1. What is Seizure?
Seizure is the procedure of attaching the debtor’s assets with the assistance of the State, so that they may be liquidated through their imminent auction, in order to enable the payment of the debtor’s monetary obligations. Seizure constitutes a procedural act, by which both legal (due to the prohibition of disposal) and physical (due to sequestration) attachment of the debtor’s assets is effected, so that the enforcing creditor and any other creditors who may register their claims may be satisfied.
2. What is a Payment Order?
The payment order constitutes an enforceable title and is issued by the court following an application by the creditor — most typically by banks. By means of the payment order, the debtor is ordered to pay to the creditor the manifest monetary debt, which is evidenced by a public or private document. It is to be noted that the issuance of the payment order takes place without an oral hearing in court, nor is the debtor summoned. The principle of the right to be heard is not, however, infringed, since the debtor has the opportunity to file the opposition provided for by law. The payment order is served on the debtor within a deadline of two (2) months from its issuance, in order that the debtor may take notice and mount a defence.
3. What will happen if I do not react immediately when a Payment Order is served on me?
If you do not make use of the legal remedies the law affords you, the creditor will proceed with the seizure of one of your assets and, if any of your real property is already encumbered by a prenotation of mortgage or a mortgage securing the loan, then the seizure will first be levied against that property, in order to satisfy the claim for the amount sought through the Payment Order that has been issued.
4. What can I do if a Payment Order is served on me?
a. Opposition against the Payment Order: The opposition against the Payment Order must be filed within 15 working days from the day following service of the Payment Order on you by a bailiff, and it must be served upon the bank or the fund within the same deadline.
b. Interim measures: The application for suspension must be filed within the same deadline as that for the opposition against the Payment Order, that is, within 15 working days from the day following service of the Payment Order on you by a bailiff, so that the seizure of your real property may not proceed until the issuance of a final court ruling on your opposition.
c. Temporary Restraining Order: Together with the application for suspension, you may submit a request for a Temporary Restraining Order, as it is called, by which the Judge examines and issues a provisional decision on our application for suspension, even on the day following the filing of our application before the competent Court, so that we may immediately have in our hands at least a provisional decision until the issuance of the final ruling on our application for suspension, which will be delivered many months later.
5. What grounds may be invoked for the Opposition to the Payment Order to be upheld?
Grounds of opposition that may be raised include both the absence of formal prerequisites for the valid issuance of the payment order (e.g. the late service of the Payment Order) and the substantive nullity of the payment order, in the sense that the opposing party disputes the existence or amount of the debt, raising defences that defeat or preclude the genesis of the claim of the respondent in the opposition. For example, grounds for the Opposition against the Payment Order may be the non-existence of the claim or of the amount thereof relied upon by the bank or the fund management company, as well as the existence of unlawful and abusive General Terms and Conditions (GTC).
6. What happens once the Opposition against the Payment Order is upheld?
If the Court upholds your Opposition, the Payment Order is annulled and the seizure of your real property cannot proceed.
If, however, no Opposition against the Payment Order is filed, or if it is filed out of time (late filing or late service), then the bank or the fund management company will have to serve the same Payment Order on you again through a bailiff, in respect of which you have a second opportunity to file a timely Opposition against the Payment Order, again within 15 working days, and to have the Payment Order judicially annulled, on the basis of which the seizure and auction of your real property would otherwise proceed. If, again, no judicial action is taken on your part, then the seizure procedures concerning the real property will proceed normally, on the basis of the Payment Order that has been issued.
7. How is the seizure procedure of the real property conducted?
Where the borrower does not file the opposition provided for by law, then the bank may proceed to serve the seizure. This means that an enforcement instruction is given by the debtor’s creditor to the locally competent bailiff, to undertake every act of execution. Seizure takes place through the loss of the power of disposal of the seized real property by the entitled person — the debtor — namely, the impossibility of transferring or selling it.
For the seizure, what is known as the seizure report is drawn up by the bailiff and is served on the debtor. As a rule, the date of the upcoming auction is also stated on the seizure report.
