The concept of title insurance doesn't exist in Germany as the Notar eliminates the risk.
There's often lots of post hoc justifications in Germany for "why it is that way" (and has to be that way). But nobody ever seems to stop and think: ok but the rest of the world seems to get by OK without these reams and reams of bullshit?
The problem with Germany is not that it is stuck in the 20th century and completely backwards, but that nobody seems to care that it is. Worse, if anything there seems to be a degree of pride among Germans of the "process". As soon as you criticise some piece of particular bullshit German bureaucracy (as opposed to bureaucracy in general, which generally you're permitted to criticise) then they start circling the wagons (often pointing to other countries where the situation is supposedly the same or worse). So it is never going to change.
I am not sure there are "countless" scams in the UK, but yes, in 10 years of commercial operation did come across a few oddities. Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity.
See https://en.wikipedia.org/wiki/Pre-packaged_insolvency
I have not come across this kind of thing in Germany.
Oh, it does exist :)
That is... how bankruptcy works? He literally didn't owe you money anymore. Obviously you shouldn't extend his new company credit, but extinguishing old debts is the exact purpose of bankruptcy.
Corporate insolvency requires an “insolvency practitioner” to be appointed by the directors; this is a regulated profession, and this ensures that the company is wound up according to the regulations and statutes.
You cannot just “declare bankruptcy” in the UK either.
You’re insinuating that due to the bureaucracy Germany is somehow better at this; it is not, it’s just more inefficient.
There's an old movie, The Edukators, where one of the protagonist is effectively broke and working a low wage job but has spent years already and has many years more left to pay off a debt she incurred by accidentally crashing into an expensive car without insurance.
This situation is basically impossible in the US where the term "uncollectible" is used to describe such debts.
Of course it would first be covered by mandatory insurance you have to have when driving a car (if you're not legally allowed to drive a car, well, you're on your own)
For a GmbH and other limited liability companiee there are minimum equity requirements instead.
For corporations there's an entire process but in simple terms the company is handed over to an externally appointed handler who tries to generate liquidity by selling off all assets and contacting all debtors and creditors. The company might recover through the process (e.g. by finding an investor) but legally the corporation is frozen and substituted by a separate corporation that only exists to resolve its bankruptcy. If the corporation no longer has any assets, it can also be fast-tracked for being dissolved.
Is the notary able to model creditworthiness (i.e. they’re acting as a rating agency), or do they just sniff out “undesirables” by some ad hoc, unregulated process involving their personal judgement, or is it something else entirely?
Depends. This can be illegal and he is personally liable for the amount. That being said, he might have done things by the book and his previous venture is bankrupted.
https://amp.theguardian.com/business/2022/dec/03/crisis-uk-c...
(Title insurance is where you must buy insurance when buying a house to guard against the risk that the house may have unknown liabilities or owners)
It doesn't exist in Sweden either, because the ownership of houses is in a central register. You can't make a claim against a house if it is not registered.
Funnily enough, there's no such register for condos in Sweden. So you can end up with a nasty surprise if it turns out you bought a condo that there were unknown bank loans against. But it doesn't happen often enough that there is title insurance against it.
Was this in Sweden? In that case, I have heard of cases where a condo that someone bought had an unknown bank loan taken out against it.
The bank loan is still attached to the condo even if it changes owners. The bank can force you to sell the condo to pay the loan back to the bank.
You can then turn around and sue the previous owner who took out the loan. Good luck with that.
I don't think this happens very often and usually the condo association knows which loans are taken out against which condos.
I'm not sure what a condo is, but if it's a 'bostadsrätt' then you check with the 'bostadsrättsförening', they're responsible for keeping a register of 'pantsättningar'.
Next, you would expect that the notary would educate participants and act as a source of trust, an actor in your best interest, but that is not the case. Notaries can change contracts until the last minute, and unless agreed upon, the common 14-day withdrawal period for contracts does not apply to things like buying property. Furthermore, if you are inexperienced, you can easily fall into traps.
As a concrete example, when buying a part of a shared property, it is commonly believed that the "Hausordnung" (house rules) is the owners' agreement for house rules. However, that is not the case, as there can be more, and in our case, it forbade us to keep dogs. Now, you could argue that we should have made ourselves more familiar with the law, and I would agree that is true. However, it begs the question, why do we need a notary?
So what else is that "trading platform" then, if not a "third party"?
The way in which this problem is solved is by introducing a third party that is trusted by both, seller and buyer. There's nothing wrong with this principle. What's wrong specifically with regard to notarys as a third party in property sales in Germany is that the amount of work involved in being this third party does not really scale linearly with the value of the thing to be transferred, but the system by which the price of the notaries' work is determined assumes that a property transfer is twice as laborious (and thus must be twice as expensive) if the property is twice as expensive as some other property. Which is BS.
Oh, and please don't suggest to "simply put it on a blockchain". I don't have the time to explain for the millionth' time why that doesn't work with physical properties. I consider that to be common knowledge among HN users after about 10 years of having those discussions regularly.
Also, property ownership can get ridiculously complex really fast. If just one person owns something, that's simple. But in reality, quite often multiple persons own something together (sometimes some of these persons aren't even humans, but legal entities). In that case there are a gazillion different ways in which such shared ownership can be implemented, with far-reaching implications with regard to what will happen if people disagree, split up, modify or sell the property further down the road. You cannot simply model this complexity with an SQL database because it involves legal contracts that specify the details in which a properties' ownership is shared exactly. And the notary is actually responsible in such a case to write these contracts, ensure that every participant knows about their role and rights within these contracts and isn't shortchanged.
Link to an article about this case (in German language, unfortunately): https://www.t-online.de/region/berlin/news/id_91147122/berli...
The way I learnt it, until now, is the following:
the person you are contracting is there to perform a single specific task.
Applied to the specific context: "Notarvertrag", it means:
the notary is there to perform the notarisation (basically to read and write the contract), making legal whatever YOU are asking to do.
Any additional thing:
- you ask him/her
- you ask someone else beforehand (so yes, you need to pay an additional session for help)
And even then, you not always get what you wished for. And when s** happens, .... "that's life experience"....