DOING BUSINESS 2009 - JOHN J. HADDAD, Ph.D.

68 Doing Business 2009• Has no trees, natural water sources,natural reserves or historicalmonuments of any kind.• Will not be used for special purposes,and no special permits, such as forresidential use, industrial plants,waste storage or certain types ofagricultural activities, are required.• Has no occupants (legal or illegal),and no other party holds a legalinterest in it.ProceduresA procedure is defined as any interactionof the buyer or the seller or their agents(if an agent is legally or in practice required)with external parties, includinggovernment agencies, inspectors, notariesand lawyers. Interactions betweencompany officers and employees are notconsidered. All procedures that are legallyor in practice required for registeringproperty are recorded, even if theymay be avoided in exceptional cases. It isassumed that the buyer follows the fastestlegal option available and used by themajority of property owners. Althoughthe buyer may use lawyers or other professionalswhere necessary in the registrationprocess, it is assumed that it doesnot employ an outside facilitator in theregistration process unless legally or inpractice required to do so.TimeTime is recorded in calendar days. Themeasure captures the median durationthat property lawyers, notaries or registryofficials indicate is necessary tocomplete a procedure. It is assumed thatthe minimum time required for eachprocedure is 1 day. Although proceduresmay take place simultaneously, they cannotstart on the same day. It is assumedthat the buyer does not waste time andcommits to completing each remainingprocedure without delay. If a procedurecan be accelerated for an additional cost,the fastest legal procedure available andused by the majority of property ownersis chosen. If procedures can be undertakensimultaneously, it is assumed thatthey are. It is assumed that the partiesTable 12.5What does registering property measure?Procedures to legally transfer title on immovable property (number)• Preregistration (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)• Registration in the economy’s largest business city• Postregistration (for example, filing title with municipality)Time required to complete each procedure (calendar days)• Does not include time spent gathering information• Each procedure starts on a separate day• Procedure completed once final document is received• No prior contact with officialsCost required to complete each procedure (% of property value)• Official costs only, no bribes• No value added or capital gains taxes includedSource: Doing Business database.involved are aware of all regulations andtheir sequence from the beginning. Timespent on gathering information is notconsidered.CostCost is recorded as a percentage of theproperty value, assumed to be equivalentto 50 times income per capita. Onlyofficial costs required by law are recorded,including fees, transfer taxes,stamp duties and any other payment tothe property registry, notaries, publicagencies or lawyers. Other taxes, such ascapital gains tax or value added tax, areexcluded from the cost measure. Bothcosts borne by the buyer and those borneby the seller are included. If cost estimatesdiffer among sources, the medianreported value is used.The data details on registering propertycan be found for each economy at http://www.doingbusiness.org.Getting creditDoing Business constructs measures ofthe legal rights of borrowers and lendersand the sharing of credit information.The first set of indicators describes howwell collateral and bankruptcy laws facilitatelending. The second set measuresthe coverage, scope, quality and accessibilityof credit information availablethrough public and private credit registries(table 12.6).The data on the legal rights of borrowersand lenders are gathered througha survey of financial lawyers and verifiedthrough analysis of laws and regulationsas well as public sources of informationon collateral and bankruptcy laws. Thedata on credit information sharing arebuilt in 2 stages. First, banking supervisionauthorities and public informationsources are surveyed to confirm thepresence of public credit registries andprivate credit information bureaus. Second,when applicable, a detailed surveyon the public or private credit registry’sstructure, law and associated rules isadministered to the credit registry. Surveyresponses are verified through severalrounds of follow-up communicationwith respondents as well as by contactingthird parties and consulting publicsources. The survey data are confirmedthrough teleconference calls or on-sitevisits in all economies.Strength of legal rights indexThe strength of legal rights index measuresthe degree to which collateral andbankruptcy laws protect the rights ofborrowers and lenders and thus facilitatelending. Two case scenarios are usedto determine the scope of the securedtransactions system, involving a securedborrower, the company ABC, and a securedlender, BizBank.Several assumptions about the securedborrower and lender are used:(c) The International Bank for Reconstruction and Development / The World Bank