It is sometimes necessary for joint owners' associations faced with chronic non-payment to resort to a seizure of property procedure. This complex procedure has a number of important specific features when used in the context of co-ownership.
I. Conditions precedent to the initiation of seizure proceedings by the trade union
Authorisation from the General Meeting
Before initiating a property seizure procedure, the syndic must obtain the express authorisation of the general meeting of co-owners.
The minutes of the General Meeting must clearly state :
- Authorisation to initiate seizure proceedings
- The precise designation of the batch concerned
- The identity of the defaulting co-owner
The absence of proper authorisation exposes the syndicate to a plea of non-receivability within the meaning of article 122 of the Code of Civil Procedure. However, this irregularity may be rectified during the proceedings by a subsequent decision of the general meeting.
Setting of the upset price by the General Meeting
The minutes must also set the amount of the upset price for the lot in question.
If no bids are received, the pursuing creditor is declared the successful bidder for the amount of the reserve price (article R. 322-47 of the Code of Civil Enforcement Procedures).
To prevent the syndicat des copropriétaires from ending up owning the property for too much money, we recommend that you set the asking price at around a quarter of the property's real value.
Furthermore, if the sale price is too high and the syndicate is declared the winning bidder, it becomes indebted to the co-owner, to whom it must pay the sale price. If the sale price is higher than the claim, the syndicate may become indebted to the former owner.
II. The trade union's double role: pursuing creditor and registered creditor
Sometimes the syndicate obtains a new writ of execution during the course of proceedings, even though a property seizure has already been initiated by another creditor. In this situation, it may be in the interests of the syndicate to publish a judicial mortgage to secure the new writ of execution.
In this situation, the syndicate can intervene in the proceedings as a registered creditor by making a declaration of claim.
This often happens when the syndicate of co-owners, faced with chronic unpaid debts, has to initiate both recovery proceedings for judgments it already has and proceedings on the merits to obtain new judgments.
III. Subrogation in legal proceedings
Legal mechanisms of subrogation
The article R. 311-9 of the Code of Civil Enforcement Procedures allows registered creditors to request subrogation in the rights of the pursuing creditor. This is necessary when the pursuing creditor abandons the proceedings, generally because he has been paid.
The application for subrogation must be made by way of pleadings before the enforcement judge. The judgment granting the application replaces the subrogated creditor in all the rights and obligations of the original debtor.
Specific cases involving the syndicate of co-owners
The union wishing to submit a subrogation request may then be faced with a difficulty.
The syndicate of co-owners, which intervenes in the proceedings as a registered creditor, does not necessarily have on file the minutes of the general meeting setting a price and authorising the seizure of the property.
In this case, if the pursuing creditor withdraws, the trustee will not be authorised to resume the proceedings on behalf of the condominium association.
Furthermore, if this authorisation has been given, but the pursuing creditor has set a higher price than that authorised by the general meeting, the trustee will once again be blocked.
V. Practical advice for trustees and union councils
We usually recommend that our trustee clients and the lawyers we train :
- Favour realistic bids that are close to the amount of the claim: this way, the lack of bids will not put the co-owners' association into debt
- Check carefully that the authorisation of the general meeting is in order: the seizure of property must not become a colossus with feet of clay
- Voting on authorisation to sue even when the syndicate is the registered creditor: this will allow subrogation if the creditor who is suing withdraws its claim
Sources
- Code of Civil Enforcement Procedures, in particular Articles L. 311-5 to L. 322-14 and R. 311-1 to R. 322-72
- Law no. 65-557 of 10 July 1965 establishing the status of condominiums in built-up areas, article 19
- Court of Cassation, 2nd Civil Chamber, 21 February 2019, no. 17-31.350 (indivisibility of the dispute)
- Court of Cassation, 2nd Civil Chamber, 2 December 2021, no. 20-15.274 (calling in of registered creditors)
- Circular CIV/17/06 of 14 November 2006 on the seizure of immovable property
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