To be honest, I don't think much of notaries and believe that they stifle innovation and harm the German economy, especially SMEs, but also clubs and citizens. For example, the purchase or sale of a property can only be carried out with a notary who reads the purchase contract for both parties. For this service, he charges a fee of around 1.5% of the sale price. The entire profession is strictly protected by law and there is no competition.
The Notar does much more than just read the contract; he is liable for the correct administration of the transfer of ownership (done by a three phase process which guarantees that the seller cannot get the money without transferring the property and the buyer cannot get the property without selling the money).
The concept of title insurance doesn't exist in Germany as the Notar eliminates the risk.
OK but how is it that other countries get by without them for founding LLCs? Are there countless scams going on in the UK surrounding limited company for example since you don't need a notary there?
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 now have a German GmbH and had a UK Ltd in the past for 10 years. Definitely there is more seriousness/trustworthiness to a GmbH.
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.
> 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.
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.
Bankruptcy in Germany requires you to attempt to pay off your debts within six years. Any remaining debt gets canceled after those six years pass. This is... not how bankruptcy works in Germany.
For a GmbH and other limited liability companiee there are minimum equity requirements instead.
The duration for private bankruptcy was recently cut to 3 years so it's a bit faster now at least.
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.
It’s a process in the UK too, abuse of which could lead to the courts imposing sanctions ranging from barring the directors from company directorship all the way to piercing the corporate veil and holding directors liable for the company’s debts.
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.
The US concept of bankruptcy is basically unimaginable in most (all?) of Europe.
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.
I don't know about other countries, but in Germany there is Privatinsolvenz which is a personal bankruptcy that would resolve this exact scenario.
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)
FWIW Privatinsolvenz is not instant although the duration was shortened from the very excessive 7 years down to a more reasonable 3 years. During insolvency you're also prohibited from founding/owning companies or freelancing, though.
> 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.
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.
How does the involvement of a notary at the time of formation reduce the risk of the company going bankrupt?
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?
Obviously there is fraud everywhere. Still, I have a higher level of basic trust when dealing with a GmbH than someone who created their Ltd Co 3 hours ago. It's just a sign they are a more serious/stable business counter party to deal with.
Yeah! Especially rampant is reusing names of closed GmbHs, reopening them, sending out invoices and stuff like that. Or spamming newly created GmbHs with phantasy invoices. Or the scam that's called Abmahnung by lawyers. There's plenty in Germany, so don't be fooled.
> The concept of title insurance doesn't exist in Germany
(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.
Insurance companies have a similar product though, 'dolda-fel-försäkring'.
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'.
From a brief search, title insurance often costs around 0.1% of the purchase price of a property; it seems the Notars are collecting a monopoly rent in Germany.
There are ways to ensure the correct transfer of ownership without involving a third party. You can see these principles at work on some trading platforms already, be it for Magic cards or something else where parties cannot trust each other because they do not know each other.
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?
> There are ways to ensure the correct transfer of ownership without involving a third party. You can see these principles at work on some trading platforms already, be it for Magic cards or something else where parties cannot trust each other because they do not know each other.
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.
Indeed, my mistake and agree. Here, I wanted to refer to the fact that the transfer of ownership could likely be done even without involving a notary or a human in a properly digitalized system.
In that case you have the entity operating and maintaining the "digitalized system" which is the third party that everyone has to trust. And that entity won't do its work for free either. And it also will somehow "involve humans" which are working there.
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.
Side question: why don't i hear horror stories about identity theft from those areas that have those evil bureaucratic notaries authenticating everything?
Actually there's been at least one known case of someone "stealing" an entire building worth about 6 million € in Berlin. Even bureaucracy and notaries didn't prevent it, so there's your potential 100% fraud prevention rate going down the drain...
It's not technically hereditary. But if the job licenses are a finite resource, and the licensee "owns" the license and is allowed to give/sell it to a person of their choice, and the job is reasonably pleasant/profitable... they're very likely to pass it on to their children, unless those children have other plans.
Pharmacies in Italy work much like notaries, although they obviously provide a much more useful service. My understanding is that in part of the US taxis work the same way, with limited # of "medallions" being treated as an investment.
It sounds like notaries are a different service as well, in the US a notary is a minor(very minor) government official whose primary purpose is to verify that the person signing a document is the person they are claiming to be. For the most part US notaries have little knowledge of the contents of that document.
In California (I think other states, but each state has it's own specific laws) the fees are fixed below a small set amount.
I was a but optimistic on my wording, But in the US they are not government employees(they are not paid any sort of salary) just citizens who are authorized to verify signatures(a governmental duty, which is why I called them minor government officials) and are are allowed to collect a small fixed fee for their effort.
FWIW in Germany in order to apply as a notary you have to be a lawyer and the number of notaries is very limited and they're lifetime positions. As with all public officials, there are severe penalties for professional misconduct and losing your lifetime position and benefits is usually enough of an incentive to keep these people honest and careful.
Technically, there is competition. You are free to choose whichever notary you want. But pricing is legally regulated, so you will pay the same price everywhere.
The amount of notaries in Germany is very limited. . You can’t just study that and open a notary in Germany. They are cash cows that obviously don’t want competition. During Covid Germany was the only country of its neighbors that did not do remote attestations.
From 2000 to 2020 the number of notaries in Germany had almost halved. How is that normal for any country ? Unless they replaced notaries with automation which Germany didn’t .
Also it seems that 30% loss was mostly in regions not experiencing economic growth. While others actually saw growth in the number of notaries as well.
The solution is easy: Create a small company to own the property. That company can be sold much more easily than the property itself. It also avoids the tax on propery purchase.
Companies have other issues like VAT/GST and reporting. I had a friend use a company in New Zealand and it cost him multiple % of property price due to an issue he didn't forsee.
New Zealand doesn't have notiaries or special insurance but you do need to use a lawyer to transfer ownership and I think it costs about NZD1500 each for vendor and buyer.
I still remember vividly how I once wrote IIII instead of IV in an outline numbering at school and my teacher was furious about it and basically told me I was stupid for writing it that way.
So glad these days are over.
I'm sorry this happened to you. Sadly, the days of stupid and abusive teachers are far from over.
I think you're focusing on the wrong thing here. If it hadn't been Roman numerals it would have been something else.
Teachers are much the same as cops. Some go into those fields because they genuinely want to help people. Other go into them because they enjoy having power.
David Basin and his team have done really cool work in the past. I was lucky enough to see a talk by him about EMV Race, which are exploits in the EMV protocol used by credit cards. Their approach included modeling this protocol in Tamarin. Its website [0] shows demonstrative videos.
Right now in Germany vaccines are available in abundance, just today Berlin opened a Drive-In Vaccination Center at a furniture store and at Vaccination Centers in Saxony appointments are not needed anymore [1].
The part about hippies is just an example, think of it as an figure of speech.
The point he is making has nothing to do with the weather or hippies, it's that peoples believes on what makes them happy are not in alignment to what actually makes them happy or they fail to take account for lots of variables changing, while they believe only one changes.
