The Public Registry and Notarial Law ("LRPN") was published in Official Gazette No. 37.324, dated November 14, 2001, as Decree with the Status and Force of Law No. 1.554,. This Decree Law governs the organization, operation, administration and powers of Registry Offices and Notaries. The new LRPN replaces and complements the regulatory texts governing the matter, namely the Public Registry Law and the Notaries’ Regulations.

I. Registry System

In essence, the new Venezuelan registry system creates three fundamental Registries and introduces three methods to improve efficiency. The registries are the Real Estate Registry, the Commercial Registry and the Civil Registry.

(i) Real Estate Registry

The purpose of the Real Estate Registry is to register and record the legal acts and procedures relating to ownership and other real property rights affecting real property. The Law expressly establishes that the provisions of the legal framework which require registration with the Public Registry of documents evidencing or implementing legal transactions relating to real property rights shall remain fully effective. The relevant Article further contains an extensive list of documents that must be registered with the Real Estate Registry, but is largely redundant since most of the documents therein listed already required registration with the Public Registry before the passing of the LRPN. An exception is conditional real property purchase agreements (promises or letters of intent), that did not previously, but do now, require registration.

Among the most relevant innovations contained in the chapter of the Law concerned with the Real Estate Registry, are:

  • provision for the coordination of work between the Municipal Cadastre Offices and the Real Estate Registry, as they will serve as the source of information of such Registrieséste; and

  • provision that in the documents registered subsequent to an earlier document which referred to the same real property, it is not necessary to repeat the details of the location, measurements and boundaries of the same or its cadastre, unless any modification in respect thereof has occurred.

(ii) Commercial Registry

The purpose of the Commercial Registry is to register commercial entities, whether individuals or associations, their representatives or agents, whether they be public or private companies, domestic or foreign, as well as all agreements and other transactions requiring registration under the law. Additionally, Commercial Registries will continue to conduct the legalization of commercial books, the deposit and publication of accounting statements and the centralization and publication of information.

In terms of organization, this will be conducted for Commercial Registries through one Central Registry and Territorial Commercial Registries. Such organization is delegated to the respective Regulations.

The Decree-Law establishes new powers of control for the Commercial Registrar over limited liability companies and corporations, based on a provision contained in Article 200 of the Commercial Code. The powers envisaged include the ability to reject the registration of companies with insufficient capital, applying reasonability criteria associated with their corporate purpose. This creates legal uncertainty by not defining "insufficient capital", leaving the determination of "sufficiency" to the reasonability criteria of the Commercial Registrar.

Additionally, it provides that the National Department of Registries and Notaries may create Official Commercial Registry Bulletins to publish those acts which require publication in order to be enforceable vis-à-vis third partiesde los documentos registrados. The wording of this provision does not seem to suggest that such acts may solely and exclusively be published in such Bulletin, yet if this were not the case, its creation would not seem to make much sense.

Under Article 56, the principles of the Real Estate Registry shall apply to commercial registration matters insofar as they are compatible (e.g. Registry Certificates).

(iii) Civil Registry

The Civil Registry is in turn to be organized under a sole Central Civil Registry and Territorial Civil Registries. Such organization is delegated to the respective Regulations.

Under Article 58, the duties of the Civil Registry shall be the registration of birth, marriage and death certificates; divorce decrees; separation of persons and property; marriage annulments; filiation proceedings; adoptions; emancipations; civil interdictions and prohibitions; acts concerning the acquisition, modification or revocation of nationality; appointment of guardians, trustees or guardianship councils; decrees of absence or presumption of death; academic, scientific and ecclesiastic degrees and military dispatches; and any others provided by law.

In Civil Registry matters, there is no mention of the complementary application of Real Estate Registry principles where compatible (e.g. Registry Certificates), as is the case with Commercial Registries. This leaves a legal void, which must be resolved through regulations.

II. Notarial System.

The Public Registry and Notarial Law (LRPN) confers upon the regulations governing notarial offices the status of law. Such regulations previously had sub-legal status, having been set out in Decree 3019 issued by the National Executive Authority. Such Decree established the Notaries Public Regulations, which had, until now, regulated notarial functions.

Another novelty of the LRPN is the considerable increase in authority of Notaries Public, who are vested with certain powers which had until now been conferred by the Civil Code and the Code of Civil Procedure upon Judges (ex parte proceedings) and Sub- Registrars, including authority for the:

  1. issue verification of permanent records, except under the circumstances set out in Article 937 of the Code of Civil Procedure. This authority was already granted under the Notaries Public Regulations, but its legality had been questioned as such power had been reserved to civil judges under the provisions of the Code of Civil Procedure;

  2. execution of "open wills" under the provisions of Articles 852 to 856 of the Civil Code. Such authority was vested in the Sub-Registrars under the Civil Code itself;

  3. presentation, delivery and opening of sealed wills, under the provisions of the Code of Civil Procedure and the Civil Code. Until now, this authority had been conferred on First Instance judges under the Civil Code. The Notary is expressly invested with the authorities conferred upon the Sub-Registrar under Article 989 of the Venezuelan Civil Code;

  4. making of prenuptial agreements, which are required by the Civil Code to be entered into before a Sub-Registrar;

  5. execution of mortgages over goods and non-possessory pledges, a matter which was not covered by the special law governing the matter, solely reserving the process of registration of the documents establishing the mortgages and pledges to the Sub-Registry Offices.

Of all the powers granted to the Public Notaries, however, among those attracting most attention due to their innovation are those concerning transactions by electronic means and the authentication of electronic signatures. Such authority to authenticate electronic signatures is not to be confused with the electronic certificate that can be issued by a Certification Services Provider under the provisions of the Decree with the status of a Law on Data Messaging and Electronic Signatures.

