It is this time of the year where scorching days can turn into violent downpours filled with lightning, rumbles and warm winds. Something of the sort may be coming from the Council of Europe.
On 24th May 2011, the Court of Justice of the European Union (ECJ) ruled that the status of the notaire in France is inconsistent with the rules of free competition set by European law.
In ruling that the nationality requirement imposed by France to become a notaire was irregular, the ECJ confirmed that the function performed by the notaire falls within the scope of free movement of persons, services and capital and in particular free right of establishment as defined in Article 49 EC (then Article 43 EC).
France was supporting the view that Article 51 EC (then Article 45 EC) allowed notaires to be excluded from the application of Article 49 EC since the latter article does not apply “to activities which in that State are connected, even occasionally, with the exercise of official authority”.
But ECJ stated that “the activities of a notary, as they are defined currently in the French legal system, are not connected with the exercise of official authority within the meaning of the first paragraph of Article 45 EC.
It must consequently be declared that the nationality requirement imposed by the French legislation as a requirement for access to the profession of notary constitutes discrimination on grounds of nationality prohibited by Article 43 EC”.
The Court was careful to note that beyond the mere question of nationality it is the whole of the current status of notaires in France which is inconsistent with the provisions of Article 43 EC.
As a result of the judgment of 24th May 2011 it belonged to France to make the necessary changes to the status of notaires in accordance with principles of European competition law.
Since then, not much has actually happened as French notaires benefited from the unconditional support of the French government to delay the inevitable reform of its status.
Indeed, in the aftermath of the judgment of the ECJ, a written statement was issued by la Chancellerie mentioning that “the removal of the condition of nationality will not alter the status of notaires”.
However, on 30th May 2012, the European Commission took once again the initiative to push this change forward, and this time, the French Ministry of Justice (la Chancellerie) could well decide to follow this lead and modify the status of 9000 notaires.
One of the characteristic elements of the notaires’ status is their legal tariff. As a result, the registration of the same deed by a notaire in Lille, Bordeaux or Marseille should roughly cost the same. Beyond the fact that notaires’ fees are sometimes not complying with their legal tariff (which has been increased in March last year) such measure impedes the rules of free competition set by European law.
After a year waiting in vain for France to automatically recognise the legal need of a reform of the status of notaires, the European Commission, on 30th May 2012, sent a recommendation to the Council of Europe.
Point 15 of this recommendation explicitly considers that “while a number of reforms have been adopted to simplify the business environment and to remove restrictions on some regulated trades and professions, they fall short of addressing barriers to entry and restrictive conduct conditions in many others (e.g. veterinarians, taxis, health sector, legal professions including notaries)”.
This time, it is no longer possible to argue that the decision of the ECJ on 24th May 2011 was confined to the question of the nationality clause.
It seems that now, things could move quickly. Indeed, there are rumours that under the impetus of the new Minister of Justice, la Chancellerie is considering as a priority to remove the notaires’ tariff.
The end of this tariff would obviously be a major reform of the status of notaires. In the first instance, the cost of transactions would be significantly reduced for clients but the removal of the tariff, by a “domino effect”, would result in opening a window to challenge the other aspects of this status inherited from bygone age.
Indeed, since the tariff is, according to French notaires, the necessary consequence of their monopoly (in particular for the transfer of ownership of property), the removal of the former must, logically, trigger the disappearance of the latter.
Please find below some practical advice and pointers regarding notaire’s “fees”:
1. It is always preferable to ask different notaires for a quote detailing each costs, taxes and fees before any confirmation to carry out the work. In case of doubt, it is always possible to seek independent advice and have the quote checked by a specialist.
2. If once a deed is signed with the notaire, additional fees and costs are due, the notaire should not request them and should bear the discrepancy. In effect, the notaire should always make sure that a sufficient provision to pay all fees, costs and taxes have been requested in anticipation.
3. It is always possible (although quite tricky) through a specific procedure to challenge the level of notaire’s fees paid after a transaction has been carried out.