Security in real estate titles: prerequisite for an European housing market

The European Union¿s `four freedoms¿ seem to provide a good basis for an increase of transborder real estate transactions, and to open the mortgage markets in Europe. The Second Banking Directive in 1993 established the basis for a single market for banking. However, a real European real estate market still seems far away. The report of the Forum Group on Mortgage Credit to the European Commission of 2004 identified the barriers to a smooth functioning of the Internal Market. In short, a common European real estate market requires: 1) Transparency of mortgage products 2) Transparency of information from national land registries 3) Uniform level of certainty concerning rights and interests in real property. The first two issues are addressed by existing initiatives. A way to tackle the differences between the mortgages within the EU, and to reach the needed transparency to compare the products of bankers is the Eurohypothec as proposed by the Eurohypothec Research Group. EULIS (European Union Land Information Service) aims to provide a cross-border access to information about the rights on real estate, using the information in the computerized databases of the participating land registries. The third issue, uniform level of certainty concerning rights and interests in real property, has so far remained unaddressed. How can we provide the required transparency and certainty to sellers, buyers and their bankers? In this paper we will discuss how the required transparency and certainty can be achieved through a common way of land registration in Europe. Further, we will discuss whether the development of such a common standard should be left to the private sector (by the concept of title insurance) or the public sector. In our analysis, we will take into account the situation in the US where similar issues have been dealt with by the Title Industry.