Frequently Asked Questions

- What do the registering property indicators measure? 
- What type of company is measured? 
- What type of property is measured?
- How do the registering property indicators count procedures? 
- How do the registering property indicators measure time?  
- What is new in the registering property indicators?
- Do the registering property indicators record the de jure (concerning law) or the de facto (concerning practice)?

WHAT DO THE REGISTERING PROPERTY INDICATORS MEASURE?

The registering property indicator records the time, cost and full sequence of procedures necessary for a business (buyer) to purchase a property from another business (seller) and to transfer the property title to the buyer’s name so that the buyer can use the property for expanding its business, pledge the property as collateral in taking new loans or, if necessary, sell the property to another business. The process starts with obtaining the necessary documents, such as a copy of the seller’s title if necessary and conducting due diligence if required. The transaction is considered complete when it is opposable to third parties and when the buyer can use the property as collateral for a bank loan or resell it. In addition, the topic measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution and equal access to property rights.

WHAT TYPE OF COMPANY IS MEASURED?

The registering property indicators consider a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most popular among domestic firms is chosen. The limited liability company is located in the periurban area of the economy’s largest business city and is 100% domestically and privately owned. Additionally, the company performs general commercial activities.

WHAT TYPE OF PROPERTY IS MEASURED?

The assumed property has a value of 50 times income per capita and is fully owned by the seller. The property had no mortgages or attachment, has been under the same ownership for the past 10 years, is registered in the land registry or cadastre, or both, and is free of title disputes.

The parcel is located in the periurban commercial zone, and no rezoning is required. Furthermore, the property consists of a land and a building. The land area is 557.4 square meters (6,000 square feet). A two-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition and complies with all safety standards, building codes, and other legal requirements. The property of land and building will be transferred in its entirety.

HOW DO THE REGISTERING PROPERTY INDICATORS COUNT PROCEDURES?

A procedure is defined as any interaction of the seller, the buyer, or their agents (if an agent is legally or in practice required) with external parties, including government agencies, inspectors, public notaries, architects, surveyors, among others. Interactions between company officers and employees are not considered. All procedures that are legally or in practice required for registering property are recorded, even if they may be avoided in exceptional cases. Each electronic procedure is counted as a separate procedure. Payment of capital gains tax is counted as a separate procedure but is excluded from the cost measure. Procedures that must be completed in the same building but in different offices are counted as separate procedures. If the parties must visit the same office several times for different sequential procedures, each visit is considered a separate procedure and is counted separately. It is assumed that the minimum time required for each procedure is 1 day except for procedures that can be fully completed online, for which the time required is recorded as half a day. Although procedures may take place simultaneously, they cannot start on the same day (that is, simultaneous procedures start on consecutive days).

HOW DO THE REGISTERING PROPERTY INDICATORS MEASURE TIME?

Time is recorded in calendar days. The measure captures the median duration that property lawyers, notaries or registry officials indicate is necessary to complete a procedure with minimum follow-up with government agencies and no extra payments. It is assumed that the minimum time required for each procedure is one day, except for procedures that can be fully completed online, for which the time required is recorded as half a day.

DO THE REGISTERING PROPERTY INDICATORS RECORD THE DE JURE (THE LAW) OR DE FACTO (THE PRACTICE) SITUATION?

The registering property indicators record both the law and the practice:

1. Procedures: Law and practice. The indicator records all procedures that are legally required (even if not done in practice) and all procedures that are commonly done in practice (even if not required by law), whether they must be completed by the seller, the buyer or a third party on their behalf.

2. Time: Practice. The time measure captures the median duration that local experts indicate is necessary to complete a procedure in practice.

3. Cost: Law or practice in the absence of law. Official fee schedules are the source for cost and where there are no fee schedules, the indicator records the practice (median estimates reported by experts).

4. Quality of land administration index: Law and practice. The reliability of infrastructure, transparency of information, and geographic coverage indices record features of land administration systems that are implemented in practice. As for the land dispute resolution index, it includes questions that address both the legal framework and the de facto practices of land dispute resolution mechanisms. Finally, equal access to property rights index only assesses the economy’s legal framework.