LEGAL PROTECTION IN THE FORCED SALE
Since the most valuable property is regularly at stake in a forced sale, legal protection in the forced sale procedure is of elementary importance. Thus, debtor protection is provided for at various points in the proceedings and will be explained below.
§ 30 A ZVG – DISCONTINUATION DUE TO ECONOMIC OR PERSONAL CIRCUMSTANCES
Pursuant to § 30a ZVG, the auction proceedings may be temporarily discontinued. This applies only to the execution proceedings and not to the proceedings for the dissolution of the community.
The application is subject to a time limit. It must be filed within two weeks after the court has been instructed. The instruction by the court shall take place when the compulsory auction is ordered.
The debtor must provide prima facie evidence of the relevant facts on which the temporary suspension of proceedings is based. If the creditor makes a statement, it shall be sent to the debtor. The creditor is then heard by the court within a specified period of time. The court shall then decide on the application by way of an order. In accordance with the provisions of paras. 3 and 4, the debtor will be subject to conditions. Finally, after the termination of the temporary cessation, the proceedings shall be continued only if the creditor applies for continuation under Section 31 of the Civil Procedure Act or if the debtor fails to comply with the conditions, Section 30a(5) of the Civil Procedure Act.
If the debtor applies for the temporary cessation again, the proceedings shall not be continued; in this case, the emergency period shall apply upon service of the order for continuation. The creditor has the right of immediate appeal against this.
Application by the debtor
The temporary discontinuance shall be pursued only at the request of the debtor. If several persons are debtors in the proceedings, the application may only be filed jointly by all debtors.
In the application, the debtor must state in detail the facts on the basis of which the forced sale can be avoided. Thus, the economic and personal circumstances must be explained. It is also important to explain in what way and by what means the creditor’s claim is to be satisfied.
PROSPECT OF AVOIDING THE AUCTION
The prerequisite for discontinuation is the debtor’s so-called ability to restructure. This is understood as the debtor’s ability to satisfy the creditor’s claim according to the income and financial circumstances. The prognosis of the ability to restructure must show that the debtor is likely to be able to repay the claim of the petitioning creditor within twelve months, because the temporary cessation is for a maximum of six months and can be granted a further time in accordance with § 30c ZVG. In addition to the economic interests, the personal interests, such as maintenance obligations, distance from the place of residence to the place of work, must also be taken into account.
FAIRNESS OF THE DISCONTINUATION
The temporary discontinuation of the foreclosure proceedings must also be in accordance with equity. This overlaps with the consideration of the creditor’s interests stipulated in Section 30a (2) ZVG. If, for example, the debtor has to overcome an acute serious illness or has suddenly become unemployed, this can lead to the equitable nature of the discontinuation. However, the type of claim must also be taken into account in the equitable decision. Claims arising from tort or maintenance claims are given preferential treatment. If the auction proceedings are pursued on account of such claims, this may militate against the equitable nature of the discontinuation.
In addition, the debtor’s previous conduct in the enforcement proceedings may also be taken into account. An (attempted) thwarting or coorperative behavior may influence the decision, in one direction or the other.
CONSIDERATION OF THE CREDITOR’S INTERESTS
The temporary cessation must also be reasonable for the creditor, § 30a ZVG. Specifically, the economic circumstances of the petitioning creditor as well as possible disadvantages associated with the auction at a later date must be taken into account. Such a disadvantage may be lower auction proceeds. However, minor losses are not to be understood as such.
§ 30a ZVG provides in paras. 3-5 for the granting of payment conditions. In this context, the court shall specify the time and the amount of the payment conditions in the discontinuation order.
§ 85A OF THE ZVG – REFUSAL TO ACCEPT THE BID
§ 85a ZVG provides that the knockdown shall be refused if the highest bid is below 5/10 of the determined market value. It, therefore, serves to protect the debtor from the squandering of his property. The purpose of the provision is that the auction should not only serve to generate proceeds but should also lead to an economically justifiable result. The provision is to be observed ex officio and is mandatory if the requirements are met.
