E-note 5 – The attachement of immovable property (Professional E-note)

  • strict warning: Non-static method view::load() should not be called statically in /var/home/europeeje/public_html/sites/default/modules/views/views.module on line 879.
  • strict warning: Declaration of views_handler_filter::options_validate() should be compatible with views_handler::options_validate($form, &$form_state) in /var/home/europeeje/public_html/sites/default/modules/views/handlers/views_handler_filter.inc on line 0.
  • strict warning: Declaration of views_handler_filter::options_submit() should be compatible with views_handler::options_submit($form, &$form_state) in /var/home/europeeje/public_html/sites/default/modules/views/handlers/views_handler_filter.inc on line 0.
  • strict warning: Declaration of views_plugin_style_default::options() should be compatible with views_object::options() in /var/home/europeeje/public_html/sites/default/modules/views/plugins/views_plugin_style_default.inc on line 0.
  • strict warning: Declaration of views_plugin_row::options_validate() should be compatible with views_plugin::options_validate(&$form, &$form_state) in /var/home/europeeje/public_html/sites/default/modules/views/plugins/views_plugin_row.inc on line 0.
  • strict warning: Declaration of views_plugin_row::options_submit() should be compatible with views_plugin::options_submit(&$form, &$form_state) in /var/home/europeeje/public_html/sites/default/modules/views/plugins/views_plugin_row.inc on line 0.
  • strict warning: Non-static method view::load() should not be called statically in /var/home/europeeje/public_html/sites/default/modules/views/views.module on line 879.
  • strict warning: Declaration of views_handler_argument::init() should be compatible with views_handler::init(&$view, $options) in /var/home/europeeje/public_html/sites/default/modules/views/handlers/views_handler_argument.inc on line 0.
  • strict warning: Declaration of views_handler_filter_boolean_operator::value_validate() should be compatible with views_handler_filter::value_validate($form, &$form_state) in /var/home/europeeje/public_html/sites/default/modules/views/handlers/views_handler_filter_boolean_operator.inc on line 0.

In this e-note:

Enforcement against property

Enforcement against property means an enforcement measure whereby a creditor has property belonging to the debtor placed under the control of a court so that it can be sold and he can have the price paid to him.

Definition

Enforcement against property means an enforcement measure whereby a creditor has property belonging to the debtor placed under the control of a court so that it can be sold and he can have the price paid to him.

Conditions for implementing an enforcement against property

To have recourse to this enforcement procedure under civil law, certain conditions must be met:

  • The claimant creditor must possess a writ of enforcement confirming an established, liquid and matured debt (cf. File No. 2);
  • The claimant creditor must have capacity to take action and to bring proceedings at law;
  • Enforcement must apply to real estate.

Enforcement

Enforcement against property proceeds as follows:

Service of the payment order entitling enforcement

This enforcement procedure under civil law is initiated by serving a payment order permitting enforcement.

Enforcement on property may be made against the debtor or against a third party in possession of the property. The payment order permitting enforcement is then served on the debtor or on the third party in possession depending on the circumstances.

However, it must be stressed that if proceedings concern a third party in possession, service of the payment order permitting enforcement is not sufficient. In fact, an ordinary payment order must also be issued to the debtor, the order being otherwise null and void.

In either case, service of the payment order permitting enforcement will in particular have the effect of:

  • A notice to pay (the property may not be abandoned or used to secure an entitlement);
  • Rendering the property non-disposable;
  • Rendering the accruals from the property non-disposable.

The payment order permitting enforcement must therefore be published for it to be made enforceable on third parties.

Discharge of formalities prior to sale

A sale, whether amicable or compulsory, can take place only if the following steps have been taken:

  • Issue of a descriptive report on the premises by the process-server in charge of the action;
  • Summoning of the debtor to a fact-finding hearing and a registered creditors meeting;
  • Preparation by the claimant creditor's lawyer of the conditions of sale, indicating the terms and conditions for sale of the property;
  • Statement of sums owed to registered creditors.

Fact-finding hearing

The outcome of this hearing will decide whether the property will be subject to amicable sale or compulsory sale. In addition, the enforcement court will take this opportunity to verify whether the conditions for proceeding with enforcement have been met and it will consider any objections and incidental requests.

Sale of the property

Sale of the property may be amicable or compulsory:

Amicable sale of the property:

the attached debtor will take the necessary steps to conclude the sale. The property will otherwise be subject to compulsory sale.