8. Can I do anything to stop the auction?
Against the procedure of compulsory enforcement, from the seizure up to and including the auction procedure, the debtor has, as a means of defence against the creditor, the opposition against the execution, which constitutes the principal defensive right for challenging acts of enforcement. In particular, the debtor has the opportunity to file the above opposition, raising objections against the claim or invoking defects of the compulsory enforcement, from the drawing up of the writ of execution up to and including the publication of the extract of the seizure report.
9. Can I file Interim Measures to stop the auction?
Even at this stage, you may file Interim measures with a request for a Temporary Restraining Order which is issued immediately, and stop the auction of the real property, even two (2) days before the day on which it has been scheduled to take place.
10. What can I do if no Opposition is filed after the seizure, or if it is rejected and the auction of the real property eventually takes place?
If, after the seizure of the real property, no Opposition is filed, or if it is filed out of time, or rejected by court ruling, then the auction of the real property is conducted.
However, even at this stage, if we have objections concerning the creditors and their claims against you, you may file an Opposition against the ranking list of the creditors, as it is called, drawn up by the notary public who conducted the auction, within twelve (12) working days from the service of the ranking list on you by a bailiff.
11. How is the auction of the real property conducted?
The day of the auction (Article 954 para. 2 of the Code of Civil Procedure (KPolD)) is set mandatorily seven (7) months from the day of completion of the seizure, and in any case not later than eight (8) months from that day. Furthermore, today auctions are conducted exclusively by electronic means.
Participants submit successive bids until the deadline for the submission of bids. The prospective bidders are immediately informed by the systems of the amount of their bid, the exact time of its submission, as well as of the highest bid submitted at any given moment. Furthermore, they are informed of any suspension, cancellation or interruption of the auction, as well as of the reason therefor. After the closure of the bidding procedure, the result of the auction is announced through the electronic systems.
Upon award to the highest bidder, namely to the person who submitted the largest bid, the notary public draws up the report of auction and award. Upon payment of the auction proceeds — that is, the price of the real property — a summary of the award report is granted to the highest bidder and the auction procedure is completed.
The auction may be challenged either where it is vitiated due to defects of prior acts, provided of course that those acts had been challenged in a timely manner, or where it is vitiated independently due to defects identified in its conduct. For defects concerning the auction itself and its procedure — for example, defects in the auction report or in the summary of the award report — the debtor may file the opposition against the execution.
The deadlines for filing, however, in this case differ and, pursuant to Article 934 of the Code of Civil Procedure (KPolD), the opposition must be filed within 30 days from the day of the auction or 60 days from the registration of the summary of the award report.
As noted above, the grounds of opposition falling within this deadline may relate to defects and irregularities of the auction itself in its conduct, or to non-compliance with prior formalities thereof which by law have a direct effect upon it. The summary of the award report also constitutes a procedural act of compulsory enforcement, which may be challenged by means of the opposition against the execution.
Apart from filing an opposition, the debtor is afforded the possibility of filing for suspension of the auction pursuant to Article 1000 of the Code of Civil Procedure (KPolD). The said application for suspension must be filed at least fifteen (15) working days before the day of the auction; it is heard under the procedure for interim measures and may suspend the conduct of the auction for up to six (6) months, if it is plausible that a better auction price will be achieved or if it is possible that the debtor will satisfy the creditor.
An indispensable prerequisite is the payment of any costs of the auction’s enforcement and of at least ¼ of the principal owed to the enforcing creditor. This regulation does not concern the validity of the auction procedure; it merely affords the debtor an extension at the final stage of compulsory enforcement, under strict conditions, taking into account, of course, the creditor’s interests.
Finally, the notary public who conducted the auction draws up the report of auction and award, as it is called. The person who has submitted the highest bid and won the real property at auction — known in legal terms as the highest bidder — pays the price and the notary public grants to that person a summary of the award report of the auction.