The basis for refusal is an effective highest bid which, including the capital value of the continuing rights, remains below half the value of the real property. If these conditions are met, the Rechtspfleger must refuse the acceptance of the bid and schedule a second auction date. The value limits then no longer apply, § 85a II ZVG.
PROBLEM: OWN BIDS OF THE CREDITOR’S REPRESENTATIVE
Cases in which a creditor’s representative submits a bid of his own without being interested in acquiring the property are problematic. Such own bids of a creditor’s representative are then invalid and must be rejected if the bid is only made in order to drop the value limits in a further auction. In contrast, a bid which is aimed at dropping the value limits but only in order to achieve the acquisition with a lower bid at a further auction is effective.
§ 114 A OF THE ZVG – FICTION of SATISFACTION
§ 114a ZVG is a fiction of satisfaction . If a creditor himself acquires the auctioned property, he shall be deemed satisfied even if his highest bid is below 7/10 of the property value.
The purpose of this is to prevent the creditor from additionally asserting his claim against the debtor through the favorable acquisition of the property. The same applies to a subsidiary of the creditor. He is also then deemed to be satisfied.
§ 765A ZPO – “IMMORAL HARDSHIP”
Great importance is attached to the protection against execution under § 765a of the German Code of Civil Procedure (ZPO) in compulsory auctions. Its purpose is to mitigate unacceptable hardship that may be caused by an enforcement measure. In this respect, § 765a of the Code of Civil Procedure applies beyond the compulsory auction proceedings to all other enforcement measures.
The prerequisites for the facts are very narrowly defined here, as it is an exceptional provision. If the prerequisites for the facts are met, the proceedings may be suspended or even set aside, but not enforcement in its entirety.
Case groups have developed in case law for the application of Section 765a ZPO, although these are not exhaustive. An immoral hardship can also arise for other reasons. It always depends on the individual case.
HOPELESS ENFORCEMENT BY THE CREDITOR
If the enforcement only serves to harm the debtor and does not bring any advantage to the creditor, there is an immoral hardship. However, there need not be an intent to harm on the part of the creditor.
If the forced sale is pursued by a creditor in an apparently hopeless position, this does not necessarily constitute a case under § 765a of the Code of Civil Procedure. The creditor also has a need for legal protection for the compulsory execution, which may not be denied to him.
SQUANDERING OF THE PROPERTY
The award of the bid to an allegedly disproportionately low highest bid is often regarded as a case of immoral hardship. It is not possible to make a uniform assessment of such cases. Therefore, the individual case is decisive, taking into account the nature of the object to be auctioned, the specific bidding situation and the duration of the proceedings.
IMMINENT DANGER OF SUICIDE
The serious impairment of the debtor’s health or that of his close relatives is of particular importance in compulsory auction proceedings. Substantiated and serious endangerment must be distinguished from abuse of rights. The distinction is not always easy.
§ 771 OF THE CODE OF CIVIL PROCEDURE (ZPO ANALOG) – “OPPOSITION ACTION”.
§ 771 of the German Code of Civil Procedure (ZPO) by analogy is referred to as a “non-genuine third-party action”. It can be brought if a partition auction is to be prevented which is unjustified for material reasons. In this respect, legal protection in the compulsory auction also applies here. This is justified by the fact that, in contrast to a forced sale, the partition sale is not preceded by an enforcement title. Without this possibility, the legal protection of the defendant would be undermined.
An action under § 771 ZPO analogously may be necessary, for example, if a former partner of a partnership under civil law (GbR) pursues an auction to dissolve the community. Since the partnership then already no longer exists, there is no reason for an auction to dissolve the community.
Otherwise, the remaining shareholder is otherwise without legal protection in this case.
On the whole, the debtor’s legal protection in the forced sale is given at every stage of the proceedings. Nevertheless, the prerequisites are narrowly defined so as not to undermine the creditor’s enforcement interest. The chances of discontinuing the proceedings are high insofar as the necessary preconditions are met and, if applicable, credibly demonstrated. The interests of the creditor must always be taken into account by the enforcement court. The legal protection in the forced sale is thus basically target-oriented.
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