Legal Procedures for Seizure and Asset Liquidation

Posted on May 21, 2025 in Law & Jurisprudence

Administration of Seized Assets

Generally, the depositary is responsible for their administration, either temporarily or permanently. The depositary may only carry out administrative acts (maintenance, operation, and repair of the seized goods), and only exceptionally dispose of them, with prior judicial authorization, and only in the following cases:

  1. Movable assets subject to spoilage.
  2. Movable assets prone to rapid deterioration.
  3. Movable assets difficult or costly to store.

The depositary must make available to the court all moneys received in the discharge of their duties (Article 515 of the Code of Civil Procedure). Upon termination of their office, the depositary must account for assets as if they were a guardian or custodian, subject to partial accounts required by the court under Article 514 of the Code of Civil Procedure.

The depositary’s remuneration is determined by the judge after approval of the account rendered by them and enjoys preference for payment (Article 516 of the Code of Civil Procedure). However, compensation is not granted in certain exceptional cases:

  1. When the depositary, responsible for paying garnished wages, has retained the attachable portion before the court.
  2. When the depositary is held liable for willful misconduct or gross negligence.

Compliance with Executive Judgments

Payment of Executive Judgments

An executive judgment is met once it is final or enforceable, or even while an appeal is pending if the executor provides surety for the results (Article 475 of the Code of Civil Procedure). It is satisfied by providing the seized money or due assets to the creditor, or through the settlement of credit and taxation of costs.

Conclusion of Executive Cases

To conclude an executive case, it is necessary to convert seized assets into cash or liquidate them.

Procedures for Liquidating Seized Property

This process consists of several stages:

Valuation of Seized Assets

(Articles 486 and 487 of the Code of Civil Procedure)

The valuation will be based on the assessment roll of the Internal Revenue Service, demonstrated by a certificate issued by that service, without prejudice to the parties’ right to request an expert appraisal.

Setting Auction Date and Time

(Article 488 of the Code of Civil Procedure)

The auction date and time must be announced at least four times through notices in community newspapers. The first notice must precede the auction by at least 15 days. The clerk prepares the notices, which must contain sufficient data for readers to identify the cause and the property values to be liquidated.

Auction Conditions

A document outlining the definition of assets to be liquidated, the date of payment and delivery, the minimum bid, guarantees, and other auction conditions is prepared. It includes the following limitations:

  • The minimum bid cannot be less than two-thirds of the appraised value.
  • The auction price must be paid in cash.
  • Applicants must pay a guarantee to make bids.

Summons to Mortgagees

This procedure must be followed for the purging of mortgages, i.e., the extinction of these guarantees.

Authorization to Dispose of Seized Property

If the property is seized under the jurisdiction of another court, the executor must petition the court to refer the case to that other court office to authorize the sale.

Publication of Auction Notices

(Article 489 of the Code of Civil Procedure)

Once the four publications have been made, they should be recorded in the file, usually via a certificate from the secretary and a clipping from the respective newspapers.

Auction Outcome

Different situations may arise during the auction:

With Bidders:

The judge must qualify the bond of interested parties and then proceed to sale at public auction, starting with the set minimum bid. After the award, a document is drawn up that serves as a public deed for the purposes of Article 1801 of the Civil Code (Article 496 of the Code of Civil Procedure).

Without Bidders (Article 499 of the Code of Civil Procedure):

A creditor may request:

  1. To be awarded the property for an amount equivalent to two-thirds of the appraisal.
  2. Or, for the court to prudently reduce the minimum bid (it cannot be reduced by more than one-third) and proceed to a new auction.

If there are still no bidders for the second auction at two-thirds of the new appraisal, the creditor may request:

  1. To be awarded the property at the minimum value.
  2. Or, to bring the property to auction a third time at a price determined by the judge.
  3. Or, for the goods to be delivered to the creditor in lieu of payment (dation in payment).