsible for everything
from the opening official contacts to the finished product,
though the property owner may need in some cases to put in
more work later on the subject of charges.
No figures considering the average duration of Slovenian and Swedish
subdivision procedure from measurement to registration are
available, but the Slovenian process ought reasonably to be
quicker, since it contains fewer elements of a legal nature.
These are instead left to the landowner to sort out before
and after the property formation. If neighbours are to be
involved, e.g. for creating an exit easement, he must negotiate
with them separately, whereas in the Swedish process this
can be handled by the surveyor. Taking the process as a whole
from land policy control to registered property with appurtenant
rights and charges, the Swedish model probably has advantages
from an efficiency viewpoint, since everything is dealt with
in one process. At least, this is a good hypothesis.
As we have seen, the Swedish surveyor has far more responsibility than
his Slovenian counterpart for legal details connected with
the creation of new properties. One can even say that the
Swedish surveyor has been made responsible for the properties
created, like the residual properties, being clearly defined
from a legal viewpoint already after the subdivision process.
No further steps are supposed to be necessary. Therefore,
the property can normally be put on the market immediately
after the subdivision process, and the sale of the new property
can be handled very quickly indeed. In Slovenia further legal
operations may be needed in order to create easements, eliminate
mortgage charges etc.
Thus the task of the Swedish surveyor is to create effective, clearly
defined units for the property and credit markets. In addition,
rights like easements are localised, since they can be plotted
on the cadastral map. In Slovenia it is the task
of legally well-trained notaries to attend to this, at the
same time as they may lack spatial knowledge concerning rational
land use. The Slovenian surveyor’s function is merely to measure
boundaries, even though he could decide on the spot which
rights are needed in order to create properties, which are
practical in every way. The differences of responsibility
between the two countries doubtless have their historical
explanations, but it is worth pondering what is best for the
property and credit markets.
The next comparison concerns sale and subdivision combined, i.e. someone
purchases an area which is to be detached from an existing
property to form a new one. It is further assumed that the
vendor has made contact with the purchaser without involving
an estate agent or credit-provider. This restriction is made
for the sake of simplicity, and in the normal run of things
anyway there is unlikely to be any involvement of estate agent
and bank if a private person is selling unsubdivided land.
Sale plus subdivision creates a combined
process in both countries, since the sale follows one kind
of procedure and the subdivision another. Different laws govern
these processes. The model components, which have been devised,
are therefore to be combined, one way or another (fig. 13).
At the initial stage, an agreement is concluded for the sale of the
area concerned. The Slovenian landowner, however, has matters
of pre-emption and permits to deal with first. The fact of
the subsequent subdivision process being initiated by the
vendor in Slovenia and the vendor
or purchaser in Sweden shows that the
first contract is not a form of transfer in Slovenia but is in Sweden where both have an interest in fulfilling the procedure.
The subdivision processes then follows, as described in figure 12.
This work is based on the contract of sale. It is worth noting
that in Sweden land policy control
takes the form of a suitability assessment forming part of
the subdivision process. Here a weakness becomes apparent.
A sale is agreed on and the parties enter into a cadastral
process without being certain that it is feasible. If it is
not feasible, the purchase is invalidated, but finding this
out can take time and cost money. In Slovenia the landowner
has already finished with land policy control before entering
into a situation of sale and subdivision.
After the subdivision has been effected, the parties meet to sign a
final deed of purchase and to transfer that part of the purchase
price, which has not been paid. The procedure described above
for sale (fig. 11) follows here. Any easements which are to
be created and other measures which can be attended to in
the Swedish subdivision process have to be raised in Slovenia by the parties
during the final phase and under the supervision of the notary
or even court.
When the purchaser then wishes to register his title, the municipality
in Sweden can exercise its right of pre-emption, the land in question being
undeveloped. In other words, a further element of uncertainty
is added at this point to the Swedish process. There are,
however, a number of restrictions in this case too, and so
a right of pre-emption does not necessarily exist.
In principle, then, the processes are similar in terms of results,
and in this instance of combined purchase and redistribution,
both Slovenian and Swedish properties are firmly defined when
the combined process is over.
There is one remark to be added concerning Sweden. The two processes
for sale and subdivision respectively are both continuous and
apparently efficient, but combining them introduces various
points of uncertainty. The process has a weakness in that land
policy control does not come early and, moreover, can come in
on two occasions. This is evident from figure 13, and especially
by comparison with Slovenia. Purely theoretically
speaking, even the municipality can approve the subdivision
and subsequently exercise pre-emption. This means that in Sweden it may be wise
for the landowner or purchaser to apply the Slovenian method
and contact the municipality and the surveyor right from the
start, to clarify the likelihood of sale and subdivision being
feasible. It may be especially wise of the purchaser to consult
the municipality at an early stage, to avoid the risk of devoting
time and money to something that in the end may be denied him.
typical transactions (simple sale plus Instances 1-3) have been
analysed in order to develop the models with components. Activity
diagrams have been used to test them. But the choice of typical
instances means that other transfers, such as the transfer of
forestry land and agricultural land, may conform to other models
and the land policy control component especially may need to
be substantively developed. Instead the models are to be regarded
as a starting point for further analyses of other transactional
processes. A test of other countries, e.g. Finland, Denmark, the Netherlands and England, would presumably develop the models further.
It must also be pointed out that the models have been made general
but are evaluated with reference to a certain aspect (the
market). The components of the models may therefore need to
be supplemented, or reconstructed, if other aspects are emphasised,
e.g. if the emphasis is put on monetary flows, the rule of
law, information flows or duplication of effort. The models
must be constructed according to what is to be investigated.
The following conclusion can also be drawn from the practical work
on this article. If nationals describe the rules of a certain
process in text, it is rarely possible to compare different
countries, or at least it is very hard to understand and still
more to make comparisons. If the text is also illustrated with
diagrams, e.g. ULM diagrams, differences and similarities become
easier to detect. But if the information can be modelled in
a structured way, even more powerful comparisons will be possible,
e.g. with help of classes, relations and processes. To this
end the present article has focused on procedures and actors
by developing what are termed components and then compiling
diagrams for countries investigated and core interactions side
Rumbaugh, J., Booch G. and Jacobson I. 2005. The Unified Modeling Language Reference Manual, 2rd
edition. Addison-Wesley Object Technology Series.
Šumrada, R. 2005. UML in Use Case Modelling. GIM International.
October 2005, vol.19, issue 10, p.12-15.
Zevenbergen, J. 2002. Systems of Land Registration - Aspects and
Effects. Publication of geodesy 51. Netherlands Geodetic
Commission. ISBN 90-6-32277-4.
Zweigert, K. and H. Kötz 1998. An Introduction to Comparative Law.
3rd edition. Oxford: Clarendon Press. ISBN 0-19-826859-9.
Zweigert and Kötz 1998.
A system study related to land registration and cadaster can be found
in Zevenbergen 2002.
ULM is used for modelling in this article. The possibility for this
is shown in Šumrada 2005.
et al (2005) is the primary reference for UML.