Thanasis Ioannou, LL.M.
Summary: The institution of judicial suspension of the Code of Civil Procedure (Article 1000) allows the debtor to "freeze" the auction process for a period of up to 6 months, so that within this period either the increase in the value of the property is achieved or the debtor himself finds the money to repay his debt. This possibility is triggered by a request from the debtor in execution. The competent court will accept the application and order the auction to be frozen, if it considers that the conditions laid down in the Code of Civil Procedure (Article 1000 of the CCP) are met.
1. A short introduction
The institution of the judicial suspension of the auction under Article 1000 of the CCP incorporates a balancing of the interests of the debtor and the creditor in order to eliminate the unfortunate delaying practices that appeared under the same provision before its amendments (with Law 2298/1995 and especially with Law 4335/2015). Nowadays, the principle of leniency towards the debtor, which exclusively inspired the provision in the past, has clearly given way after its recent amendments to the consideration of the interest of the enforcing creditor, but also of other creditors, as will be discussed below. Indeed, it could be argued that the judicial suspension of the auction is, inter alia, a procedural possibility to mitigate the severity of the new provision of the new enforcement law article that prohibits in principle the suspension of the auction of real estate. The purpose of this article is to analyse the requirements of Article 1000 of the CCP, the nature of the judicial suspension of the auction, as well as the consequences of granting it.
2. Conditions for granting the suspension
First of all, it should be noted that only the auction of immovable property falls within the regulatory scope of the provision. A prerequisite, therefore, logically necessary for the granting of the suspension is the prior imposition, even if invalid, of an attachment relating either to the right of ownership of the property or to another right in rem in immovable property (CCC 992(1)(a)), such as usufruct, or to another right to which the rules on immovable property apply (CCC 992(1)(c)).
The basic substantive condition that must be met for the granting of the suspension under Article 1000 CCC is the absence of a risk of harm to the creditor who is being repossessed. Although the law is silent in this respect, it is nevertheless argued that the court must also take into account the interest of the creditors, who may intervene in the proceedings if the decision ordering the suspension of the auction is also binding on them.
In addition to the above substantive condition, one of the valid reasons set out in Article 1000 of the CCP must also be met. In particular, it must be probable that (a) either the debtor will achieve a financial recovery that will enable him to satisfy the creditor, (b) or that a higher residual amount will be achieved after the period of suspension has elapsed. These are, in short, assessments designed both to safeguard the effectiveness of the enforcement procedure and to prevent a manifest injustice to the debtor in default.
Indeed, it is very likely that the debtor is facing a temporary financial hardship, which he is expected to overcome, in order to be able to satisfy the claim of the creditor who is enforcing the claim, thus saving his property from forced sale. In the decision of the Lamia Court of First Instance No 131/2018, for example, it was held that "it is probable that the applicant will be able to pay the entire debt, for which the above enforcement proceedings are being brought against it, within six months, since it is expected that the efforts of cooperation with a foreign investor, namely the Cyprus Limited Liability Company [...], with which negotiations have been ongoing since the beginning of this year, will be successful'. In the same spirit, the Athens Court of First Instance ruled in its judgment No 3582/2022 that actions which allow the probability that the debtor will be satisfied within six months of the suspension constitute 'the overall settlement of the debt or the previous partial payments against the overall debt". On the contrary, Commission Decision No 7028/2004 of the Single Judgment of the Court of First Instance of Thessaloniki held that moral or personal reasons, such as the fact that "this property is the last of a series of properties owned by the applicant which the defendant sold at auction, that his elderly father lives in this property, that neither he nor any other person related to him can find money to repay the defendant's debt", cannot justify the suspension of the auction.
