21 May Sale of property charged with memo
Sale of property charged with memo
by George Coucounis
THE creditor who secured a judgment against a debtor may register it as an encumbrance – memo in the Land Registry upon the immovable property registered in the name of the debtor. This security gives the creditor the right to apply to the court requesting the sale of the immovable property of the debtor in order to satisfy the judgment debt. A prerequisite for such an application is the issuance of a writ of movables for the sale of the debtor’s movable property, which must be returned to the court without being executed or the creditor must submit evidence that the debtor does not actually own any movable property. In order for the creditor to succeed in his application for securing an order for the issuance of the writ of sale of the property in public auction, he must comply with the mandatory provisions of the law. His application must be filed by summons and a copy must be served on both the debtor and any other affected person, including any other beneficiary of a memo. The application should state the property that the creditor seeks to sell, its registration number, type and extent, and attach a copy of the judgment together with a search certificate from the Land Registry and a valuation regarding the value of the property at the time of the submission of the application.
In the event that the debtor’s immovable property includes his residence, the debtor should be left with such housing, which the court will consider absolutely necessary for him and his family; reference should be made in the affidavit of the creditor to the number of the members of the debtor’s family. If the debtor is a farmer, it must be excluded from the sale such land which, according to the court, is absolutely necessary for the maintenance of himself and his family. The affidavit of the creditor should also include the relevant costs and expenditure related to the execution of the judgment and the sale. The court, examining the application of the creditor and based on the valuation, has the discretionary power to determine the reserved sale price of the property which it considers fair and reasonable and that the property will not be sold at a lower price.
Such an application for the sale of an apartment was submitted to the court and the debtor objected. The District Court of Paphos in its judgment issued on 14.4.2021 analysed the provisions of the legislation with reference to O.42 of the Civil Procedure Rules, articles 22, 23, 24 and 40 of the Civil Procedure Law, Cap.6 and case-law. The court considered that the objection of the debtor that the application did not include a valuation of the apartment by an expert valuer was valid, since its absence deprived the court of the necessary background indicating the value of the apartment, assisting the court in its work to determine the reserved price. Although there was a search certificate which stated an estimate value from the Land Registry at prices of 1980 and 2013, the court decided that the absence of a reference to the recent market value of the apartment, made the application incomplete and unsubstantiated.
Additionally, the court found that indeed the application did not clearly describe the immovable property sought to be sold, since it did not mention its extent nor the costs and expenses that would be incurred relating to the sale of the apartment. The court held that this omission to refer to the costs and expenditure, given the strict provisions of the law and that any deviation and non-compliance with them makes the whole procedure invalid, the omission of the creditor to comply with the procedural requirements was fatal to the outcome of his application.
The court concluded that, although it was not explicitly submitted as an objection to the application, it found that based on the search certificate and the Land Registry records, a memo was registered on the apartment by the Tax Department. Consequently, the creditor had to serve the application to the Tax Department, too. This omission, under the circumstances, was of an academic nature, given the dismissal of the application for the reasons stated by the court.