In the area of notarial publication, the LRPN is also innovative, providing that such publication shall be made using a database that is to form part of the notary’s automated system. We believe that this automated system corresponds to and emanates from the electronic information system used by the Registry Offices and Notaries Public governed by the Resolutions of the defunct Ministry of Justice. In the same way, the National Department of Registries and Notaries must also keep a notarial record and database, the functions and purposes of which will be governed by Regulations.

III. Innovations of the Registry and Notarial System

The Decree-Law makes two dramatic improvements to its processes and system in general. These are the use of information technology in the Registry and Notarial System and the adoption of the principle of the "folio real" in real estate matters.

  1. Use of IT in the Registry and Notarial System.

The first of these advances is the progressive use of electronic mechanisms and media to perform not only registry and notarial functions, but also the execution of legal agreements or transactions requiring the performance of certain formalities or solemnities in order to be valid or enforceable vis-à-vis third parties. This was initially prompted by the enactment of the Decree-Law of Data Messaging and Electronic Signatures.

Accordingly, the registration and notarization process may be conducted in its entirety on the basis of an electronic document which may be registered or authenticated with the electronic signature of the Registrar or Notary, respectively, providing that such document shall have the same effect as any document authenticated by handwritten signature.

This will undoubtedly help simplify registration and notarization processes, and the payment of the respective expenses, thus enhancing the effectiveness and efficiency of the services and reducing the cost of time involved.

Obviously, the investment required by the State to establish what the law calls the "National Database" (which will consolidate and backup the information concerning all matters of the Registries in the country) and the regional databases (which will have the same function as the National Database, but at the regional level) has to be considerable.

From a legal viewpoint, the enactment of this Decree-Law will allow the use of electronic media for the performance of acts such as incorporating companies, selling vehicles or property, creating encumbrances or executing sealed or open wills.

  1. Adoption of the principle of the "folio real" in real estate matters

The second of the positive advances is the adoption of the principle of the "folio real", whereby every property or real property right has its own numbered file. It consists of a summary of all registrable legal agreements or transactions, entered in digital form, to evidence the chain of ownership of the registered property or real property rights. In this way, the focal point of the registration system would not be on the parties involved, but on the relevant property or right. This means that, for example, a single file would reflect the chain of ownership and other legal transactions relating to a given property, so that it would no longer be necessary to track down such information in more than one file. To accomplish this, a license number, possibly alphanumeric, will be assigned to each property or right, according to the classification requirements of the property and rights to be registered.

This system would be closely tied to the real property (cadastre) information kept by the Municipalities, and there would thus be a certain synergy between each of the agencies involved when it comes to checking relevant information. The Decree-Law expressly provides that "The Municipal Cadastre Office shall be a source of real estate registration information". Since it is necessary to have not only a cadastre system, but also a process for its updating and automating, the "folio real" principle could only apply in jurisdictions where there exists (i) exista a cadastre system and (ii) its prior automation. Otherwise, the personal record system would have to continue to be used.

To facilitate the adoption of the "folio real" system, a registry "license" is included, which may be an alphanumeric code depending on the needs of the Registry, identifying the registered property and rights and presenting all the information pertaining to the respective real property or real property rights. Such licenses cannot be reused until the registry entry corresponding to such property or right is extinguished or canceled. This would serve to eliminate the tedious, outdated system of Protocols, Books and entry numbers.

IV. Repealing and Transitional Provisions.

The Law expressly repeals the Decree-Law of Public Registry, issued on October 5, 1999, and additionally establishes that the provisions of the Notaries Public Regulations, issued on November 11, 1998, and the Decree-Law of Judicial Tariffs, issued on October 5, 1999, shall remain effective and applicable insofar as they do not conflict with the provisions of the LRPN.

The complete abolition of the Decree-Law of Public Registry will create a legal void regarding the rights and remuneration to be received by the National Treasury for operations conducted at the Sub-Registry Offices, now known as Real Estate Registries. This is because the LRPN abolishes the Public Registry Law, which regulated liquidation and collection and established the tariffs for acts conducted at the Principal and Sub-Registry Offices, without establishing fresh regulations and replacing the repealed provisions. This is not the case with the Tariff Duties levied by the Commercial Registries and Notaries, which are governed by the provisions of the Decree with the Status and Force of a Judicial Tariff Law.

Accordingly, there will be no regulation of the Judicial Tariffs payable for procedures with what the LRPN refers to as Real Estate Registries until – as provided by Article 15 of the LRPN – the President of the Republic in Council of Ministers (through a Decree of sub-legal status), at the request of the Minister of the Interior and of Justice, establishes the tariffs to be paid for registry and notarial services, in accordance with a "study of the structure of the production costs of each registry and notarial process".

This provision appears to conflict with the principle of Taxation by Law, established in Article 317 of the Constitution of the Republic and Article 3 of the Organic Tax Code, whereby only by law may taxes be created, modified or suppressed; taxable events be defined; tax rates be set, and the basis of calculation and taxpayers be defined. This calls into question the very constitutionality of the provision.

The first four transitional provisions establish the fixed time periods for:

  1. issuing the regulations necessary to develop the LRPN;

  2. taking the measures necessary to create the Autonomous National Department of Registries and Notaries;

  3. creating a Commission to coordinate the process of reform and modernization of Registries and Notaries; and

  4. the date of the startup of the process of reform and modernization of Registries and Notaries.

Additionally, an order of priority is established for the purposes of the reform and modernization of registries, as follows:

  1. Real Estate Registry;

  2. Commercial Registry; and

  3. Civil Registry

and in no case may more than two (2) years elapse between the commencement of the processes of reform or modernization of the various types of rRegistries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.