Furthermore, the price of the property on the date on which the auction is initially fixed may be low because of a seasonal fall in the value of property, with the result that it is likely that if the auction is held later, the increase in the price of the property which has occurred in the meantime will make it possible to obtain a higher bid, which serves the interests of both the debtor, whose property is not sold at an unfavourable price, and his creditors, whose claims are much more likely to be satisfied in this way. In this context, the Thessaloniki Multi-Member Court of First Instance in its judgment No 12020/2009 accepted that 'at the same time it is expected that, after that period of time, the conditions in the housing market, which also shapes the interest of the potential bidders in this case to bid and which at the present time, a fact known from common experience, is undergoing a particularly serious crisis, will have, at least to a sufficient degree, normalised', while the Thessaloniki Single-Member Court of First Instance in its judgment No 12020/2009 accepted that "it is also expected that, after that period of time, the conditions in the housing market, which shapes the interest of the potential bidders in this case to bid and which at the present time, a fact known from common experience, is undergoing a particularly serious crisis, will have, at least to a sufficient degree, normalised", 3582/2022 held that, in order for there to be a likelihood of achieving a higher bid within the six-month suspension period, the "inferred increase in market interest in the relevant area of the properties" must be based on specific facts, such as, for example, "the manifestation of investment and purchase interest in the seized properties by specific persons". Of particular note with regard to the issue of the likelihood of achieving a higher auction within the period of the suspension is the judgment of the Syros Single Judge Court of First Instance No 23/2023, in which the latter made an assessment of the wider economic conditions and the general surrounding atmosphere not only at national but also at international level. Specifically, in that judgment, the Syros Single Judge Court of First Instance granted the application for suspension of the auction (Article 1000 of the CCP), ruling that "... it is likely that if the seized properties [...] are auctioned at a later date than the one set, namely after 22/8/2023 [...], the auction proceeds that will be achieved [...]. ] will be higher, given that in the current period of time, due to the energy crisis, the increase in the cost of living, the uncertainty about the economic conditions due to the war situation in the region of Ukraine, the increase in inflation and loan interest rates, as well as the lack of foreign visitors to the country, who wish to acquire holiday homes, potential buyers of real estate are taking a wait-and-see attitude, whereas, at the new auction date, as the auction will be in progress and the auction will be held in the near future, the auction will be held in the near future".
4. Decision on the request for suspension
The decision accepting the application and ordering the suspension of the auction is inter partes and develops its effects not from the time of its issuance, but from its notification to the enforcement bodies, i.e. to the notary. Thus, if this notification to the auctioneer is omitted, the auction is carried out validly (OLE 33/1995). The consequence of the hearing of the application in the interim proceedings is that the decision granting the application is not subject to appeal (appeal, etc.). It is still possible, of course, for the creditors who did not intervene in the proceedings or for the person who was not summoned to appear in the proceedings to file an application for revocation (pursuant to Article 696(1) of the CCP). Those persons may also base their application for revocation on a change of circumstances (Article 696(3) of the CCC). However, if the application for suspension of enforcement by the defendant is rejected, he may not apply for revocation, because negative decisions on interim measures are not subject to revocation.
In theory, the view had prevailed that the judgment ordering the suspension under Article 1000 of the CCP has erga omnes (against all) effect, thus binding also other creditors who have a claim based on an enforceable title (i.e. mainly a court judgment or a payment order) and who have issued a cheque for execution to the debtor, and would therefore be able to substitute themselves for the original creditor by submitting a declaration of continuity to the notary (Article 973(3)(b)). 3 of the Civil Code). 886/2008 of the Supreme Court, where it was held that a declaration of continuation of the aborted auction is legally submitted by another creditor who has an enforceable title (primarily a court judgment or a payment order) and has issued a cheque for payment to the debtor in default, even if the reason for not holding the auction is the suspension of the auction by a court decision (Article 1000 CCP).