Compulsory sale of the property (adjudication):

in practice this means selling the property by public auction.

Compulsory sale requires prior notice. Sales will take place at the bar of the Regional Court (see file No. 2). The vendor must have instructed his lawyer. Representation by a lawyer is in fact obligatory.

On completion of the sale, an adjudication judgement is given which the claimant creditor must serve on the debtor, registered creditors, the purchaser and any person who has raised an objection settled by the decision.

It should be noted that adjudication may be upset by a higher bid (situation if a person puts forward a price higher than the adjudicated price) or by a repeat auction (applicable in cases where the auction is annulled).

Enforcement against property means the enforcement measure whereby a creditor has a property belonging to his debtor placed under court control for it to be sold and for him to be paid the price.

Unlike enforcement against property (files 3 and 4), there is only one enforcement procedure under civil law for real estate.

Enforcement against property is governed by decree No. 2006-936 of 27 July 2006 concerning procedures for attaching property and distributing the price of a property.

Before considering the procedure for enforcement against property (II), the general principles should be noted (I).

The general principles for enforcement against property

In property attachment matters, the competent court is the enforcement court (cf. file No. 2) at the place where the property is situated.

Within the framework of this procedure, representation by a lawyer is mandatory.

In addition, decisions given by the enforcement court must be served by a process-server (cf. file No. 2) subject to certain exceptions. The exceptions are as follows:

  • authorisation of amicable sale if the debtor has not been represented by a lawyer
  • orders made at last instance
  • lapsing and expiry of the payment order permitting enforcement.

These decisions are served by the clerk of the court.

Only an appeal is open to means of recourse. In principle, an appeal must be made within a fortnight following service of the decision.

The enforcement procedure

1. Conditions for implementing enforcement against property

The claimant creditor must possess a writ of enforcement confirming an established, liquid and matured debt (cf. file No. 1).

In addition, the claimant creditor must possess both capacity to make disposal and capacity to proceed at law if the enforcement against property is of a legal nature.

If the debtor is married, the creditor must proceed with enforcement against each of the spouses.

Article 2191 of the Civil Code lays down the limits to the rights of a claimant creditor to proceed with enforcement against property:

  • Priority for a mortgage: a creditor can attach his debtor's property if it is not mortgaged on his behalf only if the property mortgaged in his favour is insufficient to cover the debt;
  • Prohibition of simultaneous attachments: a creditor who introduces enforcement proceedings against property may undertake further enforcements against property only if the property already attached is insufficient to cover the debt.

Enforcement against property may be made against a third party holding the property.

In the case of enforcement against property, the procedure must therefore concern real estate.

In principle, any real estate may be the subject of enforcement against property. Consequently, chattels by nature, chattels, landlord's fixtures and chattels according to their purpose may be attached. Immovable property rights such as usufructs may similarly be attached.

On the other hand, certain rights in rem cannot be attached: mortgages, easements, etc.

2. Attachment

It must be stressed first of all that a claimant creditor must obtain a property file or a registered property list in order to identify the actual owner of the property. If the debtor is a corporate body, a form K-bis must be obtained.

Article 4 of the Decree of 27 July 2006 provides that "the enforcement procedure is initiated by service of a payment order permitting enforcement".

Preliminary comments: the nature of the payment order permitting enforcement

Where a process-server's instrument is concerned, the general rules must be observed applying to process-servers' documents and those issued under article 15 of the Decree of 27 July 2006.

Article 15 of the decree of 27 July 2006 reads as follows:

" In addition to the particulars laid down for process-servers' instruments, a payment order permitting enforcement comprises:

The appointment of a lawyer by the claimant creditor, which requires a choice of address for service;

An indication of the date and the nature of the writ of enforcement by virtue of which the order is made;

An account for the sums claimed, including capital, expenses and interest due, and an indication of the interest rate on arrears;

A notice that the debtor must pay the sums concerned within a time limit of eight days, that on failure of payment proceedings will follow aimed at sale of the property and, for this purpose, the debtor will be summoned to appear at a hearing before the enforcement court so as to be present when the arrangements for the procedure are fixed;

An indication of each of the chattels or rights to which the enforcement against property applies, as required under the rules for land registry notices;

an indication that the order permits enforcement against the property that the debtor may not dispose of the property as from service of the instrument and, with regard to third parties, as from publication of the notice at the mortgage office;

an indication that the order permits enforcement against accruals and that the debtor will act as administrator;

an indication that the debtor remains able to find a purchaser for the attached property to proceed with its amicable sale or to give instructions for this purpose and a reference that the sale may nonetheless be concluded only with the consent of the enforcement court;

