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Abstract
As the fourth contribution in the ‘Land’ section, this paper forms a research ‘diptych’ with the next paper by Levy. Whereas she focuses on the notarial institution in mid-nineteenth century Mexico, this contribution examines it in a contemporary context. The notary is one of the chief components of property rights protection in civil-law systems, performing various public functions such as writing deeds for real estate property. Yet notaries are considered an ‘inefficient’ institution by many, due to the perception of rent-seeking behavior enabled by their near-monopoly over validating property rights claims. This study examines notaries in Mexico to unpack the apparent contradiction in the role of notaries in economic development. I use a combination of interviews with notaries and clients, and data on notarial practice and bureaucratic outcomes across the country, to examine notaries’ social function. The theoretical lens of endogenous development and institutional functionalism reveals an alternate explanation for their seemingly high-cost services, as well as their role in economic development. Mexican notaries have a dual social function: public representative and private service provider. They perform diverse and essential activities, which in other countries are performed by multiple actors such as real estate agents, escrow offices and title insurance companies. Thus, what is perceived as inefficiency by some can be interpreted as an efficient response to the context in which they operate, and their semi-privatized nature can overcome problems found in other bureaucratic arrangements.
Acknowledgements
UCLA graduate students Brock Hicks and Nate Holmes provided excellent research assistance. I would also like to thank Juliette Levy and Peter Ho for their valuable comments and suggestions, and for alerting me to a number of sources concerning notaries and property rights institutions.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 Translation by author; original text reads, ‘cuando el federalismo ha sido el sistema, la materia notarial es local, cuando el régimen ha sido el centralismo, las disposiciones notariales son generales, de aplicación en todo el territorio’ Castillo and del Pérez (Citation1979, 34).
2 Large companies are treated differently than small firms or individuals in many contexts.
3 The Doing Business data report costs as a percentage of the value of the property, but also list the estimated value of the hypothetical property.
4 One drawback to the methodology is that they do not consider city-level characteristics, such as population, which can impact the often-localized bureaucracy of property registration. In a similar analysis, Monkkonen and Ronconi (Citation2013) find no difference between common- and civil-law countries.
5 A list of countries in the three categories is available in Appendix 1.
6 No other similar empirical research on this topic was found for Mexico. Arruñada (Citation1996) analyzes Spanish notaries but has very different findings, as discussed later.
7 But the size of the metropolitan area, an extremely important factor in any analysis of property markets, is not included. Instead they include a variable describing the size of the house's ‘locality’, which is like a neighborhood and basically irrelevant for properties in medium or large cities.
8 Every state in Mexico and the Federal District has a college of notaries that serves as their association and leadership.
9 Baja California, Campeche, Chihuahua, Hidalgo, Nayarit, Nuevo León, Sinaloa, Tabasco and Veracruz.
10 The Oxford English Dictionary defines a cartel as ‘An association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition’.
11 Real estate agents do exist in Mexico but most residential property transactions do not use one. Although there is an association of real estate professionals (Asociación Mexicana de Profesionales Inmobiliarios (AMPI)), it is not a similarly organized group to those in countries like the United States. Their fees are not the well-established five percent that they are in the United States, partly because they provide fewer advisory services and partly because they are less well organized and thus do not have the wealth of information about property markets to which agents in the United States have access.
12 Similarly, with technological changes, the importance of a deed written by a notary might become less (or more) important. What happens when there are exogenous political or technological changes? How does the institution adapt? For instance, currently, the Mexican government's management of cadasters and land registration records is undergoing changes, though at different rates in different states. The property registry, which is modeled after the Spanish system, has long experienced improvisational changes at the local level, and ‘these improvised modifications of registry techniques have, in many cases, become permanent, resulting in diverging practices even within the same state’ (Salas Citation1984, 6). Efforts to modernize record-keeping systems seem to have magnified differences between states. Notaries interviewed in states where records have been digitalized and placed online – usually richer states – unanimously agreed that this has made their work faster and cheaper.
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Paavo Monkkonen
Paavo Monkkonen is an associate professor of urban planning at the University of California, Los Angeles Luskin School of Public Affairs. He studies the way housing policies shape urban development and segregation in cities around the world, focusing on housing finance, land use regulation, land titling programs and property taxation.