The seizure of jointly-owned property is a complex legal situation that raises many questions. Whether a property is the result of an inheritance, a divorce or a joint purchase, its ownership rights are shared between several people, known as co-owners. This has a direct impact on creditors' rights. Given the complexity of these procedures, it is essential to call on a competent lawyer to defend your best interests. Depending on the nature of the debt, the law imposes very different procedures for selling the property and obtaining payment of the sums owed.
The entire system is based on a fundamental distinction between the joint ownership creditor and the personal creditor of one of the joint owners. This difference determines the procedural route to be followed: direct seizure of property or, more indirectly, initiating an action for partition leading to a forced sale by auction. Our firm will explain the key points you need to know to navigate the legal framework of joint ownership.
The principle: crucial distinction between undivided creditors
To understand how undivided property can be seized, it is essential to refer to article 815-17 of the Civil Code. This article establishes a fundamental difference in treatment between two types of creditor, each with its own prerogatives. The nature of the claim, whether common to all joint owners or personal to just one, dictates the applicable procedure.
Joint-ownership creditors: a right of seizure on the common property
The first category of creditors is those whose claim arises from the conservation or management of the undivided property. These may include debts relating to co-ownership charges, unpaid property tax, a joint administrative debt or the financing of work needed to maintain the building or flat. These creditors are considered to be creditors of the undivided estate itself, as their claims are linked to the proper management of the property. As such, article 815-17 of the Civil Code gives them a direct and powerful right of action: they can pursue the seizure and sale of the undivided property in its entirety, as if it belonged to a single owner. The undivided property constitutes their joint lien, and they can take action against all the co-owners, who are jointly and severally liable for these debts.
The undivided co-owner's personal creditors: a limited right to partition
The second category concerns creditors whose claim is specific to only one of the co-owners. This debt is unrelated to the management, use or conservation of the property (a consumer credit, a professional debt, etc.). In this case, the law protects the other co-owners and limits the creditor's right to take legal action. A personal creditor cannot seize the whole of the property, which is not his pledge, or even the abstract share of his debtor. His rights are more limited: he must bring about the division of the undivided property so that his debtor's share can be converted into a sum of money from which he can make payment. To do this, he uses a specific procedure called the action oblique, in which he acts on behalf of his debtor to exercise the latter's right to request partition.
Case 1: Seizure of undivided property (undivided creditor)
When the debt is shared by all the joint owners, the procedure applicable is that of seizure of property under ordinary law. This is a compulsory execution measure that allows a property to be sold to pay off a debt. This is the most direct route, but its implementation is subject to strict conditions.
Prerequisite: a writ of execution against all undivided co-owners
A creditor may only initiate a seizure of property if he holds a enforcement order establishing a claim that is certain, liquid and due against all co-owners. A writ of execution is a legal document (usually a judgment or notarial deed) that authorises compulsory execution. Without this valid title against each undivided owner, the direct attachment procedure is impossible. This requirement guarantees that all owners are bound by the same payment obligation.
Procedure: from payment order to sale
Once the writ of execution has been obtained, the property seizure procedure takes place in several key stages, supervised by the enforcement judge:
- Summons to pay in lieu of seizure The creditor's lawyer has a court commissioner serve a summons to pay on each undivided co-owner. The main effect of this act is to render the property unavailable.
- Publication of the order The purchase order is published in the Land Registry so that it can be enforced against third parties. This publication is an essential formality that ensures the legal certainty of the transaction.
- The summons to the orientation hearing The undivided co-owners are summoned to appear before the execution judge. It is at this hearing that any disputes are settled and the judge decides on the direction of the proceedings: either towards an amicable sale if an agreement is reached, or towards a compulsory sale.
- The sale If a compulsory sale is ordered, the property is sold by public auction at an adjudication hearing. The sale price is then deposited and distributed among the creditors.
Case 2: Sale by auction (personal creditor of an undivided co-owner)
When the debt concerns only one joint owner, the creditor must take a more indirect and often longer route: sale by auction. This is not an enforcement measure in the strict sense, but the creditor's exercise of a right belonging to the debtor.
The mechanism of the oblique action to bring about judicial partition
This procedure is based on the legal adage that "no one is forced to remain in joint ownership". Each undivided co-owner has the right to request partition at any time. If an undivided co-owner neglects to exercise this right, thereby depriving the creditor of the possibility of recovery, the creditor can take the place of the undivided co-owner by means of an action oblique, a civil procedural mechanism provided for under French law. The creditor simply exercises the debtor's right to partition. The aim is not to seize an asset, but to force its sale so that the undivided co-ownership situation ceases and the shares are converted into capital.
Stages of the procedure leading up to the sale by auction
The auction-division procedure is conducted before a court and comprises several distinct phases:
- Obtaining a writ of execution against the debtor alone The creditor must first obtain a judgment ordering the sole debtor to pay the amount due.
- Summons for partition-licitation With this title, the creditor, acting as a de facto intermediary, sues all the co-owners (and not just the debtor) before the court for an order to divide the undivided property and, if the property cannot be divided in kind, to sell it by auction.
- Judgment ordering the sale The court rules on the application for partition. If it grants the request, it orders the auction and appoints a notary to supervise the operations and draw up the specifications.
- Sale by auction (licitation) The sale then takes place at public auction, at the bar of the court. Partition has a declaratory effect: it does not create a new right but establishes the full ownership of each undivided co-owner in the funds allocated to him. It is from the share that belongs to the debtor that the creditor will ultimately be able to recover its claim.
The central role of the enforcement judge (jex) in the procedure
In both scenarios, a magistrate plays a decisive role: the enforcement judge, or JEX. Specialised in enforced debt collection, he is responsible for ensuring that the property seizure procedure runs smoothly and that the rights of all parties, creditor and debtor, are protected.
