In a nutshell, she must either pay her dues a second time as well as the dues of the vendor or accept that her purchase was a completely lost investment.

Notaries are protected by professional indemnity insurance which covers claims made against them for negligence and errors. However, Stephanie argued that an insurance firm is unlikely to take the position that a notary gambling his client’s money away constitutes an act of professional negligence.

“Insurance won’t pay for fraud,” she said.

Her only option, therefore, is to take legal action against the notary, but this is a cumbersome process that can drag on for years, throughout which she’ll be in complete limbo.

Moreover, she said the notary is in a precarious financial situation and is facing numerous cases from aggrieved clients, which means there’s no guarantee he’ll be in a position to repay the money, even if the courts find him guilty.

“Therefore it would be futile and excessively burdensome to sue him for repayment of the mishandled funds,” she said.

Communication with the Office of the Ombudsman seen by Lovin Malta shows that the State Advocate, Chief Notary and Justice Ministry are discussing this issue with a view of possibly amending the law to safeguard people who fall victim to defaulting notaries. 

The CfR and the Notarial Council are also planning an educational campaign to increase awareness among property buyers and help them take prompt action against defaulting notaries who don’t register their deeds.

However, none of this really helps Stephanie in the immediate future and she has decried the practice which forces her to repay her taxes as a “reprehensible” one which goes against her human rights. 

Seeing as notaries are public officers, she said it should be the CfR, and not herself, to seek a remedy from the notary for not passing on the tax money he had received. 

“It is unreasonable to burden a layperson with the obligation and accountability to oversee the actions of public officers in the proper discharge of their duties, and to be held liable for their failure to do so,” she said.

“It should not be the obligation of the purchaser to make good on the misconduct of a public officer. The CfR is responsible for such public officer’s behaviour and actions. This assertion is undeniable as legally a notary is carrying out the duties of a public officer, representing the government and not the vendor or purchaser.”

Lovin Malta has reached out to the CfR and the Notary to Government to clarify how exactly they intend to amend the law to give more peace of mind to property buyers.

Chief notary responds:

Below is the response in full given by Chief Notary Keith German:

“When purchasing a property it is the buyer who chooses the Notary to publish the contract. Upon signing the deed the Notary collects the tax due (Capital gains and duty on documents always if applicable to the particular case).”

“The Notary has 15 working days to register the contract. That means that the Notary will have to pay the tax first and then submit the note of enrolment to Public Registry to register the contract. Hence if the tax is not paid the contract cannot be registered with Public Registry. The law was purposely amended in this way so as to serve as a deterrent for Notaries who default.”

“Every year each Notary has to submit all the original deeds together with a copy of the enrolment note to the reviewers. There are presently 6 reviewers that are engaged by the Notarial Council in collaboration with the Office of the Notary to Government.”

“The reviewers are either retired Notaries or advocates. The reviewers will collect all the original deeds (bound in volumes) from each Notary every year. The reviewers will check each contract to see if all the formalities of a contract by law were observed, including whether the contract was registered or not. Notaries not complying with the reviewers will end up before the Court of Revision of Notarial Acts.”

“The latter court is a specialised court and has the power to suspend the Notary or even order to revoke the Notarial Warrant.”

“Regretfully there were a few Notaries who have not complied and eventually lost their Notarial Warrant and are facing criminal procedures. When a defaulting Notary loses his /her warrant, the ‘goodwill’ passes by law to the Chief Notary to Government as Notary Keeper who cannot refuse. This would mean that the Chief Notary to Government would have to collect all the contracts, organise them and deal with the aggrieved parties. The law exempts the Notary Keeper from personally paying any taxes due by the defaulting Notary.”

“Hence the current situation is that the aggrieved parties would approach the Chief Notary to Government (CNG) to register the contract. To do so the CNG would first and foremost inform the parties to pay the tax. In reality the CNG informs the aggrieved party that the capital gains tax and the duty on documents would have to be paid (possibly again).”

“Most aggrieved buyers complain that the vendors would not want to pay the Capital Gains Tax. The vendors would have nothing to lose if the contract is not registered since they would have collected the sale price. On the other hand the aggrieved buyer would not be able to sell the property if their contract is not registered.”

“So most aggrieved buyers will be constrained to pay the Capital gains tax and duty on documents to carry on with the sale. Unfortunately many aggrieved buyers will only come to know about this problem when they decide to sell the properties and upon ordering the searches.”

“Many aggrieved parties will seek legal advice from their solicitors. The advice given is that it is not worth suing the defaulting Notary since it would require the opening of a court case and therefore incur more expenses without any guarantee that they will recoup the money. Hence they opt to pay all the taxes again.”

“It must be emphasized that clients should check whether their tax was paid when selling or purchasing property. The CFR issues tax receipts to clients. The Notary can also provide proof to the client that the tax was paid. Unfortunately, many clients do not check these things and they would only realize when they opt to sell their property.”

*Her name has been changed to protect her identity

Have you heard of similar situations? Let us know in the comment section or by reaching out to us at [email protected]