As regards the institution of multiple seizures (this institution was first introduced by Law 4335/2015), the answer to the question whether the suspension of the auction prevents the continuation of the auction procedure by another creditor who has also imposed a seizure using the discretion provided by the Code of Civil Procedure (article 997 par. 5 of the CCP) or excludes the possibility for another creditor to impose its own attachment must be considered in the light of the relevant provision allowing multiple attachments on the same property. The independence of the various enforcement proceedings which may be running in parallel, which the above provision is intended to ensure, clearly supports the view that the validity of the judicial stay of the auction is limited to the specific enforcement proceedings conducted by the defendant which is the applicant and that, as a result, it cannot bind other creditors who may be bringing independent enforcement proceedings against the debtor's own property.
Furthermore, the court's decision is issued by 12.00 noon on the Monday preceding the auction, while the suspension of the auction is always granted subject to the payment of any costs of acceleration of the auction and at least ¼ of the capital due to the recoverer (CCC 1000(b)). The capital is the amount for which the attachment was imposed, not including the interest thereon (Single-Member Court of First Instance of Lamia 131/2018). That is, the calculation of the ¼ will be based on the capital of the claim for which the attachment was imposed, and not on the amount of any larger claim that the recoverer has against the debtor (Single-Member Court of First Instance of Syros 23/2023). The possibility under the previous regime for the court to order payment of less than one quarter of the capital, if there were exceptional reasons for doing so, has been abolished. The fulfilment of the above conditions by the applicant is by law a condition of the active suspension. This practically means that for the start of the suspension requires the prior fulfillment of these conditions until 10.00 a.m. of the day of the auction, otherwise the validity of the decision ordering the suspension ceases without any other procedure and the auction procedure can be carried out without prejudice (Single Member Court of First Instance of Lamia 131/2018).
5. Duration of the suspension
Following the recent legislative amendments (Law 4335/2015), the suspension of the auction can now only be ordered once by the court. The maximum duration of the suspension is six months. The starting point for the calculation of the six-month suspension is the date of the original auction, regardless of whether it was cancelled or suspended or whether it was accelerated by the seizing party or any other substituted creditor (MPA 1795/2011). The six-month suspension does not include the time of contractual suspension, the cancellation of the auction due to the correction of the summary of the seizure report (Article 954(4) In fact, if the application for suspension is directed against the creditor who replaced the original bailor, the suspensions granted by court decision against the previous bailor are also counted for the purpose of determining the maximum limit of six months of suspension (M.P.A. 1527/2006).
6. Consequences of suspension
As mentioned above, the suspension decision takes effect from the time of its notification to the notary. After such notification, the performance of any act in the pre-trial or main auction proceedings is prohibited. Thus, if the auction is held during the suspension period, it may be challenged by the debtor in default (Article 933 of the CCP) and may be declared null and void on the grounds of procedural prejudice, which in this case is self-evident. The prohibition of the auction resulting from the suspension does not include those procedural acts which follow the seizure, such as its entry in the seizure register (Article 995(2) However, if the day of the auction is set at a time later than the end of the suspension (CC 856/2014). Upon expiry of the suspension, the auction may be validly conducted either by the secured creditor himself or by another creditor who has been substituted in his place by submitting a continuation statement in accordance with the terms of the relevant provisions of the Code of Civil Procedure (Article 973(2) and (3) CCP).
From an overall assessment of the institution of judicial suspension of the auction, the following can be concluded: It is a regulation that compensates for the strictness of the current law with regard to the impossibility of granting a stay of enforcement proceedings in the seizure of real estate. The recent amendments made to this institution (by Law 4335/2015) have clearly led to its modernisation, as they link the granting of a stay to the interests of the creditor who is being repossessed, as well as those of other creditors. In this spirit, it would not be out of place to argue that the substantive requirements of no harm to the creditor and a reasonable prospect of satisfaction by the debtor within the six-month period of the suspension could be similarly applied in those cases, where, in view of the totality of the circumstances, it is reasonable to allow the debtor a reasonable period of time to negotiate with the enforcing creditor a viable and mutually beneficial arrangement of his debt in order to avoid the forced sale of his immovable property. Moreover, this interpretation is also reinforced by the relevant judgment of the very recent and above-mentioned judgment of the Athens Court of First Instance, No 3582/2022.