- See also article Risks of Acquiring Real Property at Auction
- See also article Purchase of Real Property
- See also article Sale of Real Property
- See also article Fraud against Buyers of Real Property by Sellers
- See also article Action for Partition of Real Property
- See also article SYPOTHA – Unauthorised Constructions
- See also article Fines for Unauthorised Constructions
- See also article Annulment of SYPOTHA Decision
- See also article Acquisitive Prescription
- See also article What is the KAEK?
- See also article Prenotation of Mortgage
- See also article Eviction of Tenant
- See also article Professional and Commercial Leases
- See also article Correction of Manifest Error – Unknown Owner – National Land Registry
FREQUENTLY ASKED QUESTIONS ON SEIZURE AND AUCTION OF REAL ESTATE
1. A payment order has been served on me — what do I risk losing?
The payment order constitutes an enforceable title and entitles the bank or the loan management company (fund) to proceed with compulsory enforcement against your assets. If your real property is already encumbered by a prenotation of mortgage or a mortgage for the loan in question, the seizure will, as a rule, first be levied against that property and an auction will follow. You therefore risk losing ownership of your real property, while seizure may also be levied on bank accounts, salaries or other assets. Inaction at this stage significantly limits the defensive remedies the law affords you, which is why immediate action is critical.
2. What can I do to stop the seizure?
You have three tools that are filed in parallel: opposition against the payment order, application for suspension of execution (interim measures), and a request for a temporary restraining order. Through the opposition you challenge the validity of the payment order; through the suspension you request that enforcement does not proceed until a final ruling is issued; and through the temporary restraining order you obtain immediate cover, even on the day following filing. Even at an advanced stage, an opposition against the execution and an application for suspension of the auction (Article 1000 of the Code of Civil Procedure (KPolD)) may be filed, the latter being filed at least fifteen working days before the date set for its conduct.
3. How much time do I have to react legally?
The deadlines are strict. The opposition against the payment order is filed and served on the bank or the fund within fifteen working days from the day following service. If this deadline lapses, a second opportunity arises following a fresh service of the same payment order, with the same deadline. The opposition against the execution is filed within 30 days from the auction or 60 days from the registration of the summary of the award report. The opposition against the ranking list is filed within twelve working days. Lapse of these deadlines results in forfeiture of rights, which is why contact with a lawyer must take place on the very day of service.
4. Which grounds of opposition have prospects of success?
The grounds are divided into formal and substantive ones. Formal grounds include late service, deficient particularisation of the claim, failure to produce the required documents, or lack of jurisdiction. Among substantive grounds, particularly strong arguments are the contestation of the amount of the debt, the erroneous calculation of interest, the existence of abusive General Terms and Conditions (GTC), the nullity of clauses (e.g. Swiss franc clause, compounding of interest, levy under Law 128/1975), as well as the standing of the management company prosecuting the enforcement. Assessment is made on a case-by-case basis, after examination of the loan agreement, the detailed account statements and the bank’s notices of termination.
5. What documents do I need in order to file the opposition?
The following are to be gathered: the payment order as served together with the bailiff’s report of service, the original loan agreement with all addenda, the bank’s notice of termination of the agreement, the detailed statements of the servicing account, any letters notifying assignment of the claim to a fund (notice of securitisation), the writ of payment, and the seizure report if it has been served. In the case of an auction, the summary of the seizure report, the valuation report of the real property and the title deed are also required. The fuller the file, the more targeted the legal strategy that can be shaped.
6. What is the role of the lawyer in this procedure?
The lawyer studies the agreement and the account, identifies abusive clauses and calculation errors, drafts and files the opposition, the application for suspension and the request for a temporary restraining order, represents the client before the Single-Member Court of First Instance and negotiates with the bank or the management company for a settlement or extra-judicial arrangement. The lawyer monitors the deadlines so that no defensive remedies are lost and, at an advanced stage, files an opposition against the ranking list or challenges the auction itself for defects. Our firm handles cases of borrowers against banks and funds on a daily basis, with a focus on saving the principal residence.