If the property is subject to a lease, an order that the surname, forename and address of the lessee or, in the case of a corporate body, its trade name and registered office, must be indicated to the process-server;

10° an indication that a process-server may enter the premises in order to prepare a descriptive report of the property;

11° an indication of the enforcement court with territorial jurisdiction to consider the enforcement procedure and objections and incidental requests relating to it;

12° an indication that the debtor who so requests beforehand may, for the enforcement procedure, obtain legal aid if he meets the conditions as to resources laid down by Act No. 91 - 647 of 10 July 1991 on legal aid and the decree No. 91-1266 of 19 December 1991 enabling the said act;

13° if the debtor is a private person, an indication that if he considers himself to be insolvent he will be able to approach the private persons' insolvency commission set up by article L.331-1 of the Consumer Code.

If the enforcing creditor acts by virtue of a debt transfer under any title for the debt covered by the writ of enforcement establishing proceedings, the order will cover the transfer document unless the debtor was not duly advised of this beforehand.

If the payment order permitting enforcement is served on a person who has mortgaged one of his properties to cover a third party debt, the notice procedure referred to in paragraph 4 will be increased to one month.

The particulars set out in this article will be statute-barred and null and void. However, avoidance will apply only if the sums claimed exceed those that are payable to the creditor."

The requirements of article 15 of the decree of 27 July 2006 will apply, the payment order permitting enforcement being otherwise null and void.

Service of the payment order permitting enforcement

This payment procedure may be introduced against the attached debtor or against a third party holding the property subject to enforcement.

Service on the attached debtor

The payment order permitting enforcement will be served according to the rules under the code of Civil Procedure.

Service on a third party in possession

In these circumstances, a claimant creditor must issue an ordinary payment order under ordinary law to the enforcement debtor, including a reference to the payment order permitting enforcement, issued to the third party in possession (article 17 of the Decree of 27 July 2006).

Within the same period, the creditor will have a payment order permitting enforcement served on the third party in possession of the property.

This ordinary payment order is essential to the creditor since absence of a payment order results in avoidance of the order to pay permitting enforcement handed to the third party in possession.

Within this three-part relationship (claimant creditor, debtor and third party in possession), the payment order permitting enforcement issued to the third party in possession must be carefully distinguished from the payment order under ordinary law handed to the debtor.

This order contains all the particulars provided for under Article 15 of the Decree of 27 July 2006, which are extended to the third party apart from the obligation to settle the debt within 8 days. In fact, this particular is replaced by a summons to pay the debt or to quit the property within one month, failing which enforcement will be continued against the third party in possession himself. Article 17 of the Decree of 27 July 2006 does not provide for a sanction should the requirements made in it not be observed.

Article 18 of the Decree of 27 July 2006 states that only the payment order permitting enforcement served on the third party in possession need be published within the period of two months following service. Consequently, there is no obligation on the claimant creditor to publish the order handed to the debtor.

Effects of a payment order permitting enforcement

General effects

A payment order permitting enforcement is a notice to pay. Consequently, this document suspends prescription and triggers interest on the arrears.

In addition, this order results in non-availability of the property, which cannot therefore be sold or used to guarantee an entitlement.

Service of the payment order permitting enforcement also results in non-availability of the accruals of the property for the benefit of mortgage and privileged creditors.

These accruals will be distributed with the price of the property.

The payment order permitting enforcement ceases to have effect two years after it is published unless a judgement confirming sale of the attached property is noted down in the margin of the published document.

Effects on the attached debtor

On service of the payment order permitting enforcement, the debtor becomes the legal administrator. He therefore retains use of the property. However, such use is limited by the debtor being prevented from acting in a way that reduces the value of the property. The debtor, as administrator, receives and manages the accruals of the property on behalf of his creditors. However, creditors can require the enforcement court to dismiss the debtor and to appoint a third party as administrator.

Nonetheless, the enforcement court may on request authorise the claimant creditor to undertake certain actions on the attached property to safeguard his rights.

Effects on the third party in possession

The enforcement procedure is continued against him should he fail to comply with the writ served on him (cf. b-2 below, Service on the third party in possession).

In addition, he will be held liable towards creditors for wear and tear on the property due to his actions or negligence.