Exclusive jurisdiction and the role of the judge
The JEX has exclusive jurisdiction to rule on all difficulties relating to enforceable titles and disputes arising in connection with the seizure of property. He can rule on the validity of the procedure, the legality of the payment order or the amount of the debt. However, there are limits to his role: he cannot change the substance of the writ of execution. His role is to ensure that the enforcement is carried out in accordance with the legal rules, and not to review the judgment that condemned the debtor.
The orientation hearing: a decisive stage for the foreclosed property
The orientation hearing is the key moment in the property seizure procedure. It is during this hearing that the JEX, after hearing the arguments and using its discretionary powers, takes a fundamental decision for the future of the property. It checks the validity of all the procedural documents and ensures that the creditor has a valid enforcement order. It rules on any disputes raised by the debtor. At the end of the debates and in the light of the arguments put forward, he has two main options: either he authorises the amicable sale of the property by the debtor himself, under his supervision and within a set time limit, or he orders the forced sale by public auction (adjudication).
Angles of expertise: complex cases and points to watch out for
The seizure of an undivided property may come up against specific legal situations that complicate or even paralyse the procedures. These cases, which are often overlooked, require in-depth analysis to anticipate obstacles and protect the rights of the parties.
Seizure in joint ownership and collective proceedings (safeguard, liquidation)
The opening of collective proceedings (safeguard, receivership or liquidation) against an undivided co-owner has a major impact. The opening of insolvency proceedings results in the suspension of individual proceedings by personal creditors. This means that a personal creditor can no longer bring an action for licitation-partage against a debtor, such as a company director, who is being wound up by the court. Only the liquidator is entitled to act on behalf of all creditors. On the other hand, joint creditors retain their right to seize the undivided property, as their claims are not affected by the insolvency proceedings of just one of the owners. For a more detailed analysis, see our guide tointeraction of undivided assets with insolvency proceedings.
Protection of the assets of the sole trader (unseizability)
Since the law in favour of self-employed professional activity of 14 February 2022, the assets of sole traders have been split into two. One set of business assets, made up of assets used in the business, and one set of personal assets. As a matter of principle, the principal residence of the sole trader cannot be seized for business debts. This protection of the family home is automatic and applies even if the property is jointly owned. In addition, there are mechanisms for protection of the assets of the sole trader which can make other non-business property exempt from seizure upon declaration. These arrangements, which require the creation of separate business assets or the drafting of a notarised declaration, are enforceable against business creditors and must be taken into account before any legal action is taken.
Prescription of claims: a crucial point often overlooked
Holding an enforceable title is not an eternal guarantee. A claim, even one established by a judgment, is subject to a limitation period. In the case of debts arising from mortgages granted to consumers, for example, recovery action is time-barred after two years. The starting point of this period is often difficult to determine (date of the first payment incident that has not been regularised, expiry of the term, etc.) and is the subject of a great deal of case law, particularly from the Cour de cassation. A careful analysis of limitation periods, in the light of current legal developments, is therefore an essential step to avoid incurring significant legal costs.
FAQ: Frequently asked questions about the seizure of undivided property
The complexity of seizure procedures for jointly-owned property raises a number of recurring practical questions. Here are clear answers to some of them.
What are the tax implications of seizing undivided property?
The tax consequences vary depending on whether the sale is amicable or forced. In the case of a sale, transfer duties are payable by the purchaser. If the sale puts an end to indivision, it may be treated as a partition and qualify, subject to conditions, for partition duty at the reduced rate of 1.10 % (from 1 January 2022) on the shared net assets, rather than standard sales duty (approximately 5.80 %). The question of VAT may also arise for certain assets. Lastly, the capital gain realised on the sale will be taxed for each joint owner according to his or her share and personal situation.
What is the role of the notary in an amicable sale authorised by the court?
When the Enforcement Judge authorises an out-of-court sale, the notary intervenes to prepare and authenticate the deed of sale. However, his role is governed by the court decision. He must ensure that the conditions set by the judge (in particular the minimum price) are met. His main responsibility is to guarantee the legal security of the transaction, to ensure that the sale price is deposited with the Caisse des Dépôts et Consignations, and to ensure that the sale complies with the ruling. In the event of a dispute between the joint owners, it is up to the JEX to decide, with the notary acting as an intermediary and executor of the court order.
Is it possible to contest the reserve price set for the auction?
Yes, the upset price set by the pursuing creditor can be contested by the debtor. This challenge must be raised at the orientation hearing before the Enforcement Judge. The debtor must demonstrate that the amount proposed is "manifestly insufficient" in relation to the real market value of the property. If it considers the dispute to be well-founded, the JEX itself has the power to set a new price that is more in line with the market. This approach is essential to protect the debtor and limit the risk of a sale at a derisory price that would not enable the creditors to be paid while maximising any remaining balance.
Conclusion: seizing an undivided property, a possible but restricted action
It is therefore possible to seize an undivided property, but the procedure to be followed is strictly dictated by the nature of the debt. The creditor of all the undivided co-owners can take recourse to the classic seizure of property, while the creditor of a single undivided co-owner must initiate an action for licitation-partage. For this reason, the implementation of each procedure has its own stages and complexities, supervised by the judge. In addition, specific situations such as insolvency proceedings, the unseizability of the entrepreneur's assets or the statute of limitations on the debt may prevent recovery. The involvement of a court officer who is up to date with the latest legislation ensures that the sale takes place under the best possible conditions for all parties and in compliance with the legal framework. For an in-depth analysis of your situation and tailored advice, please contact contact our firm.
Sources
- Civil Code (articles 815-17 et seq.)
- Code of civil enforcement procedures
- Commercial Code (provisions relating to insolvency proceedings and sole traders)
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