Property seizure proceedings are sometimes initiated against a third party who has acquired the encumbered property.
The concept of third-party purchaser
To fully understand how recovery proceedings can be initiated against a third party, it is important to understand the concept of a real guarantee.
A real guarantee, such as a judicial mortgage, a conventional mortgage or a lender's lien, is a guarantee that is not attached to a person, but to a property.
This gives rise to the rule that the guarantee follows the property if it changes hands, which follows from the provisions of article ... of the Civil Code: ...
Example: Company X acquires a plot of building land using a private loan granted by Mr Y. It then carries out a property development operation by building a condominium with 14 condominiums.
As security for his claim, Mr Y has a conventional mortgage over the land parcel.
Company X completes the transaction without reimbursing Mr Y.
When selling the 14 co-ownership lots, the notary failed to ask Mr Y for authorisation to cancel the mortgage registration he held against the cadastral parcel.
Mr Y's mortgage registration, which initially encumbered the cadastral parcel, has been transferred to all the co-ownership lots by application of the rule that the security follows the building wherever it is located.
Mr Y therefore has the option of initiating seizure proceedings against the third-party purchasers, i.e. any of the 14 purchasers of the various co-ownership lots.
Seizure of the property in the hands of the third-party purchaser
In such cases, the provisions of the following articles shall apply:
Article R. 321-4 of the Code of Civil Enforcement Procedures : "The seizure of property initiated by creditors with a right of resale is pursued against the third party purchaser of the property.
Article R. 321-5 of the Code of Civil Enforcement Procedures : "The pursuing creditor shall serve a summons to pay on the principal debtor. The document shall state that the summons to pay equivalent to seizure provided for in the following paragraph shall be issued to the third party purchaser.
The summons to pay in the form of a seizure is served at the instance of the pursuing creditor on the third party purchaser. It includes the information listed in article R. 321-3. However, the warning provided for in 4° is replaced by a summons to fulfil one of the obligations set out in article 2456 of the Civil Code within a period of one month and the reference to the debtor in 6°, 7°, 8°, 12° and 13° is to be understood as referring to the third party purchaser. The summons refers to the provisions of article 2464 of the Civil Code.
Article 2456 of the Civil Code : "Once summoned to pay, and without prejudice to the benefit of discussion provided for in the preceding article, the third party purchaser may :
-or pay,
-purge the building in accordance with the rules set out in the following sub-section,
-or let yourself be seized.
Article 2464 of the Civil Code : "In the absence of the agreement provided for in the previous article, the third party purchaser may, once the sale has been published, purge the property of the right of resale attached to the mortgage.
He must, either before the proceedings or within one month of the first summons to pay made to him, notify the registered creditors of a deed stating that he is prepared to pay the mortgage debts immediately, whether or not they are due and payable, but up to the price stipulated in the deed of purchase or, if he has received the property by gift, up to the value he declares".
Article R. 321-19 of the Code of Civil Enforcement Procedures : "Service of the summons to pay as a seizure on the third party purchaser has the same effect on the third party purchaser as service of the summons to pay as a seizure on the debtor.
If the third party purchaser fails to comply with the summons, the seizure of the property and the sale shall be pursued against the third party purchaser in accordance with the procedures set out in this book.
Two certificates will be issued:
- A summons to pay to the principal debtor, stating that the summons has been issued to the third party holder (article R. 321-5, paragraph 1, above),
- A summons to pay (commandement de payer valant saisie immobilière) to the third party purchaser containing the provisions of the summons to pay (commandement de payer valant saisie immobilière) usually issued to the debtor (article R. 321-3), subject to mentioning the third party purchaser instead of the debtor, and to mentioning articles 2456 and 2463 of the Civil Code.
- Article 2456 sets out the obligations to pay and to allow seizure, and together with article 2464, also mentions the implementation of a purge procedure.
Caution! The summons to pay for the seizure of property must comply with the rules applicable to the service of the summons on a married debtor.
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