Online payment of property taxes and registration fees is the solution to protect clients from the situation whereby notaries, entrusted with their funds, could default, according to the Notarial Council.

But the real-time element of the project proposed by the council is still lagging due to limited banking infrastructure.

The technology exists, but the investment in real-time digital services to enable the system to work as envisaged is lacking, said council president Clinton Bellizzi, explaining the importance to sellers of immediate confirmation that the money has been passed on before signing a contract.

The electronic “ecosystem” avoids having to pass money for property purchases through third parties, including notaries, who would no longer hold funds for clients but would still be responsible for the transactions concluded before them.

It ensures “security, transparency and legal certainty for all parties”, Bellizzi said.

Apart from the real-time issue, there is also the problem of high-value payments, which are not adequately catered for within local banking spheres, he added.

These remain the major stumbling blocks to the integrated online centralised system, and political direction is needed to get the banks to comply.

The case of deceased notary Ivan Barbara has led to the question of how to protect clients, some of whom had put their life savings in his hands for the investment of a lifetime.

As things stand, this is a civil matter and the clients, who have described the situation as “messed up”, were simply advised to “seek legal advice”.

They had entrusted their notary with the 10% deposit on a promise-of-sale agreement – as is the norm – and have come forward to express their state of anxious limbo, filing an application in court to demand a magisterial inquiry into whether their funds were misappropriated.

Money for property purchases, including deposits, registration fees and taxes due to the Inland Revenue department, is left in escrow with notaries because it is considered the safest option for many buyers.

While situations of abuse do not arise frequently, with only a handful of cases from among around 500 practising notaries over the years, when it did happen, people saw their money disappear.

Apart from the misuse of deposits on property, defaulting on tax collected from clients was more common and meant contracts could not be registered, leaving clients helpless.

Bear in mind that notaries do not get anything out of being responsible for this

“I hope this unfortunate case will ultimately serve as an accelerator for the full implementation of the proposed system,” Bellizzi said.

The Notarial Council is in talks with the state advocate to come up with a “comprehensive set of amendments” to laws and procedures that would offer clients more protection in these circumstances.

“We are in talks with all the stakeholders and hope to find a mutually agreeable solution for the timely implementation of the system that has been lagging and is not yet fully implemented,” he said.

“So far, we can register and pay tax collected on deeds online, but this is just one part of the whole system,” Bellizzi said.

The proposed creation of integrated web services and tokenised payments for property transfer and registration has been on the drawing board since 2016.

It allows for a “seamless, end-to-end, real-time, online integration for property transfer and registration, with the notary at its centre”, according to the council’s 2020 annual report.

Already available in some other countries, it would also ensure integrity and efficiency at all stages through qualified electronic signatures, which are in the process of being implemented.

Sources in the notarial profession have highlighted the need for a legal remedy, with no protection available to clients as things stand.

Notary Joseph Abela, former president of the Notarial Council, said the setting up of sub-accounts for each transaction, held by notaries, has been proposed as a solution to the issue.

This would be as opposed to having a “big” client’s account, with all funds for various promise-of-sale agreements and contracts, which only the notary could identify.

It would give full transparency to the banks if any queries from purchasers and authorities arose, Abela stressed.

Moreover, these funds would only be released electronically and in real-time with the consent of both the notary and a purchaser through their electronic signatures.

“That is all it takes,” he said, adding that apart from protecting the client, it would also remove the responsibility for the money from the notary.

Over the years, the “test” on this profession has increased exponentially and become very laborious, with the collection of funds and other checks and balances from various bodies.

Others suggested the introduction of either of two options: Every notary should appoint another, who would have access to all information and funds if he/she passed away; or funds for deposits would no longer be transferred to the notary but blocked by the banks in the client’s personal account and released when due.

“Bear in mind that notaries do not get anything out of being responsible for this,” one notary highlighted, adding: “I spend time and money to ensure that we tally with the money coming in and going out. It is a great big hassle.”

Asked if it was looking into the situation and had plans to provide remedies in these few instances, the Justice Ministry did not answer at the time of writing.