Summary: Between 1 January 2018 and 31 May 2023, it is estimated that more than 60,100 electronic auctions have been conducted. In most of the cases, the auctioneers were banks or companies managing loans and credit claims on behalf of acquiring funds directed against natural persons - debtors. The latter, being in a legally disadvantaged position, need to be aware of all the means of defence available to them in order to stop the enforcement proceedings being brought against their assets. In previous articles, reference has been made to the main action under Article 933 of the Code of Civil Procedure, which is brought by the debtor seeking the annulment of the enforcement proceedings against him. This article deals with another opposition, the so-called 'correction opposition' of the seizure report, which has a different role from the objection under Article 933, which is mainly to increase the price of the first offer.
1. What is the correction opposition
A correction opposition (Article 954(4) of the Code of Civil Procedure) is a remedy requesting the correction of the seizure report and/or its summary on grounds relating to defects and deficiencies in the description of the seized property and the first bid price at the auction (which is identical to its estimated value). In assessing the value of the property, account is taken of its market value (Article 993(2) of the CCP), which may not be less than the objective value. If, in fact, it is a property in which an industrial, craft, hotel business or any production unit with equipment that constitutes a single economic unit has been installed and has been seized together (in accordance with Article 1001A of the CCC), the equipment and its annexes must also be taken into account in the assessment of the value of the property. This is justified by the fact that the equipment necessary for the operation of the production unit is decisive for the assessment of the overall value of the property, as it will usually be machinery of significant economic value that indicates the quality and capabilities of the unit installed on the property. Thus, it is rightly accepted that the object of correction is not only the seizure report in cases where the description of the seized property is subordinate to its legal content or contains inaccuracies with regard to its essential elements, but also when the inaccuracy, lack or ambiguity affects the attraction of bidders, thereby frustrating the purpose of the auction (e.g. For example, the value of two apartments of the same area on the same street may differ substantially because of the luxurious construction of one apartment or because of construction defects in the other). Since the opposition needs to be filed no later than fifteen working days before the auction, otherwise it will be rejected as inadmissible, and the decision on it must be issued by 12 noon on the eighth day before the auction and published on the auction publications page of the eEFKA's Judicial Publications Bulletin (https://deltio.tnomik.gr/decisions), the correction opposition is heard under the expedited injunction procedure.
2. Competent court - Legalisation
An application for rectification shall be admissible in the court in which the application for rectification under Article 933 is brought, namely the court for the district in which enforcement is sought. If it is an execution for the satisfaction of a pecuniary claim, the place where the attachment took place is relevant, e.g. in the attachment of real estate the objection will be admissible in the court of the district of the place where the real estate is located. In most cases the opposition will be brought before the competent local Single Judge Court of First Instance, unless the enforceable instrument (e.g. the judgment or order for payment) was issued by the Magistrates' Court, in which case the latter will have jurisdiction to hear the opposition.
An objection to the correction of the report and its summary may, in principle, be lodged by any person against whom enforcement proceedings are being brought. , In the present opposition to the correction of the seizure report (and/or its extract), the circle of persons who are entitled to exercise it is extended in relation to the aforementioned opposition under Art. 933 requesting the annulment of the enforcement acts (and the seizure report). As expressly stated in the relevant article, the opposition to the correction of the seizure report can be brought by both the debtor and the creditor and any third party with a legal interest (Article 954(4) of the Code of Civil Procedure). If the mortgaged property of a third party (owner or landlord) is sold, then he is also entitled to bring such an action as the defendant in the enforcement proceedings. Third parties with a legitimate interest are the creditors of the debtor (see also MIR 32563/2011), irrespective of whether they have an enforceable title or have been announced at the auction, as well as the creditors of the auctioneer, always with the aim of achieving a higher auction price. The legitimate interest of the creditors (the debtor and the auctioneer) in bringing the present appeal lies in securing and satisfying their individual interests by obtaining a higher first bid price for the property and, as a result, a higher bid price. In the absence of a statutory provision to the contrary, it may, of course, be accepted that it is a paradox that the creditor who has initiated the auction has a legitimate interest in requesting a reduction in the first bid price, if it is disproportionately high, in the face of the risk that no bidder will be found and that the auction will be cancelled. In such a case, the objection will be directed both against the debtor against whom enforcement is sought and against the bailiff who imposed the attachment. In practical terms, however, the creditor who enforces the attachment can achieve the same result if he waives the attachment in order to then enforce a new one without the defects and errors that were inherent in the original one.