Publication of the payment order permitting enforcement

The payment order permitting enforcement must be published for it to be held out against third parties.

This document must be published within a time limit of two months as from service. Two copies will be lodged at the mortgage office at the place where the property is situated. Deposit is entered up in a special register.

The debtor is allowed eight days in which to settle his debt. In practice, therefore, the creditor will await expiry of this time limit before proceedings to publish the order.

The order lapses unless this 2-month time limit is observed. It is confirmed lapsed by the enforcement court at the request of the party concerned.

The effects of the order can be held out against third parties as from its publication on the property register.

As stated above, a payment order permitting enforcement ceases to be effective two years after it is published.

Incidental facts connected with the payment order permitting enforcement

Rejection or refusal by the keeper or mortgages

The keeper of mortgages has powers of discretion. He is entitled to reject or refuse the deposit of documents with him if they appear incomplete or irregular or if the time limit has not been observed. If the keeper's refusal is made good by completing an additional formality in order to regularise the position, the two-month time limit will be extended.

The property is the subject of previous enforcement

The existence of a notice prior to the order for enforcement on the same property prevents any other publication. The keeper must, in effect, refuse any request for publication regarding the second enforcement on the same property.

Multiple simultaneous enforcement on the same property

If publication of more than one order is requested at the same time, the order to be published is that indicating the enforcement writ with the older date. If the writs bear the same date, the older order will be published. If the orders bear the same date, that concerning the larger debt will be published (article 20 of the decree of 27 July 2006).

Multiple successive enforcement on the same property

In these circumstances, there is no need to publish a new payment order permitting enforcement relating to the same property. Nonetheless, if the order once again is more broadly based, it will be published for chattels that were not included in the first order (article 21 of the decree of 27 July 2006).

Time limitation on the order

The effects of a payment order permitting enforcement last for two years. Consequently, if no judgement confirming sale of the attached property is entered on the margin of the order within two years following its publication, it ceases ipso jure to be effective.

In these circumstances, it is up to the party concerned to approach the enforcement court in order to have the order confirmed as lapsed. Nonetheless, there are four cases where this two-year period can be extended or suspended.

They are as follows:

  • suspension of the enforcement procedure
  • deferral of the sale
  • extension by the court of the effects of the order
  • repeat auction.

3. The sales procedure

Formalities prior to a sale

Certain preparatory formalities must be completed for the sale:

A report describing the premises

On the debtor's failure to pay and on expiry of a period of 8 days as from issue of the payment order permitting enforcement, the process server may enter the premises in order to draw up a descriptive report of the property.

This possibility granted to the process server is laid down by articles 35 to 37 of the decree of 27 July 2006. The descriptive report allows the creditor to obtain information before putting the property up for sale in the full knowledge of the facts.

This descriptive report must include (article 36 of the decree of 27 July 2006):

  • a description of the premises, their composition and their surface area;
  • an indication of the conditions for occupying the property and the identity of the occupants, together with the rights available to them;
  • where applicable, the name and address of the condominium manager;
  • any other useful information, provided by the occupant of the property in particular.

Summons to a fact-finding hearing

This hearing on the one hand allows the debtor to sell the attached property amicably and, on the other, to deal with any incidental procedural requirements.

A summons to a fact-finding hearing should, in addition to the general particulars common to all summonses (article 56 of the Code of Civil Procedure) include the particulars required under Article 39 of the Decree of 27 July 2006, the summons being otherwise void.

A summons to a fact-finding hearing must be issued within a period of two months from publication of the payment order permitting enforcement at the mortgage office, being otherwise void (articles 12 and 38 of the decree of 27 July 2006). In the former case, any person concerned may require the enforcement court to confirm lapsing.

In addition, the summons must be issued at least one and not more than three months before the date of the fact-finding hearing.

Article 40 of the decree of 27 July 2006 requires the payment order permitting enforcement to be notified to registered creditors no later than the fiftieth working day following issue of the summons to the debtor.

This notification includes a summons to appear at the fact-finding hearing and must include the information required under article 41 of the decree of 27 July 2006, being otherwise void.

Notice will be made by process-server's instrument.

Notification triggers a time limit of two months in which registered creditors are allowed to declare their receivables in the procedure. In addition, a reference to issue of the summons and all notifications must within eight days from the last notification be entered in the margin of the order as published at the mortgage office.

Conditions of sale

The conditions of sale are entered in a draft prepared by the claimant creditor's lawyer, indicating the conditions and procedures for selling the property.

