Ahé Lacotte
Master 1 student in Business Law at Paris-Panthéon-Assas University
In a time of unprecedented crisis in the property market which severely impacted real estate transactions, notaries find themselves at a crossroads. With falling sales and dismissals in several notary offices, the profession faces a major challenge that leads it to question its traditional role and its ability to adapt to a crisis redefining a core aspect of its work – real estate.
Rapidly rising interest rates have made loans less accessible to buyers, while an increase in both land and building materials prices has exacerbated the situation, making property acquisition more expensive. This situation is further intensified by insufficient supply in the face of persistently strong demand, particularly in major cities and their suburbs. In addition, global economic uncertainty and inflation have eroded purchasing power, prompting many potential buyers to postpone or cancel their plans to buy real estate. The combination of these factors has led to a decline in property transactions, negatively impacting professionals in the sector, including notaries, who are seeing their fee income drop due to a decrease in the number of authenticated deeds needed for real estate deals.[1]
Notaries, as legal professionals and public officers, play a crucial role in authenticating deeds and offering legal advice on matters covering family law, property law and private asset management. They guarantee the legal security of transactions, particularly in the real estate sector, by conducting essential checks and calculating fees and taxes. Moreover, they support individuals and businesses during key moments in their lives, whether setting up a business or going through the important stages of family life, thereby helping to prevent disputes and protect their client’s assets. It is against this backdrop of tensions and tensions that we need to analyse the issues arising from this crisis.
- The real estate crisis: a profound impact on the notarial profession
The current crisis in the real estate market, characterised by a significant fall in transactions, is putting notaries under considerable pressure. Real estate is the main source of income for these professionals, accounting for an average of 57% of notaries’ revenues, and even 65% of offices opened after 2017.[2] Yet the rapid rise in interest rates and costs of land and commodities has led to a fall in notaries’ turnover of at least 20% in cities such as Paris and Lyon. In 2023, the number of transactions on existing properties is estimated to range between 850,000 and 890,000 compared with 1.2 million the previous year, underlining the scale of the crisis.
Faced with these challenges, notaries have had to adopt a defensive stance, going so far as to reduce their staff in the hope that the market will recover in the medium term. Notaries are also diversifying their activities, especially those that have traditionally specialised in property law. For example, notaries are able to secure a more stable source of income by taking on more work in other areas of law, such as family law. In addition, Law number 21 of November 18th, 2016, which aims to modernise the French justice system, introduces the possibility of divorce by mutual consent without the intervention of a judge. This simplified procedure can be completed quickly and efficiently, attracting clients who wish to settle their separation amicably before a notary. Family law needs, such as divorce, inheritance and child custody, will continue to exist regardless of the economic situation, providing notaries with a steady source of work and income for notaries.
- Diverging views on the number of notaries: what balance should be struck?
The question of the number of notaries in France highlights another aspect of the crisis. Some argue that an increase in the number of notaries would promote a better geographical distribution of the work, as exemplified by several government initiatives. This is because notaries are appointed to geographic locations, although they can provide services nationwide, and overcrowding in one sector leads to monopoly. This is why recommendations such as the French Competition Authority’s opinion of July 2023 to install 600 new notary positions could lead to a revitalisation of the market. However, others such as Me. Sophie Sabot-Barcet, President of the Higher Council of French Notaries (CSN), warned of an overpopulation of notaries that could worsen their economic situation. The profession already impacted by a significant increase in the number of notaries since the Macron law of 2015, is also having to cope with a changing regulatory landscape. The notarial profession has seen a rejuvenation and feminisation of its ranks, following the creation of nearly 1,650 new notaries in several parts of the country.[3] This development follows the reform initiated by Emmanuel Macron when he was Minister for the Economy, which, is beginning to show its positive effects three years after the demonstrations by notaries in 2015 against the opening up of their sector to competition.
- Strategies and prospects for change
Notaries are exploring various adaptation strategies, ranging from diversifying their activities to optimising their internal management. The importance of real estate in their business is also leading them to consider innovative solutions to revive the market, such as legislative proposals to promote access to real estate credit or to simplify transaction procedures.
In addition, the current crisis could encourage notaries to rethink their business model, by integrating more digital services and optimising their internal management to improve efficiency. The creation of a specific unit within the order of notaries (Chambre des Notaires), such as Mr Frédéreic Aumont’s initiative, to help affected practices financially demonstrates the profession’s willingness to face the crisis collectively. Other measures such as mergers between firms or strategic decision-making, also illustrate that point, highlighting the need for mutual support in response to the difficulties in the profession.
Finally, the gradual integration of artificial intelligence into notaries’ work would provide for a valuable opportunity to modernise the profession and counter a possible decrease in turnover. By automating repetitive tasks and ensuring document management via ISO-compliant tools such as iManage, AI would allow notaries to focus on more strategic aspects of their business, such as legal auditing. Document analysis systems such as LexisNexis increase the efficiency and accuracy of legal data processing, while automated drafting and online optimisation tools such as Thomson Reuters improve their productivity and visibility. With the real estate market in a sustained downturn, the report predicts that house prices will fall by 4% in 2024, twice as much as in 2023. However, this downward trend can only be confirmed if inflation continues to fall without being affected by external events that could disrupt the economic recovery. This would be a positive sign for the recovery of notarial activity.
In conclusion, the current crisis in the real estate market poses major challenges for notaries, who find themselves in the eye of the storm. Fewer transactions, redundancies and falling incomes are calling into question the traditional role of this profession. However, diverse coping strategies are emerging to overcome this crisis, such as the diversification of notarial activities, professional solidarity and the integration of artificial intelligence. In these tense times, these prospects and solutions offer hope for the resilience and renewal of the notarial profession.
[1] Yves Delecraz, « Notre profession subit de plein fouet la crise », (Immomatin, 4 octobre 2023)
[2] Diane Lacaze, ‘APRÈS LES COURTIERS ET LES AGENCES, LES NOTAIRES SOUFFRENT DE LA CRISE IMMOBILIÈRE’ (BFM Immobilier, 27 novembre 2023)
[3] Wladimir Garcin-Berson, ‘«Nous avons arrêté de nous payer» : le grand blues des notaires face à la crise immobilière Le Figaro Économie (28 Octobre 2023)