In particular, in the case of an objection by a third party creditor, the objection must be directed both against the debtor and against the person who brought the auction.
3. Subject-matter/Causes of opposition - Case law
As already mentioned, the present opposition admissibly challenges the seizure report and the extract from it on specific grounds, namely grounds relating to defects and omissions in the description of the seized first offer price. We also made it clear that the said objection shall be filed no later than fifteen working days before the auction, otherwise it shall be rejected as inadmissible, and the decision thereon shall be issued by 12 noon on the eighth day before the auction and published on the auction publications page of the eEFKA's Judicial Publications Bulletin. However, it is necessary to be aware that the decision on the objection becomes effective not from its publication, but from the moment it is deposited with the auction clerk (i.e. the appointed notary)! This means in practice that the conduct of the auction, despite the existence of a corrective decision, is valid if the decision has not been deposited with the auctioneer (CC 293/2007)!
Before going into examples from case law, it is important to emphasize that the correction objection does not challenge the validity of the execution acts - as in the case of Article 933 of the CCP - nor does it lead to the annulment of the seizure, but the correction of any of the description of the property, but especially the appraisal value and the first offer price of the seized property under the assistance of the element of irreparable damage (Efath 9935/2002, MonPrthes 48223/2007, MonPrthes 3234/2007). The damage is pecuniary and is identified by the substantial depreciation of the value of the property or the omission of essential elements and properties that would lead to an increase in the first bid price. Therefore, the request for a reduction of the first offer price will be rejected because in such a case no harm to the opposing debtor is established.
If, however, the deficiencies and errors in the description of the property and in general of the seized property are so substantial, to such an extent that doubts arise as to its identity and cannot be cured by mere correction (CC 1687/2005), then the debtor needs to file an objection under Article 933 of the Code of Civil Procedure requesting the annulment of the seizure report and its summary, proving the existence of the element of damage suffered by the reduction in value due to the incorrect description. For example, if the address and the area of the property are incorrectly described in the seizure report and/or its extract (and in fact it concerns a different property), there is an objection with a request to annul the seizure report (and/or its extract). The boundaries, however, are indistinguishable and if there is no substantial confusion of the identity of the property with another property caused by the incomplete or incorrect description, then only an objection to correct the seizure report (e.g. the judgment of the Single Judge of the Court of First Instance of Samos No. 127/2014 held that "the deficiencies are of such gravity that they may create doubts as to the local and economic identity of the auctioned property, as well as wrong impressions to the potential bidders and lead to lower bids", ordering the completion of the seizure report for a complete description of the property in terms of materials and year of construction, technical characteristics and specifications of the building, as well as the easy access to it from main roads making it ideal for commercial use. ".
Obviously, for any other irregularity and error that has been committed in the enforcement procedure and possibly concerning the seizure report, the opposition under Article 933 of the CCP and the interlocutory request for its annulment is the debtor's only defense, since the opposition for correction can be exercised on the above-mentioned limited grounds. However, for marginal cases, such as the one we have discussed in the previous paragraph, the debtor, in order to better defend his interests, may, in parallel with the filing of the opposition to rectification, also separately file an opposition under Article 933 requesting the annulment of the same act, if he considers it to be a serious deficiency, based also on what is set out herein. In this way, even if the court does not succeed in annulling the seizure report and the court rejects the objection under Article 933, the latter can be corrected as to the facts discussed herein; since the discrepancy/omission is found in the extract of the seizure report, it is accepted that the latter can be challenged independently, although the rule is that the challenged act is the report together with its extract.