The particulars that the conditions of sale should include are laid down in article 33 of the decree, which provides: "The conditions of sale will in particular, being otherwise void, include:

particulars of the writ of enforcement under which the procedure is undertaken;

an account for sums due to the claimant creditor including capital, expenses and accrued interest and an indication of the interest rates on arrears;

reference to the payment order permitting enforcement with the date of its publication and other documents and judgements issued subsequently;

A description of the attached property, the origin of ownership, easements imposed on the building, leases granted on it and the descriptive report;

The conditions for sale by the court and the reserve price decided by the claimant creditor;

The appointment of an administrator for the funds obtained from the sale or from the Bank for Official Deposits as custodian of the funds."

A copy of the writ served on the debtor and a certified mortgage statement as at publication date of the payment order permitting enforcement will be appended to the conditions of sale.

All these documents must be lodged with the clerk of the enforcement court within five working days following issue of the summons to the debtor.

The reserve price is decided by the claimant creditor. Once decided, it can no longer be changed. However, article 2206 of the Civil Code allows the debtor to challenge the amount of the reserve price if the price is obviously inadequate. The enforcement court will then settle the dispute on the basis of the market price and market value of the property.

Declared receivables

Registered creditors must within a time limit of two months from notification of the payment order permitting enforcement register their claims, their security otherwise lapsing.

However, a declaration may be made out of time if the creditors show that the failure was due to circumstances beyond their control.

The formal nature of this approach requires registered creditors to obtain the services of a lawyer.

On the basis of these declarations, the claimant creditor will issue a plan for breaking down the price amongst the various creditors.

The fact-finding hearing

Verification of the enforcement conditions

Verification applies to the proper nature of the writ on which enforcement is based. The enforcement court will take steps to ensure that a final decision is actually concerned. This means that the claimant creditor must be able to produce an enforceable copy and a certificate of no appeal if his title is based on a decision given at first instance.

Examination by the enforcement court will otherwise concern the applicability and the status of the property rights attached.

Applications

With regard to the attachment of property, an application is an objection resulting from the enforcement procedure or directly relating to it and which is such as to have a direct and immediate bearing on the procedure, doing so even if the objection concerns the basis of the entitlement. This situation originates from a decision given by the Court of Cassation (Civ 2, 3 October 2002).

The enforcement court alone has jurisdiction to settle objections. It does so by a decision which will in each case be subject to appeal.

The following applications may be made:

  • an action for ownership : an action brought by an outsider to the proceedings that may arise from ownership rights to the attached property. As soon as the enforcement court has verified that the claim concerned is sound, the third party will be able to withdraw from enforcement property belonging to him and which was included amongst the attached property in ignorance of his rights.
  • substitution in proceedings: this mechanism allows any creditor to take the claimant creditor's place on the waiver of action, failure to act or fraud by the initial claimant creditor.
  • The claimant creditor affected by the substitution must pass the procedural documents to the substitute, who will confirm receipt. Until they have been returned, the claimant creditor is not discharged from his obligations.
  • nullity subject to the traditional system of nullity (articles 112 et seq. of the Code of Civil Procedure).
  • lapsing: at the request of any interested party, the enforcement court may cancel the enforcement document.
  • insolvency: due to his insolvency, the debtor may require enforcement to be suspended.
  • debtor's request for amicable settlement: this application also results in suspension of proceedings.

Outcome of the fact-finding hearing

The fact-finding hearing is intended as a choice between amicable sale and compulsory sale.

The criteria allowing a choice to be made between these two types of sale are laid down by article 49 of the decree of 27 July 2006.

Article 49 of the decree of 27 July 2006 reads as follows:

"At the fact-finding hearing, the enforcement court after having heard the parties whether present or represented, will verify that the conditions under articles 2191 and 2193 of the Civil Code have been met, decide on any objections and incidental applications and lay down procedure for continuing proceedings, authorising amicable sale at the debtor's request or ordering compulsory sale.

If it authorises amicable sale, the court will ensure that it can be undertaken under satisfactory conditions having regard to the situation of the property, the economic conditions of the market and steps, if any, by the debtor".

Sale

Amicable sale

Amicable sale is governed by articles 1582 et seq. of the Civil Code and by articles 2202 et seq. of the same code.

Nonetheless, there are certain specific features to amicable sale that distinguish it from a traditional sale.

