La foreclosure is a procedure whereby a creditor in possession of a writ of execution can have the debtor's tangible assets sold in order to obtain payment of the price. This compulsory execution measure, provided for in articles L. 221-1 et seq. of the Code of Civil Enforcement Procedures (CPC exéc.), raises an essential question: what assets can actually be seized?
Seizable tangible movables
Definition and classification
Article L. 221-1 of the CPC exéc. specifies that seizure for sale may only relate to tangible movable property belonging to the debtor. This procedure therefore only applies to things that are movable by their nature. The Civil Code distinguishes between two categories:
- Goods that can move themselves (such as animals)
- Goods that can only be moved by a foreign force (paintings, jewellery, furniture)
Beware of bearer securities which, although incorporating a claim, may be treated as tangible movables since the claim is materialised in the security evidencing it.
The Court of Cassation has ruled that a seizure for sale of the shares of partners of a notary in an SCP was irregular because it was incompatible with the prior approval of the transferee by the Minister of Justice (Cass. 1re civ., 4 Nov. 2003, no. 99-13.965).
Cash sums
Article R. 221-20 of the CPC exéc. authorises the bailiff to seize cash found at the debtor's home. These sums are immediately deposited in the bailiff's hands. The act of seizure mentions this deposit and indicates to the debtor that he has one month to contest it.
If the debtor contests, the judge may order the sums to be deposited with the Caisse des Dépôts, returned or paid to the creditor. If no objection is lodged within one month, the sums are paid to the creditor.
Prepayment of furniture
Fruit not yet detached from the soil can be seized in advance, because although it is immovable in nature, it is destined to become movable. This "seizure of standing crops" (articles R. 221-57 to R. 221-61 of the CPC exéc.) enables the creditor to have the crops still attached to the land placed under legal control in order to preserve them until they reach maturity before selling them.
Limits to seizability
Assets exempt from seizure
Certain assets are exempt from seizure by virtue of legislative provisions. Firstly, property belonging to legal persons governed by public law is immune from execution, whether in the public or private domain (art. L. 111-1, para. 3 CPC exéc.).
For foreign States, the Sapin 2 law has clarified their protection while preserving the enforcement of court decisions when assets are not protected by immunities. Article L. 111-1-2 of the CPC exéc. provides that a judge may only authorise a compulsory enforcement measure if one of the following three conditions is met:
- The State concerned has expressly consented to the application of the measure
- The State has reserved the property to meet demand
- The property is used other than for non-commercial public service purposes
It should also be noted that the seizability of assets may be affected by the triggering of insolvency or over-indebtedness proceedingsThis will result in the suspension of individual prosecutions.
Assets exempt from seizure for social or humanitarian reasons
Article L. 112-2 of the CPC exéc. lists the assets that may not be seized, including :
- Assets necessary for the life and work of the debtor and his family
- Essential items for disabled people
- Goods intended for the care of sick people
Article R. 112-2 of the same code specifies this list by including, among other things, the furniture needed for daily life, clothing, bedding, equipment needed to prepare meals, etc.
Relative unseizability (conditions)
Other assets are relatively exempt from seizure. In principle, they cannot be seized, but they can be seized under certain conditions:
- For payment of their price
- If they are in a place other than that in which the garnishee usually lives
- If they are valuable because of their importance, material, rarity or luxurious nature
This is particularly true of motor vehicle used for business purposes. Jurisprudence considers that it is only exempt from seizure if it is "indispensable and limited to the sole activity of the person from whom it was seized" (CA Pau, 18 June 2003, no. 03/01238).
The Court of Cassation has thus ruled that the vehicle used by a doctor to get to his practice was not a work instrument necessary for the personal exercise of his professional activity (Cass. 2e civ., 15 Dec. 2005, no. 04-14.600).
The special case of joint property
The rules applicable to joint property differ depending on whether creditors are suing the joint owner or one of the joint owners.
Article 815-17 of the Civil Code recognises the right of joint creditors to be paid out of the assets before partition and to pursue the seizure and sale of joint property.
On the other hand, for the personal creditors of an undivided co-owner, the same article provides for the unseizability of the undivided share. These creditors can only initiate partition in the name of their debtor or intervene in partition initiated by their debtor.
The Court of Cassation confirmed that the absence of a claim does not result in a transfer of ownership to the debtor's assets and does not prevent a third party who claims to be the owner of a seized asset from claiming ownership of it. distraction (Cass. com., 26 Nov. 2002, no. 01-03.980).
The EIRL status and the creation of an affected estate
Act no. 2010-658 of 15 June 2010 created the status of limited liability sole trader (EIRL), enabling entrepreneurs to protect their personal assets by creating assets earmarked for their business activity.
Under article L. 526-12 of the French Commercial Code, the EIRL's professional creditors may only seize the affected assets, while personal creditors may only seize the unaffected assets.
The declaration of appropriation is enforceable by operation of law against creditors whose rights arise after it is filed. However, in the event of fraud or serious failure to comply with the rules governing the creation of the earmarked assets or accounting, the EIRL may be sued for all of its assets (C. com., art. L. 526-12, para. 7).
Since 24 May 2019, any individual wishing to run a business under their own name must declare, when setting up the business, whether they wish to operate as a sole trader or under the EIRL regime.
Faced with the complexity of the rules governing seizure for sale and the seizability of assets, whether it is a matter of carrying out a seizure or contesting it, theassistance from a specialist lawyer is essential if you are to navigate these procedures effectively and secure your rights.
Sources
- Code of Civil Enforcement Procedures, articles L. 221-1 to L. 221-6 and R. 221-1 to R. 221-61
- Civil Code, articles 527 et seq., 815-17, 1538, 2276, 2277, 2284, 2285
- Commercial Code, articles L. 526-6 to L. 526-12 (EIRL status)
- Cass. 1st civ., 4 Nov. 2003, no. 99-13.965
- Cass. 2nd civ., 15 Dec. 2005, no. 04-14.600
- Cass. com., 26 Nov. 2002, no. 01-03.980
- CA Pau, 18 June 2003, no. 03/01238
- Act no. 2010-658 of 15 June 2010 relating to individual limited liability entrepreneurs
- Law no. 2019-486 of 22 May 2019 on the growth and transformation of businesses
- Order no. 2021-1192 of 15 September 2021 reforming the law on securities
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