The effects of a summons to pay in the form of a seizure on the debtor

The effects of the summons to pay in the form of a seizure on the debtor, the third party purchaser and third parties are described in article R. 321-13 of the Code of Civil Enforcement Procedures, which states that "The unavailability of the property, the seizure of its fruits and the restriction on the debtor's rights of enjoyment and administration run with regard to the debtor from the date of service of the summons to pay in the form of a seizure.

These effects apply to third parties from the date of publication of the summons.

Where an agreement has been entered into prior to publication of the summons by the distrainee debtor in breach of the effects attached to service of the summons, it shall be declared null and void by the court at the request of the other party to the agreement.

The articles in this section will therefore deal successively with the question of the effects of a summons to pay in the form of a seizure of property on the debtor, on the third-party purchaser and, finally, on third parties.

Unavailability of the property

The first effect of the summons is to render the property unavailable. This has three consequences, namely the nullity of acts of disposal, the (theoretical) unenforceability of leases, and the need to obtain the authorisation of the enforcement judge to dispose of the property.

Nullity of acts of disposition

Article L. 322-1, paragraph 1, of the French Code of Civil Enforcement Procedures states that "The assets are sold either out of court by judicial authorisation or by auction.

Article L. 311-3 of the French Code of Civil Enforcement Procedures states that "Any agreement to the effect that the creditor may sell the debtor's immovable property without following the procedure prescribed for the seizure of immovable property is null and void.

Lastly, article L. 321-2 of the Code of Civil Enforcement Procedures provides that "The act of seizure renders the property unavailable and restricts the seized person's rights of enjoyment and administration.

Subject to the provisions of article L. 322-1, the latter may not dispose of the property or encumber it with rights in rem.

Unless the property is rented, the garnishee is constituted as the receiver unless circumstances justify the appointment of a third party or the eviction of the debtor for serious reasons.

Acts of disposal are acts by which the debtor disposes of his property, e.g. a deed of sale, gift, etc. The debtor may not sell, give away or encumber his property with real rights. In other words, the debtor may not sell, donate or encumber his property with real rights.

The unenforceability of leases

Article L. 321-4 of the French Code of Civil Enforcement Procedures states that "Leases granted by the debtor after the act of seizure are not enforceable against the pursuing creditor or the purchaser, regardless of their duration.

Any means may be used to prove that the lease has been in force for a longer period.

In addition to the debtor, article R. 322-64 of the Code of Civil Enforcement Procedures refers to any occupier of the debtor's property who does not have any rights enforceable against the successful bidder: "Unless the terms and conditions of sale provide for the distrainee debtor to remain on the premises, the successful bidder may enforce the eviction order that he has against the distrainee and any of his occupants who do not have any rights enforceable against him from the time the price is paid or deposited and the taxed costs are paid.

It should therefore be considered that, in the case of a property seizure, a lease entered into prior to service of the summons to pay in lieu of seizure may be enforced against the successful bidder, whereas a lease entered into after such service may not be enforced on the grounds that it was entered into in breach of the rule of law relating to the unavailability of the property.

However, the Court of Cassation has tempered this rule in an extremely important way, ruling that "the delivery of a summons to seize the property does not prohibit the conclusion of a lease or the tacit renewal of a lease previously concluded, and that the lease, even concluded after the publication of such a summons, may be set up against the successful bidder who was aware of it before the auction". (Cass. civ., 2nd, 27 Feb. 2020, no. 18-19.174, published in the Bulletin).

With this position, the Court of Cassation reiterates its established case law, the reasons for which are set out below (Civ. 3e, 15 January 1976, no. 74-13.676; Civ. 3e, 11 February 2004, no. 02-12.762; Civ. 3e, 23 March 2011, no. 10-10.804, Civ. 3e, 9 June 2016, no. 15-10.595).

It directly contradicts Article 4 of the General Provisions of the Terms and Conditions of Sale relating to seizures, the second paragraph of which states that "leases granted by the debtor after delivery of the summons to pay in the event of seizure are not enforceable against the pursuing creditor or the purchaser"..

If the successful bidder wishes to evict a tenant whose lease was signed after the summons was served, he will have to prove that he was unaware of the existence of the lease.

If, on the other hand, the lease is not enforceable against the successful bidder, then the latter may rely on the provisions of articles L. 322-13 and R. 322-64 of the Code of Civil Enforcement Procedures. As the second of these two texts has been cited above, we will only repeat the first: "The auction judgement constitutes a writ of eviction against the distrainee.

Be that as it may, the case law of the Cour de cassation has had the effect of shifting the cursor: whereas it seemed necessary, in order to decide the question of the enforceability of the lease, to identify the date on which it was concluded (before or after the summons), it is now necessary to analyse the information provided to the successful bidder (whether or not he was informed of the existence of the lease).

