Mistakes and frauds of notaries

[Man]

The liability of notaries is established by law and is subject to insurance. But does it actually occur as a result of errors and fraudulent actions of notaries?

According to Part 1 of Article 17 of the Fundamentals of the Legislation of the Russian Federation on Notaries, a notary engaged in private practice bears full property liability for damage caused through his fault to the property of a citizen or legal entity as a result of performing a notarial act in violation of the law, unless otherwise provided by this article.

Damage caused to the property of a citizen or legal entity in the cases specified in Parts One and Two of Article 17 Fundamentals of Legislation on Notaries, shall be reimbursed at the expense of insurance compensation under the notary's civil liability insurance contract, or if this insurance compensation is insufficient - at the expense of insurance compensation under the notary's collective civil liability insurance contract concluded by the notary chamber, or if the latter insurance compensation is insufficient - at the expense of the notary's personal property, or if his property is insufficient - at the expense of the compensation fund of the Federal Notary Chamber (Part 3 of Article 17 of the Fundamentals of Legislation on Notaries).

Article 17 of the Fundamentals of Legislation of the Russian Federation on Notaries contains an exhaustive list of grounds for bringing a notary to property liability. According to the provisions of this article, the basis for imposing full property liability on a notary for damage caused to the property of a citizen or a legal entity as a result of a notarial act is one of the following conditions:
• the notarial act performed is contrary to the legislation of the Russian Federation;
• the notary unlawfully refused to perform a notarial act;
• the notary disclosed information about the notarial acts performed.

In accordance with paragraph 1 of Article 1064 of the Civil Code of the Russian Federation , harm caused to the person or property of a citizen, as well as harm caused to the property of a legal entity, is subject to compensation in full by the person who caused the harm.

According to paragraph 1 of Article 15 of the Civil Code of the Russian Federation , a person whose right has been violated may demand full compensation for the damages caused to him, unless the law or contract provides for compensation for damages in a smaller amount. At the same time, by virtue of paragraph 2 of Article 15 of the Civil Code of the Russian Federation, damages are understood to be expenses that the person whose right has been violated has incurred or will have to incur to restore the violated right, the loss of or damage to his property (actual damage), as well as lost income that this person would have received under normal conditions of civil circulation if his right had not been violated (lost profits).

According to the meaning of the specified norms, in order to impose property liability on a person for the damage caused, it is necessary to establish the facts of the occurrence of damage, its size, the illegality of the behavior of the person causing the damage, his guilt, as well as the cause-and-effect relationship between the actions of the person causing the damage and the adverse consequences that have occurred.

It would seem that everything is simple. In fact, it turns out to be very difficult to prove either the illegality of the notary's actions, or his guilt and other circumstances that the plaintiff - a citizen who has suffered from the actions of a notary - must prove in court in order to receive compensation for damage from a notary.

1. Poor identification of the client is not a notary's mistake

It would seem that notaries are very strict and legally literate professionals; a person with a fake passport cannot pass them by. It seems even more incredible that a notarial act would be performed in relation to such a "shady" person. But practice, alas, shows the opposite: it is easy to deceive a notary by presenting a forged identity document, and it is equally impossible to hold him liable for deliberately accepting a forged document as genuine.

It turns out that poor quality identification of a person during a notarial act is not even recognized by the courts as an error, let alone as a notarial act performed in violation of the law.

An example from practice:

H. filed a claim with the court against notary S. for damages.

The court established that on 22.08.2014, notary S. certified a power of attorney on behalf of A. to K. for the right to manage and dispose of all property. Based on this power of attorney, a contract for the sale and purchase of an apartment was concluded between K., acting on behalf of A., and H. The court ruled that this transaction was invalid due to its nullity, while it was established that the power of attorney was executed on behalf of A., who died back in 2010. Since the notary certified a fictitious power of attorney on behalf of A., the plaintiff believed that he had suffered material damage due to the fault of the notary.

It was established that the power of attorney was certified by the notary on the basis of identity card N, presented by A. It was subsequently discovered that this document was forged. When performing notarial acts, notary S. had no doubts about the authenticity of this document, as well as about the identity of the citizen who presented this document. No evidence was obtained that the notary committed actions that contradicted the law when performing notarial acts. Certification of a power of attorney is within the powers of a notary. The defendant performed all the necessary actions related to the notarization of the power of attorney.

