A creditor cannot always count on succeeding with enforcement on a real estate
A creditor who has acquired an enforcement resolution can be »leapfrogged« by third persons who claim that they bought the real estate from the debtor and that they are not yet registered in the land register as owners.
In practice, the following situations are common: a creditor files a motion for enforcement on a debtor’s real estate and acquires a mortgage on the real estate with the entry of the resolution on enforcement in the land register. Afterwards, the “real” owner of the real estate (i.e. the person who bought the real estate from the seller beforehand, but is not yet registered as the owner in the land register) comes forward. The third person states that enforcement on the real estate is not permitted.
The courts have in such cases consistently ruled in favour of the unregistered buyer of the real estate. The position of the jurisprudence is that good faith and the principle of confidence in the land register do not protect a creditor who acquired the mortgage with the entry of the resolution on enforcement in the land register. In such cases, advantage always goes to the unregistered buyer of the real estate, even if the buyer was not of good faith and has not registered its title in the land register solely by his own choice.
The condition for such judicial protection is that the acquirer disposed of complete “commitment legal transaction” (i.e. a sale-purchase agreement for the real estate) and “dispositive legal transaction” (i.e. land-registry permission) before the entry of the resolution on enforcement in the land register. If, for example, a signature on the land-registry permission was not notarised prior to entry of the resolution on enforcement in the land register, the third person will not be entitled to protection against the creditor.
It is interesting that this year a court of second instance attempted to depart from the above-stated jurisprudence; however, the Supreme Court annulled the judgement and confirmed the previous jurisprudence. Such an approach unfortunately produces a number of negative effects in practice. Among others, it allows unregistered owners of real estate to hide their assets (and subsequently enjoy various benefits), whereas at the same time allows the formal land register owners to give an impression of creditworthiness and subsequently deceive creditors. With respect to the latter, we highlight situations where creditors who rely on the state in the land register and file a motion for enforcement only on the debtor’s real estate (for which they expect that it will suffice for recovery of their claim) are left without the possibility of recovery from the debtor’s other assets, as other creditors in the enforcement proceedings have superseded them on such debtor’s assets.