Authorisation from the judge

Article R. 321-15, paragraph 2, of the Code of Civil Enforcement Procedures states that "If the circumstances justify it, the execution judge may, at the request of the pursuing creditor or the debtor, authorise the performance of certain acts on the seized property.

The unavailability of the property, if left unchecked, could have disproportionate consequences. The legislator has therefore reserved to the enforcement judge the possibility of authorising the debtor to carry out certain acts of disposal.

In practice, the authorisation of the enforcement judge will be sought at the orientation hearing.

Example: A property seizure is initiated against a villa to recover the sum of €3,000.00. The debtor asks the judge for authorisation to divide the land on which the villa stands so that only part of it can be sold, in order to pay off the pursuing creditor from the sale price of this parcel. As the division of the land is a disposal act, it requires the authorisation of the enforcement judge.

Seizing fruit

Article R. 321-16 of the Code of Civil Enforcement Procedures :

"The fruits immobilised from the date of service of the summons to pay valid as seizure are distributed with the price of the immovable in the same order as the distribution of the latter.

Article R. 321-17 of the Code of Civil Enforcement Procedures :

"The pursuing creditor may authorise the distrainee to sell the fruits out of court or, with the authorisation of the enforcement judge, may himself proceed with the cutting and sale of the fruits, which will be sold by auction or by any other means within the period set by the judge.

The price is deposited with the receiver appointed by the pursuing creditor or consigned to the Caisse des dépôts et consignations.

Article R. 321-18 of the Code of Civil Enforcement Procedures :

"The pursuing creditor may, by bailiff's deed, prevent the tenant from paying the rent and lease payments into the hands of the debtor and require him to pay them into the hands of a receiver designated by him or to deposit them at the Caisse des dépôts et consignations.

In the absence of such opposition, payments made to the debtor are valid and the debtor is the receiver of the sums received.

The debtor is the receiver of the fruits. However, sequestration of the fruits may lead to their deterioration. For this reason, the aforementioned article R. 321-17 allows the pursuing creditor to authorise the sale of the fruits, or to sell the fruits himself with the authorisation of the enforcement judge.

The debtor is the receiver of the sums, but the pursuing creditor may oppose payment of the rent and lease payments and order them to be deposited in the hands of a receiver by a bailiff.

In practice, the receiver of the sums arising from the property seizure procedure is appointed when the conditions of sale are filed. Rents and rents may therefore be deposited with a different receiver. This solution is obviously not recommended, and it would be simpler to appoint the same receiver.

Caution! Article L. 321-16 of the French Code of Civil Enforcement Procedures states that "The act of seizure of an immovable shall entail seizure of its fruits, except for the effect of an earlier seizure.

The pursuing creditor who knows that a tenant is occupying the seized property will therefore have an interest in seizing the rent from the tenant who is benefiting from a seizure-attribution procedure with successive execution before initiating the property seizure procedure. This will prevent the rents from being included in the basis of assessment for the distribution of funds and, consequently, prevent them from being shared with the other registered creditors.

Conversely, a creditor who is unaware of the presence of a tenant on the premises before the descriptive report is drawn up will have to oppose payment of the rent and will see the rent incorporated into the basis of assessment for the distribution of the funds.

When a property is repossessed as a rental investment, the loan used to finance its acquisition is often forfeited as a result of unpaid rent.

Restrictions on rights of use and administration

Article L. 321-2 of the Code of Civil Enforcement Procedures :

"Unless the property is rented, the distrainee is constituted sequestrator unless circumstances justify the appointment of a third party or the eviction of the debtor for serious cause.

Article R. 321-15, paragraph 1, of the Code of Civil Enforcement Procedures :

"Unless his eviction is ordered, the debtor retains the use of the seized property provided that he does not perform any material act likely to reduce its value, on pain of damages and without prejudice, where applicable, to the penalties provided for in article 314-6 of the French Criminal Code.

The seized debtor may enjoy the property, but may not reduce its value, on pain of damages and criminal prosecution.

The text does not specify whether these damages may be awarded by the enforcement judge.

• Read also : the jurisdiction of the enforcement judge

Example: property seizure proceedings are initiated against a townhouse. The seized debtor, a bricklayer, saws the roof beams, which collapse after the summons has been issued for the orientation hearing and the conditions of sale have been filed, setting the upset price.

The value of the property has deteriorated and it seems impossible to sell it for more than the upset price. The pursuing creditor can no longer proceed without taking considerable risks, since a lack of bids could result in the property being included in his estate.