The court, having established the absence of a causal relationship between the notary's actions and the losses incurred by the plaintiff, came to the conclusion that there were no grounds for satisfying the claims. The court concluded that the plaintiff's losses arose not as a result of the notary's actions, but due to the malicious intent of third parties, which is confirmed by the case materials and corresponds to the factual circumstances of the case ( appellate ruling of the Supreme Court of the Republic of Sakha (Yakutia) dated 18.01.2016 in case No. 33-196/2016 ).

Conclusion: issuing a power of attorney on the basis of an invalid passport/identity card does not create grounds for civil liability of notaries, since at the time of the dispute it is almost never possible to establish that the presented passport should have caused the notary to doubt its authenticity. And if the opposite is not proven... it is considered that the notary was allegedly deceived by presenting him with a forged, but high-quality counterfeit document.

2. Is the client's insanity not an obstacle to a notarial act?

Some notaries are not afraid to certify powers of attorney of persons who are not fully aware of their actions, suffer from short-term memory loss and other mental deviations or disorders. Despite the fact that before performing a notarial act, a notary must verify the legal capacity of a citizen who has applied to him for the performance of a notarial act, in practice some do not fulfill this requirement. If this is done intentionally, the notary may be suspected of fraud, if unintentionally, of a mistake. However, suspicions alone do not prove the notary's guilt and do not confirm the legitimacy of the claims to the notary for compensation for damages to the victims of this mistake or crime.

An example from practice:

Yu.E. filed a claim with the court against a notary for compensation for damages. The claims were based on the fact that the notary certified a power of attorney issued to Yu.E. in the name of F. Acting on the basis of this power of attorney, F. entered into a contract for the sale and purchase of a share in the apartment with F.I.O.7, and subsequently the court issued a decision to invalidate the disputed power of attorney, as well as the contract for the sale and purchase of a share in the ownership of the apartment, applied the consequences of the invalidity of the transaction, returned the parties to their original position, and Yu.E. was moved into the residential premises.

The basis for recognizing the power of attorney as invalid was the fact that at the time of its issue, due to a chronic mental state, Yu.E. was unable to understand the meaning of her actions and control them. By a court decision, unjust enrichment was recovered from Yu.E. in favor of F.I.O.7 in the form of costs for repairing the apartment. The amount collected by the court decision within the framework of enforcement proceedings was withheld from the pension of Yu.E. in favor of F.I.O.7.

In resolving the dispute, the court proceeded from the absence of evidence indicating that the notary P.V. violated the law when performing the notarial act of certifying the power of attorney, the absence of a causal relationship between the actions of the notary and the payment by the plaintiff in favor of F.I.O.7 of unjust enrichment, as well as the absence of losses for the plaintiff, since the amount paid by Yu.E. is compensation to F.I.O.7 for the costs incurred by him to improve the condition of the apartment, returned to the ownership of the plaintiff. Under these circumstances, the court refused to satisfy the claims of Yu.E. ( appellate ruling of the Orenburg Regional Court dated September 16, 2015 in case No. 33-5819/2015 ).

Conclusion: certification of a power of attorney of persons who are "a little out of their minds" can, in fact, rarely entail for a notary the risk of recovery from him of damages caused as a result of using such a power of attorney and performing legally significant actions on its basis.

3. Proven inadequacy of a capable client when performing a notarial act does not lead to liability of the notary... a priori!

According to paragraph 1 of Article 177 of the Civil Code of the Russian Federation , a transaction concluded by a citizen, although capable, but who was at the time of its conclusion in such a state that he was not able to understand the meaning of his actions or control them, may be recognized by the court as invalid at the suit of this citizen or other persons whose rights or legally protected interests were violated as a result of its conclusion.

In the absence of authority to act on behalf of another person or in excess of such authority, the transaction is considered concluded on behalf of and in the interests of the person who made it, unless the other person (the represented person) subsequently approves this transaction (clause 1 of Article 183 of the Civil Code of the Russian Federation).

In practice, there are cases of notaries certifying powers of attorney on behalf of people who were not fully competent at the time of signing, on the basis of which real estate transactions were then concluded that were subsequently recognized as invalid. Quite bona fide purchasers were more than once put in a disadvantageous position by this process, in which they were forced to first defend themselves in court against the claims of the previous owner of the property, and then themselves come forward with demands to bring the notary to property liability for certifying the power of attorney of persons who are not capable of understanding the meaning of their actions in signing the power of attorney.

