Limitation periods applicable to property seizures

The statute of limitations is a major issue in property seizure proceedings. It is essential for both creditors and debtors to understand the mechanisms for interrupting and suspending the statute of limitations and their effects over time. This particularly technical area of litigation requires an in-depth knowledge of civil procedure and the specific rules applicable to the compulsory sale of real estate.

Interruption of the limitation period

The prescription interruption stops the time counter and restarts it at zero after the interruptive event. In other words, after an interruption, the time limit is restarted in its entirety.

Acts interrupting the statute of limitations

There are two main acts that interrupt the statute of limitations in property seizure proceedings:

1. Summons to pay in lieu of seizure of property interrupts the limitation period pursuant to Article 2244 of the Civil Code, which states: "The limitation period or the period of foreclosure is also interrupted by a protective measure taken in application of the Code of Civil Enforcement Procedures or an act of forced execution.. This is the starting point of the lawsuit.
2. The summons to the orientation hearing also interrupts the limitation period, as indicated in Article 2241 of the Civil Code : "An application to the courts, even in summary proceedings, interrupts the limitation period and the period of limitation.. This position was clearly affirmed by the Court of Cassation in its ruling of 1 March 2018 (Cass. civ 2, 1 March 2018, no. 17-11.238, F-P+B).

In this decision, the Second Civil Chamber added that "the provisions of article 2241, paragraph 2, of the Civil Code do not apply to acts of forced execution".. This means that an action brought before an incompetent court or a writ of summons that is annulled due to a procedural defect has no effect in interrupting the statute of limitations. This particularity gives rise to numerous appeals, as the annulment of a summons could result in the debt becoming time-barred if too much time has elapsed.

The duration of the interruptive effect

Article 2242 of the Civil Code states that "The interruption resulting from the application to the court shall have effect until the proceedings are terminated.

In an opinion dated 16 May 2008 (no. 08-00.002), the Court of Cassation stated that "the seizure of property and the distribution of the purchase price are two phases of the same procedure".. This fundamental principle was reaffirmed in the judgment of 2 March 2023 (no. 20-20.776), which states that "The proceedings initiated by the referral to the enforcement judge at the orientation hearing are terminated only when the enforcement judge can no longer be seised of a dispute relating to the seizure of property.

Case law has therefore clarified this rule of law, which was necessary given the numerous debates on the subject.

Suspension of the limitation period

Unlike interruption, suspension merely temporarily freezes the time limit, which resumes where it left off once the cause of suspension has disappeared. The time limit therefore continues to run after the end of the suspension, but is not restarted.

The main grounds for suspension in the case of seizure of property are :

• Initiating over-indebtedness proceedings : under article L. 722-2 of the French Consumer Code, "The admissibility of the claim suspends and prohibits enforcement proceedings against the debtor's assets...".
• Guiding judgment authorising out-of-court sale : Article R. 322-20 of the Code of Civil Enforcement Procedures states that "The decision granting the application suspends the course of the enforcement proceedings, with the exception of the period allowed for registered creditors to declare their claims. This request is generally made by the debtor's lawyer at the hearing.
• Initiation of collective proceedings : in accordance with Article L. 622-21 of the French Commercial Code, which states that "the opening judgment stops or prohibits all enforcement proceedings..."..

There are other possible grounds for suspension, such as actions brought by third-party holders claiming to have rights in the property being pursued.

The end of the interruption

In its ruling of 2 March 2023 (no. 20-20.776), the Court of Cassation established precisely when the effect of interrupting the limitation period ends, depending on the different configurations:

"It follows that the effect of interrupting the statute of limitations in proceedings for the seizure of real property continues either until an order approving the project or the agreement to apportion the sale price of the property, or until a statement of apportionment drawn up by the judge, or, where there is only one creditor meeting the criteria of article L. 331-1 of the Code des procédures civiles d'exécution, the expiry of the fifteen-day period following notification of payment or, where applicable, until the date of the decision ruling on the challenge made within this period.

This clarification was necessary because until now there had been many doubts about the date on which the interruptive effect came to an end.

The difference between expiry, lapse and dismissal

These three mechanisms bring the foreclosure proceedings to an end in different ways:

1. The expiry of the commandment occurs if no judgement recording the sale is published within five years of its publication (article R. 321-20 of the Code of Civil Enforcement Procedures). This period was extended from two to five years by Decree no. 2020-1452 of 27 November 2020. This significant reform gives the pursuing creditor more time to complete the procedure.
2. Lapse strikes the summons when certain formalities are not completed within the prescribed time limits (article R. 311-11 of the Code of Civil Enforcement Procedures), such as :
   • Publication of the summons within two months of service
   • Notification to registered creditors within five days of the summons
   • Filing the conditions of sale within five days of the summons
   The Court of Cassation ruled that "the lapse of a summons to pay in the form of a seizure of property, which retroactively deprives it of all its effects, affects all the acts of the seizure procedure that it initiates". (Civ. 2e, 19 February 2015, no. 13-28.445). The release may then be requested by the party concerned.
3. The unsuccessful applicant results from a judgment that rejects the creditor's claim on substantive grounds. For example, if the statement of claim is disputed and the court considers that the loan has already been repaid, the creditor's appeal may be dismissed.

Prize distribution

The price distribution phase is governed by articles L. 331-1 et seq. of the Code of Civil Enforcement Procedures. It enables the funds held by the bâtonnier as receiver to be disbursed.

In its ruling of 2 March 2023, the Court of Cassation drew an important distinction:

• Where there is more than one creditor, the interruptive effect ends either with the order approving the proposed distribution (article R. 332-6 paragraph 2 of the Code of Civil Enforcement Procedures), or with the final order (article R. 333-3 of the same code);
• In the case of a single creditor, the interruptive effect ends on expiry of the fifteen-day period following notification of payment to the debtor (articles R. 332-1 and R. 311-5 of the Code of Civil Enforcement Procedures), or on the date of the decision settling any dispute.

In a ruling dated 8 January 2015 (no. 13-27.631), the Court of Cassation had already stated that "the effect of interrupting the statute of limitations attached to the summons for the purposes of seizure of the property continues until the seizure of the property is abandoned, the order is closed or the price is distributed"..

Sources

• Civil Code (articles 2241, 2242, 2244)
• Code of civil enforcement procedures (articles L. 331-1, R. 311-5, R. 311-11, R. 321-20, R. 322-20, R. 332-1, R. 332-6, R. 333-3)
• Consumer Code (article L. 722-2)
• French Commercial Code (article L. 622-21)
• Cass. civ 2, 1 March 2018, no. 17-11.238
• Cass. civ, 2 March 2023, no. 20-20.776
• Cass. civ, 8 January 2015, no. 13-27.631
• Cass. civ 2e, 19 February 2015, no. 13-28.445
• Notice no. 08-00.002 of 16 May 2008
• Decree no. 2020-1452 of 27 November 2020