  • The selling price and accessory charges must be deposited by the intending purchaser before the sale. The enforcement court will ensure that this is done properly before authorising amicable sale. The enforcement court will otherwise order the deposit to be made at the request of the purchaser or notary concerned with the sale.
  • This amicable sale is subject to authorisation from the enforcement court.

It is up to the vendor (the attachment debtor) to take the necessary steps to conclude the sale and to report on it to the claiming creditor. On failure by the debtor to act, the creditor may summon him at any time for resumption of the compulsory sale.

The purchaser is a third party to the attachment proceedings. He must agree to deposit the selling price for distribution to creditors, any surplus being passed to the debtor.

Adjudication: compulsory sale

Publication

The publication formalities are laid down by article 63 et seq. of the decree of 27 July 2006.

These formalities must be completed within a time limit of between one and two months before the adjudication hearing. These steps will be taken by the creditor's lawyer, who will draw up a notice intended to inform third parties.

This notice will be lodged with the clerk of the enforcement court and published in a journal for legal notices in the district where the attached property is situated.

A simplified notice will be put up at the entrance of the property and published in two locally or regionally distributed newspapers (article 65 of the decree of 27 July 2006).

In addition, candidates for adjudication will be able to inspect the premises under terms to be laid down by the enforcement court.

The adjudication procedure

Auctions will take place at the bar of the District Court - cf. File No. 2).

Adjudication must necessarily be undertaken by a lawyer. The auctioning lawyer must be registered at the Bar of the District Court before which the sale will take place. He may discharge only one brief (article 73 of the Decree of 27 July 2006).

There is no bar to auctioning property. Any person may therefore act as auctioneer, with some exceptions. These are as follows:

  • incapacitated persons who must be represented by their legal representatives;
  • officers of the court may not auction property on their own account if they have been concerned in any way in the proceedings;
  • a debtor who wishes to buy back his own property.

Whatever the circumstances, to act as auctioneer, a lawyer must have been mandated, together with an irrevocable bank suretyship or a bank cheque representing 10% of the amount of the set-up price, against receipt.

According to article 78 of the decree of 27 July 2006, "auctions will be stopped when 90 seconds have passed since the last bid. Time is counted by any visual or acoustic means which will announce every second passing to the public. The court will confirm the amount of the last bid on the spot, resulting in adjudication."

These rules are laid down, any bids placed by the court being void (article 81 of the decree of 27 July 2006).

The successful party may be:

  • the claimant creditor if no bid has been lodged;
  • in the case of a single bid, the person placing it;
  • in the case of multiple bids, the last bidder.

The last bidder's lawyer will reveal the identity of his principal to the clerk before the end of the hearing (article 79 of the decree of 27 July 2006).

The adjudication decision

According to article 88 of the decree of 27 July 2006, the claimant creditor must notify the adjudication decision "to the debtor, to the registered creditors, to the successful bidder and to any person having put forward an objection affected by the decision."

The adjudication decision is not a true judgement. It is not in the nature of a court order. It is a judicial contract which implies transfer of ownership. Consequently, no means of recourse is open against this decision, apart from a possible action for avoidance.

Nonetheless, if the adjudication decision settles or affects a contentious application, it will acquire the nature of a court order. Means of recourse will therefore be available.

The successful bidder will lodge the selling price in a blocked account or with the Caisse des dépôts et des consignations [Bank for Official Deposits] and pay the expenses. The effect of this formality is to cancel any privilege and any mortgage in respect of the debtor on the property.

Unless these formalities are completed, the sale will be cancelled ipso jure and the auction can be repeated.

The adjudication document consists of the conditions of sale together with a writ of enforcement on which the adjudication decision will be entered.

The clerk will hand this adjudication document to the successful bidder. It will then be published at the office of the keeper of mortgages by the successful bidder or, otherwise, by any creditor seeking distribution of the price.

Adjudication implies transfer of ownership for the benefit of the successful bidder. Transfer will take place at adjudication decision date for the debtor and the successful bidder. However, transfer may be held out against third parties only as from publication of the document at the mortgage office.

Higher bid

Higher bid is an operation whereby a person offers a higher price that is higher than the adjudicated price.

In that case, the adjudication is suspended, resulting in a new auction sale being held.

The higher bid must be submitted by a lawyer's deed and lodged with the clerk of the enforcement court within ten days following adjudication, otherwise lapsing. It may not be withdrawn.

