In March 2017, the Parliament amended Act LIII of 1994 on judicial enforcement. law (Vht.). When the amendment was adopted, it was criticized in several places in the press that the implementation procedures would be delayed by the relevant amendment of the legislation, and the efficiency of the credit institutions’ returns would be called into question. Let’s see what the amendment means from a legal point of view from the point of view of creditors and debtors.
The relevant amendment is Vht. Section 159 (8) was affected, according to which „In case of recovery of a claim based on a contract concluded with a consumer, if one year has passed since the publication of the notice for the continuous auction of the residential property and the residential property has not yet been sold, the executor shall schedule the new auction as that a valid purchase offer can be made for the residential property with an amount equal to at least 90% of the asking price.”
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Who does the amendment apply to?
The amendment to the law on the minimum amount of the purchase offer applies only to real estate auctions based on a claim from a contract with a consumer. In practice, therefore, in the case of real estate auctions initiated and conducted as a result of claims arising from contracts (loan contracts) between credit institutions and persons considered to be consumers, the minimum purchase offer of 90% is applicable.
When does the 90% requirement apply?
The enforcement procedure is a multi-step process. When the executor starts the auction, the property concerned will first be auctioned in the Real Estate Auction Notices. If this first auction is unsuccessful, the executor will auction the property in the next round among the Unsuccessful Real Estate Auction Announcements. If this fails, a so-called property takeover procedure can begin.
According to the provision of the referenced legal position, the 90% purchase offer is applicable if one year has passed since the publication of the announcement for the continuous auction of the residential property. Therefore, in order to apply the rule, it is necessary that (i) the property is auctioned in the Continuous Real Estate Auction Announcements, which can take place if both the aforementioned auction procedures and the acceptance procedure were unsuccessful and (ii) since publication in the Continuous Real Estate Auction Announcements a year passes.
The auction of the residential property during the first auction
It is important to mention that in connection with real estate auctions resulting from contracts concluded with consumers, the legislator amended the Vht. One of the most significant amendments is that, in the event of a residential property auction, the valid bid must be equal to at least the asking price of the residential property. This amendment makes it possible for residential properties to be sold at a minimum valuation during the auction, unlike the previous practice, which rule protects the consumer, but may hinder the lender from the point of view of return.