The deficiencies or errors which the opposing party seeks to correct may relate not only to the value of the seized property but also to facts concerning its area, location or status (e.g. that the property is leased), the correction of which will restore the true picture of the property and possibly stimulate buyer interest. If essential elements and properties of the seized property have been omitted, the correction will result in a different assessment of its value.
For example, if it is a commercial property that is rented out, the valuation of the property needs to take into account, among other things, the rent based on the corresponding valuation method of capitalisation, otherwise the use of another method would lead to a downgrading of the value of the property and would justify an objection requesting an increase in the value of the property (cf. (see also the Athens Single-Member Court of First Instance 6964/2022 - unpublished in a case we handled).
Usually, however, and in the case of privately owned houses and apartments, the comparative method is adopted, where an approximate average price for the value of the square meter is adopted on the basis of the local real estate market. This value and whether the location of the property is privileged are therefore the basis for the many court decisions that grant the request for correction.
For example, it has been accepted that because the property is located in the "most expensive area of the Municipality of Ilioupolis", the area of the Policemen, an area with greenery, good urban layout and close to main roads such as Vouliagmenis Avenue and Heroes of Polytechnic Avenue, it was presumed that its commercial value was higher than the assessed value and the objection was accepted (Athens Magistrate Court 1146/2022). Similarly, the request for correction of the report regarding the auctioned horizontal property "located in the most beautiful and most developed area of the Municipality of Haidari, in the location "Dasos", in the most privileged block of the Municipality of Haidari, 50 m. from Protomayas Square and 150 m. from the bus stop. It is constructed with the most luxurious and high-cost building materials and has been almost completely reconstructed twice (2) in 2008 and 2017" (Athens Court of First Instance 22/2023). The same for a property in a central point of the Municipality of Papagos - Cholargos "However, it is presumed that the value of the seized properties is higher, as they are located in a well-known district of the Municipality and in a central point where, from the data provided in relation to the local real estate market, it is clear that the prices offered for sale of properties similar to the seized properties are higher" (Athens Single-Member Court of First Instance 27/2023).
On the contrary, the opposition to the property located in Kolonos was not accepted because, inter alia, '[...] it was assumed that the area of Kolonos where the property is located is densely populated, with few open spaces, where various types of buildings are found, such as multi-storey blocks of flats of typical contractor construction of the 1960s-70s, industrial buildings of the same period, neoclassical buildings in collapse, and there is a problem of on-street parking. Transport is provided by bus and metro, and there is a strong commercial activity, mainly by economic migrants. The above factors and the proximity to the centre of Athens theoretically create prospects for development, but the settlement of economic migrants, combined with the fact that there are many brothels in the area and their relocation to another area is uncertain, do not bode well for development and upgrading in the short term.
Thus, we note that the court is primarily required to weigh factors such as the integrity and year of construction, the quality of the interior, whether the property is located in a good or a deprived social and economic area, and whether it is centrally located in that area with easy access to services, recreational facilities, the road network and public transportation.
The error may, however, lie in the way the valuation is carried out, as often only an external inspection is carried out, which means that the interior of the building is not taken into account and the value of the property is reduced. In decision No 1306/2022 of the Athens Magistrate's Court, it was accepted that 'It is, however, presumed that the commercial value of the above apartment is higher than the value indicated in the contested seizure report. In particular [...] only an external autopsy was carried out, without taking into account in the value of the apartment the renovation of its interiors. In particular, the witness's testimony and the photographs submitted show that the apartment has a modern security door with a video intercom and that the kitchen and bathroom have been completely renovated. It also has floors in good condition, aluminium frames and security bars on the balcony doors [...]'. Similarly, and in a case we had handled, the decision of the Nafplion Court of First Instance, number 107/2022, was issued, which includes the following regarding the issue of valuation by external autopsy only: "Further, in the same report of forced seizure it is exposed that due to the non-production of data on the surfaces of the building, for the calculation of these, an external autopsy was carried out on site in combination with an area measurement carried out through maps of the online application google maps and there is a possibility of deviation of the surfaces. Also, that due to the location of the pool on the plot, during the external autopsy carried out it was not possible to locate it [...] According to the assumptions of the estimate for which only an external autopsy of the property has been carried out [...] All of the above and especially the condition of the property inside it was impossible for the particular appraiser to take into account, since he did not have the opportunity to carry out an internal autopsy [...]. On the basis of the evidence submitted, the Court, taking into account the report of the certified valuer who carried out an external inspection of the seized property with the above-mentioned observations, the reports submitted by the opposing party for the preparation of which an internal inspection was carried out with the above-mentioned observations [...] this Court considers that the economic value of the property, presumably in the amount of 460. 000 and not the estimated amount of EUR 230 000. The Court's judgment is not affected by the testimony of the witness for the defendants [...] whereas, moreover, as he has testified, he has visited the site only once [...] and has simply seen the property from the outside, without being able to add any relevant facts other than his own personal perception, which has been taken into account'.