Example from practice:

the citizen, with the help of a forensic psychiatric examination, was able to prove that, despite being legally competent, at the time of signing the power of attorney for the sale of a land plot belonging to him and having it certified by a notary, he did not understand the significance of his actions. His claim to invalidate the power of attorney, the land purchase and sale agreement, and to recognize the right of ownership of the land plot was satisfied by the court, which came to the conclusion that the transactions based on this power of attorney were not based on the law ( appellate ruling of the Moscow Regional Court dated July 16, 2014 in case No. 33-14423/14 ).

Conclusion: a citizen who has suffered from the actions of a notary must still initiate the procedure for bringing the notary to liability; a priori, if his actions/certified documents are recognized as invalid, such liability does not arise for the notary.

4. A client may not be needed to certify a transaction!

Of course, notaries rarely commit openly illegal actions, preferring to disguise them as mistakes. But in the event that illegal actions are committed, the probability (with a due degree of activity on the part of the injured citizen to bring the notary to property liability (coupled with criminal liability)) is quite high.

An example from practice:

A notary certified a car sale and purchase agreement in the absence of the citizen, the owner of the car. The car was subsequently resold to the next owner. The notary was convicted under Part 1 of Article 202 of the Criminal Code of the Russian Federation. The original owner of the car, G., filed a claim with the court against the notary and all subsequent owners of the car to invalidate the sale and purchase transactions for his car and apply bilateral restitution. As follows from the case materials, as a result of the notary performing a notarial act in violation of the law, which consisted in certifying the car sale and purchase agreement in the absence and against the will of the owner, the owner lost his property, that is, the car. The court satisfied the claims of the original owner G. ( appellate ruling of the Supreme Court of the Republic of Dagestan dated July 30, 2015 in case No. 33-3127/2015).

Conclusion: certification of a transaction in the absence of one of its parties is not only grounds for bringing a notary to criminal liability under Article 202 of the Criminal Code of the Russian Federation (abuse of power by private notaries and auditors), but also entails liability under Article 17 of the Fundamentals of Legislation on Notaries and the Civil Code of the Russian Federation .

5. Shortcomings in work are not mistakes and not a crime.

In practice, there are also simple shortcomings in the work of notaries, which indirectly affect the rights and obligations, as well as the occurrence of losses for citizens whose interests are affected by the actions committed by the notary.

Example from practice:

A notary certified a notarial agreement on the payment of alimony without considering it necessary to obtain the consent of the current spouse of the person paying the alimony. In order to pay alimony for a certain period, the child's father sold property that was the joint property of him and his current spouse, which became the cause of a legal dispute, as a result of which the notarized agreement on the payment of alimony was recognized by the court as invalid. The payer of alimony presented the notary with claims for compensation for property damage caused by the performance of notarial acts to certify the agreement on the payment of alimony that did not comply with the requirements of family law, and the impossibility of recovering the paid funds from the recipient of alimony due to the invalidity of the agreement. The court refused to satisfy the plaintiff's claim, considering that the grounds for the occurrence of such liability, provided for in Art. 17 Fundamentals of the Legislation of the Russian Federation on Notaries, are missing (see the appellate ruling of the St. Petersburg City Court dated 07.06.2016 in case No. 2-192/2016).

Conclusion: inattention to the interests and position of citizens who applied for a notarial act, leading to the recognition of transactions and agreements certified by a notary as invalid, does not entail the risk of bringing the notary to property liability due to the absence of a direct violation of the law when performing a notarial act.

Conclusions

1. Based on the analysis of current judicial practice, it can be concluded that it is extremely difficult to bring a notary to property liability for errors and fraudulent actions when performing notarial acts: either it is impossible to establish a causal relationship, or the action cannot be recognized as an error.

2. In the case of clearly illegal actions constituting the elements of a criminal offense, it is easier to recover damages from an unscrupulous notary than simply in the case of erroneous actions of a notary.

3. Numerous cases of irresponsible attitude of notaries to their duties, to the responsibility imposed on them by the legislator, together with court decisions on disputes between citizens and notaries show that notaries are not inclined to fear their property liability. After all, practice itself shows that few plaintiffs can prove their guilt and violation of the law when performing a notarial act.

4. It seems that there is no particular hope that real estate transactions that notaries must certify will be "clean", with the rights and interests of all owners of shares ensured.

Based on materials ("Housing Law")