Higher bidding is an open procedure. Any person may therefore place a higher bid provided that it represents at least one tenth of the principal price of the sale.

This lawyer's deed is regarded as a request to fix an auction hearing. It must be notified to the successful bidder, otherwise lapsing, to the debtor and to the attaching creditor within three days following its being declared.

The higher bidder's lawyer must confirm lodging of a bank cheque or irrevocable bank suretyship.

The higher bid may be challenged within a fortnight following its being declared. In that case, a hearing will take place on the objection. A new adjudication will then be fixed within a period of between two and four months as from the declaration of the higher bid or the decision rejecting the objection.

The procedure for the new adjudication will be the same as for the former. However, it should be noted that if the first successful bidder is again successful, he will be regarded as owner towards the attached third party as from the first adjudication.

If a new bidder is successful, the first adjudication will be cancelled.

Higher bidding can take place once only.

Repeat auctions

If an auction is cancelled, new auctions must be arranged. This is referred to as a "repeat" as the first operation is regarded as not having taken place. Auctions can be repeated only in the following three cases:

  • if the successful bidder has not lodged the selling price;
  • if the successful bidder has not paid the adjudication expenses;
  • if the successful bidder has not paid the transfer fees.

Only the claiming creditor, the registered creditor and the debtor may require a property to be put up for sale again on the conditions of the first sale. Whichever of them acts must obtain a certificate from the clerk of the enforcement court confirming the successful bidder's failure to discharge his obligations. This certificate will be served on the debtor, the successful bidder and the first claiming creditor.

If this is done against the first successful bidder, a writ requiring enforcement by him is appended to the document served.

On failure to execute the summons, the person requesting the repeat may lodge a request with the enforcement court to arrange a new auction. This new auction can take place only within a period of between two and four months as from service of the certificate on the first successful bidder.

At the end of this new hearing, the first successful bidder must:

  • pay the difference between the initial price and the resale price if it is less;
  • pay the expenses of the initial sale not advanced by him;
  • pay interest at the legal rate on his bid as from a period of two months as from the initial auction.

At the end of a period four months from confirmation of adjudication, the rate will be increased by five points.

Glossary

  • Adjudication : an operation intended for selling an attached property to the highest bidder at public auction
  • Lapsing: sanction for an action that was initially valid but its entry into full effect depended on a subsequent event that has not taken place
  • Disposal capacity: ability to dispose of or destroy a property or use it as security
  • Appear before the court: capacity to proceed at law both as claimant and defendant and to enforce one's rights oneself
  • Mortgage (or conservation) office: an administrative body which, on the one hand, publishes land registry notices and, on the other, collects duties
  • Mortgage creditor: a creditor whose receivable is secured by mortgage
  • Privileged creditor: a creditor whose debt is secured by a privilege (privilege: a right vested in a creditor enabling him to be paid preferentially to other creditors out of the proceeds of the sale of a debtor's property)
  • Claimant creditor: a creditor who effects enforcement on property
  • Last resort: refers to a decision which cannot be appealed.
  • Capital transfer tax: a registration duty payable following a transfer not confirmed by issuing a public document
  • Property right in rem: a right relating to immovable property
  • Mortgage: security set up on real estate allocated to payment of a debt
  • Real chattel: an article regarded as legally an immovable as it forms part of a property attached to the soil or allocated to the operation or administration of a property or chattel
  • Property by kind: a property which due to its nature cannot be moved
  • Property according to purpose: a property that cannot be materially defined (intangible property) which is considered as immovable property having regard to the purpose for which it is intended
  • Property attached to the soil: movable property materially attached to immovable property from which it cannot be removed without damage
  • Non-availability: the state in which a person finds it impossible to dispose of his assets or of a property
  • Judicial: this term has several meanings; in this file, the term judicial means issued by a court
  • Binding nature: the capacity of an instrument, a right or a legal situation to have an effect on third parties
  • Order: a decision given by a court with a single judge
  • Expiry: loss of force of an instrument or a right due to its holder failing to show due care or to exercise a right during a certain period of time
  • Sequestration: a deposit entrusting to a third party and under his safekeeping of an article in litigation up to settlement of a case
  • Easement : a charge placed on a property to permit use and usefulness of another property (e.g. wayleave)
  • Security: guarantee intended to ensure enforcement of an obligation such as payment of a debt
  • Third party holder: a person who holds an article belonging to another
  • Usufruct: a right that permits the holder to use and enjoy a property belonging to another person