In addition, other elements and properties of the property to be auctioned must not be disregarded. For example, even a parking space may add value and be taken into account, among other things, by the court (see The Athens Single-Member Court of First Instance 17/2023 "[...] as well as the fact that the owner of the warehouse in question has the exclusive right to use the car parking space number P2 on the ground floor in perpetuity. This fact is crucial, since it constitutes an important advantage of the apartment').
In addition to the above, it is very interesting that the present appeal can correct other errors in the seizure report, irrespective of the description and value of the property. For example, the Piraeus Court of First Instance in its decision number 2133/2014 (unpublished) has ruled that the phrase "the rights of the declarant shall be borne by the successful bidder" should be deleted from the seizure report, since, according to the provisions of Article 932 of the Code of Civil Procedure, the costs of execution (including the rights of the declarant) are borne by the party against whom the execution is directed, since the costs of execution are deducted from the auction and are not included in the amount that will end up in the hands of the creditors.
4. Buying property after the pandemic
Finally, it should not be overlooked that, although due to the lockdown in the midst of the pandemic, investment and construction activity temporarily declined, in 2022 they recovered completely, so that the price of real estate has increased. Indeed, overall house price growth in the euro area accelerated from an annual increase of around 4% at the end of 2019 to almost 10% in the first quarter of 2022 - the highest rate since early 1991. It is also significant that in 2022 foreign direct investment in real estate, according to data recorded by the Bank of Greece, increased 68% compared to 2021. At the same time, the short-term rental of homes through the Airbnb platform has skyrocketed rents and property prices in tourist-friendly areas. Of course, due to the rise in interest rates on mortgages and the so far raging war in Ukraine, an international recession in the real estate market is predicted.
The domestic real estate market, however, does not seem to be affected in the near future, with property prices constantly on the rise. This is explained by a variety of reasons, such as the fact that due to the ten-year economic crisis prices had fallen so much that they are still below the pre-crisis level. Also, most buildings in Greece do not meet modern standards and are not environmentally friendly under the new energy standards, so it is understandable that the few comparatively new constructions do not meet demand. Moreover, as mentioned with tourism being the country's heavy industry, which in 2022 reached pre-pandemic levels in tourist arrivals, many are rushing to invest in hotels and accommodation. In essence, that is, with rising prices and rents, domestic properties have become investment products for Greeks and foreigners alike.
The above is reflected in recent decisions of case law (Athens Magistrate's Court 730/2022: "[...] Given the fact that in the last eighteen months the property market has been showing signs of recovery after ten years of significant recession', Athens Magistrate's Court 1207/2022: 'It has been established that the demand for the purchase of similar properties has increased compared to 4-5 years ago, but was moderated during the time of the peak, but is fully covered by the corresponding supply').
Consequently, although in the past, the correction objection was used by the debtor as a means of delaying the auction process, since its exercise postponed the auction (a provision that no longer applies), it now works beneficially and promotes the enforcement procedure, since it corrects errors in the description of the property and any incorrect value of the property, in the interests of both the debtor and the enforcing lender.