Susana Lastarria-Cornhiel, Grenville Barnes (1995):
Assessment of the Praedial Property Registration System in Peru

H. Linkage between Formal Credit and Registration

By focusing on improving the formalization process of informal property rights, ILD hoped to transform those property rights into working capital. Property can become productive capital once it is recognized as an asset and accepted as collateral for the purposes of obtaining credit. An efficient (in terms of time and transactions costs) registration system that documents and guarantees property rights facilitates the use of property as collateral for formal credit and thus the generation of capital based on property.

The ILD's efforts to formalize property rights, therefore, are based on the thesis that a necessary condition for formal commercial credit is property that can be used as collateral. For many credit institutions, collateral is based on registered property rights. [FN 27] Whether the ability to mortgage property is sufficient in order to obtain credit is dependent, of course, on many other factors. Some of the evidence we have gathered indicates that in spite of having registered their titles, many low-income families are unable to obtain credit, and the credit they are able to secure is tied to non-credit conditions.

At an operational level, a significant achievement of the Registro Predial system is the ability to quickly process mortgage transactions. These are normally done within a one-week period with a lawyer's signature and a minimum of documentation. In contrast, the same process at the Registro de Propiedad Inmueble apparently takes weeks, if not months, and requires the intervention of a notary public.