Chile Economy — 05 October 2012



Chile is modern in many ways, with gleaming malls and Latin America’s tallest skyscraper at 70 stories. But the notary system here is absolutely archaic and, one could argue, a drain on the economy. The lawmakers in Chile talk of Chile as reaching developed nation status soon. President  Piñera’s Economic Ministry writes, “The government of President Sebastián Piñera has defined a clear and concrete mission for the Ministry of the Economy:  make Chile the first developed nation in Latin America.”  If that is to happen then changing the notary system should be paramount as much time and money is wasted there.

In Chile one grows accustomed to waiting in line.  Want to get a refund from the health insurance company? Wait in line.  Want to deposit a check? Wait in line.  Want to get a copy of your marriage certificate?  Wait in line although some of that has moved onto the web.  But the time people spend at the notary borders on the ridiculous.

In the USA almost anyone can be a notary public.  You find them in banks, at the office, at the law office, banks, or with the realtor. They are free: zero.  You do not pay them anything. But here in Chile notaries operate out of crowded offices where one attorney oversees a large number of clerks whose job is to stamp and sign, staple, and copy endless reams of paper, all at $1 USD to $12 USD per pop. People line up 50 to 60 persons deep and wait thirty minutes, one hour or more to have documents stamped, signed, and sealed.

In the USA you rarely needed any document notarized. But here in Chile under the 70 year old system the law stipulates that many documents be notarized. So if you buy or sell a car: go to the notary. Start a new job: go to the notary. Quit the same job: go to the notary again. Rent an apartment: go to the notary.

La Tercera newspaper says the notary business generates gross revenues of between $150 million USD and $180 million USD according to their own guild.  20,000 transactions are processed per year whose costs are from $1 USD to $12 USD and $60 USD and more for more extensive transactions.

Regarding real estate transactions, notaries operate in Chile as would title companies in the USA . In the USA the title company holds funds in escrow and the attorney conducts the real estate transaction. The actual title search is done by the attorney who also records the deed.  So the notary does nothing but hold onto the check and provide a place to conduct the real estate closing.

The government of Chile recognizes that this system is a drain on the economy so various reform proposals have been put forth.  Change was tried under the previous president Bachelet, but those bills went nowhere in the congress.  Now the government proposes increasing the number of notaries–currently there are a precious few 400–getting them to use technology, fostering competition between them, and offering some oversight by the consumer protection agency (SERNAC).   The Economics Ministry suggests they “…establish that the notaries and clerks of court use technology in order that the registered users can upload or send their documents electronically and consult documents online.”

That the notary system is an anachronism and a drain on resources in Chile is best illustrated by an example.  On the 19th floor of a building in the downtown there is a skyscraper with one elevator whose only trek is to ferry people up and down to the notary.  In one corner while a gentlemen paid 30,000 CLP ($60 USD) for 5 copies of a power of attorney a notary was at work with his son at his side.  The boy appeared to be about 11 years old.  While his father signed documents the boy stamped one after another as if illustrating the point that this is work which can be done by a boy.





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(1) Reader Comment

  1. I’d like to see the same thing happen to this quirky parasitic niche as is happening to lawyers in general due to automation. I’d also like to see Chile have the political courage to eliminate tens of thousands of public sector jobs through automation. Not that I’m bitter, those dozens of hours of my life aren’t coming back, but in a country that’s embraced free market reforms and wants to be contra-latinamericano when it comes to the boludeses that plague most of the continent, this is one last hold-out.

    Also, taking 20 minutes to withdraw money from the bank and they have to call my account exec while I fill out a form stating my intent for the withdrawl… well, I’d like to see Nicolas O’shea’s start-up get license to operate for starters.

    Legalize competition!

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