Auction Procedures in Legal Enforcement
October 13, 2009
Compliance Enforcement
If a judge issues a compliance order (interlocutory sentence), the performing party, not the executive, may appeal. If the judge decides otherwise, it leads to execution and attachment. The execution will only be heard to raise exceptions. If transfer grants opposed to the performer are resolved, the judge decides if the case goes to trial. After sentencing the exceptions, if execution is refused and seizure occurs on money or specific assets, the sentence shall order the surrender of the assets or sum of money to the performer. If assets other than money or a specific item are seized, the implementation process and auction proceed. If the execution is not contested within the statutory deadline, it becomes final, leading to execution and seizure warrant.
The sentence may order payment or auction.
- Payment is ordered when the embargo is on a specific item or sum of money. Once ordered, the performer receives the item or the credit is liquidated, costs are taxed, and payment is arranged from the seized funds deposited in the court’s account. If the decision is rejected due to enforcement exceptions, the court may order specific delivery or payment of the attached sum, provided the performer provides security to guarantee restoration if the host appeals. If an appeal is filed under Article 773 CPC subdivision 1, delivery or payment may be suspended until compliance is impossible, such as in cases of nullity of marriage or involving a minor. Otherwise, there is no impediment to payment under Article 773 paragraph 2 CPC, except when the enforced party appeals and demands a guarantee of results.
- Auction Sentencing proceeds even if final and executory, following urgency procedures. Resources are not deducted against suspending the sentence, but the realization process is more complex than payment sentencing. The legislature requires several steps to obtain payment through auction and compromise.
Procedures for Obtaining Payment with Auction Sentencing
1. Embargoed Goods Without Auction
- Movable property subject to corruption or deterioration, or whose retention is difficult or expensive, can be sold without prior assessment but with court approval, as per Article 483 CPC.
- Trade effects, as per Article 484 CPC, are sold by a court-appointed broker due to their daily transaction value.
2. Goods Auctioned Publicly
Attempt: A procedural legal act where seized assets are forcibly sold to the highest bidder by court order.
Movable Assets: Sold by an auctioneer appointed by the court upon the performer’s request (Article 482 CPC). The auctioneer sets the date and time, publishing notices. Proceeds are deposited into the court’s account. If the sentence is not enforceable, the money remains in the account pending appeal, provided the performer guarantees its return. Other assets like real estate and intangibles follow a different process under Article 485 CPC.
Procedures for Conducting the Auction (Article 485 CPC – Real Estate)
1. Taxation (Article 486 CPC)
Real estate pricing is based on the assessment roll for land tax. This can be challenged by the run, requesting a new appraisal. The player submits a statement with the fiscal value. A counter-request for expert appraisal can be made under Article 414 CPC. Experts submit a report, parties have 3 days to object. If challenged, the court decides. The court can determine the appraised value (Article 487 CPC), and resolutions are final. For other property, expert valuation is always required.
2. Establishing Auction Bases (Article 491 CPC)
After appraisal approval, the auction date and time are set. Auction bases include:
- Minimum positions
- Payment method
Article 491 CPC:
- Payment is in cash unless otherwise agreed or decided by the court.
- Other bases include minimum positions and deposit requirements (at least 10% of assessed valuation, Article 494 CPC).
3. Setting Date and Time (Article 489 CPC)
The court sets the date and time, advertising four times in a local newspaper. Notices must be 15 days prior to the auction. If the property is in another municipality, notice is also published there. The court clerk certifies the publication. Omission of any advertising action voids the auction.
4. Citing Mortgagees (Article 492 CPC and 2428 CC)
Mortgagees are summoned and paid from the auction proceeds according to their priorities. If a subsequent mortgagee pursues the property, preferred creditors can claim payment from the auction price or maintain their mortgages. Failure to respond within the notice period implies opting for payment from the auction proceeds.
5. Authorization from Other Courts
If assets are repossessed by multiple courts, authorization is required to validate the auction.
6. Qualifying Securities or Bonds
The court must qualify the seriousness bond (minimum 10% of assessed valuation).
Once procedures are completed, the auction is held at the court or the appropriate court based on the property’s location. The auction starts at the minimum position and ends at the highest bid. The creditor can attend without bail. Minutes are recorded, signed by the judge, secretary, and auctioneer. An extract is added to the file. This constitutes the sale contract. Within three days, a deed of sale is issued before a notary. The auctioneer acts as the buyer unless representing a third party. The buyer can then register the property. The court can lift embargoes and cancel mortgages upon request.
(Class Assistant)
Third Party in Possession
A third party can intervene in a lawsuit, claiming possession and requesting the embargo be lifted if the seized goods were in their possession. The Supreme Court recognizes this but requires proof of possession. The third party must prove an error in the embargo. If the debtor’s assets are seized, the lien is legitimate. If a third party claims ownership, they must file a third-party domain claim.
Third Party in Possession and Seizure
The general right of pledge allows creditors to enforce obligations by seizing the debtor’s assets. The judge issues a warrant of execution. The executive trial unfolds in two notebooks:
- Executive Notebook: The debtor is required to fulfill the obligation.
- Urgency Notebook: Ensures compliance through asset seizure.
Situations at the Time of Arrest
- Seizure of debtor’s assets at their home.
- Seizure of a third party’s assets at the debtor’s home.
- Seizure of a third party’s assets at their home.
- Seizure of debtor’s assets at a third party’s home.
Situations (a) and (d) are straightforward. In (b), the embargo is legitimate unless proven otherwise. In (c), a rapid procedure is needed for the third party’s defense.
Requirements for Filing Third Party in Possession
- The embargo has been locked.
- The measure was charged on goods possessed by a third party.
- The seizures were not in the debtor’s possession at the time.
Legal Nature of Third Party’s Possession
This is an incidental matter to redress injustice to third parties, handled by a special judge.
Requirements for Third-Party Demand
- Common requirements (Article 254 CPC).
- Copies for all notified parties.
- Content and processing details, including sponsoring agent and lawyer.
- Clear factual arguments and requests.
Exceptions and Defenses
Within three days of notification, the performer and executor can present legal and factual observations.
Resolution for Third Party
The court decides within three days based on proof of possession.
Consequences
- If possession is proven, the embargo is lifted.
- If not proven, the incident is rejected.
The resolution is an interlocutory decision, subject to appeals.
Regarding the Embargo
Article 456 CPC allows extending the embargo to third-party dues.
Appointment of the Depositary
A third party or creditor can contest payment with proceeds from seized assets.
Third Party Payment
A third party can claim rights to edicts of performing if the debtor lacks other assets.
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