SALE OF REAL ESTATE BY MEANS OF ELECTRONIC AUCTION, 19 July 2021
The Act of May 28, 2021 on amending the act – the Code of Civil Procedure and certain other acts (Journal of Laws of 2021, item 1090), in addition to controversial changes regarding the existing rules for handling cases in civil, criminal and administrative court proceedings and the rules for delivery of letters to professional representatives in civil proceedings, it also introduces regulations governing the sale of real estate by means of electronic auction. Substantial part of the provisions of the aforementioned Act entered into force on July 3, 2021; however, the provisions regulating electronic auctions of real estate will not take effect until September 19, 2021.
With regards to the real estate execution, this is a completely new solution, as the previous regulations allowed for a sale by means of electronic auction only in case of movables. In general, such sales will be proceeded in a manner similar to the current execution against immovable properties, with the exceptions provided for in the new legislation. While retaining the specificity of this solution regulated in Part Three, Title II, Section VI and the new Chapter 6a of the Code of Civil Procedure (Articles 986¹ to 986¹¹), and taking into account the exclusion of application of certain provisions, the existing provisions concerning, inter alia, an announcement of auction (Chapter 4), auction conditions (Chapter 5), auction (Chapter 6) and acceptance (Chapter 7) shall still be applicable to the sale of real estate by means of electronic auction.
The sale of real estate by means of electronic auction will be possible only at a request of a creditor, and if real estate is seized to satisfy several debts claimed by different creditors, its sale by means of electronic auction will be obligatory in case of a submission of a request by any of the creditors. Thus, a different solution has been adopted than in the case of electronic auctions of movables, where the procedure of sale is decided by the creditor at whose request the first seizure took place. A bailiff shall notify a debtor of the fact that s/he has received a request from a creditor to conduct the sale of real estate by means of electronic auction within one week, indicating the real property or part thereof covered by the request. As currently, the debtor will have the right to indicate an order in which individual properties are to be auctioned if several properties or several parts of one property are to be sold in the given enforcement proceedings. It will be also possible to submit the request initiating the sale of real estate by means of electronic auction in the event of a submission of a request for a re-auction or the second auction.
As in the case of electronic auctions of movables, the sale of real estate by means of electronic auction will be carried out via an ICT system, where the condition of participation in the auction will be creation of an individual account in the ICT system. An announcement regarding the sale of real estate by means of electronic auction shall be posted on the website of the National Council of Bailiffs at least two weeks before the date of the auction. Pursuant to this mode of sale, the obligation to post an announcement regarding an electronic auction of real estate on a website and bulletin board of a court supervising the given execution against immovable property (including in different court districts, if enforcement proceedings involve one or several properties located under different courts‘ jurisdiction) or on premises of a municipal authority competent for the place of location of the real estate, as well as an optional announcement in another way, including in particular in a daily newspaper with wide circulation in the given locality, will no longer apply. The announcement regarding the sale of real estate by means of electronic auction shall include, inter alia:
- information about the real estate that is to be sold (its location and economic purpose, land and mortgage register number and a place where it is kept or an indication of collection of land and mortgage register documents and a court where the said collection is kept);
- information about the fact that the auction is held by electronic means, as well as the time when the auction begins and ends;
- information about the obligation to pay a warranty and its amount;
- the time at which the property may be viewed within two weeks prior to the auction;
- total amount of the estimate and the starting price.
Unlike in the classical real estate enforcement proceedings, in the announcement of sale of real estate by means of electronic auction a bailiff will not provide a name and surname of a debtor. The time limit for depositing a warranty deposit is also different from the classic execution against immovable properties. In case of the sale of real estate by means of electronic auction, the deposit should be transferred to the relevant bank account no later than 2 working days before the start of the auction, while the date of placing the deposit is the date on which the bailiff’s bank account is credited (in the classic manner, a bidder entering an auction is required to deposit the warranty deposit no later than on the day preceding the auction). The bailiff shall confirm the fact of depositing the warranty deposit and providing the data necessary for issuing a decision on acceptance immediately after receiving them, by admitting the bidder to participate in the auction. The bailiff shall notify the interested party about the refusal to admit to the auction via the ICT system. A complaint may be filed against the refusal of admission to the auction and with regards to the manner of conducting the auction within 3 days from the date of refusal of admission to the auction or from the date of completion of the auction, respectively. Bidders and those who are not admitted to the auction will only be able to submit the complaint through the ICT system, while others will benefit as long as they have an account on the system.
An electronic auction of real estate must be scheduled by a bailiff in such a way that it is conducted between 9:00 am and 2:00 pm on working days. The duration of the auction has also been imposed by the Act, i.e. 7 days. After closing an auction (but no later than within a week), a bailiff shall send a report on the course of the auction, unresolved complaints and documents necessary for granting an acceptance to the relevant court. The decision on the acceptance will be made in a closed session within one week and will be delivered to the highest bidder.
Implementing regulations for the newly adopted solutions are still in the process of being drafted, including, in particular regulations pertaining to the manner of authentication of ICT system users, ensuring accessibility of the system and security of using documents in an electronic form.
For one year after the entry into force of the Act, it will be permissible to choose to sell a property by means of electronic auction only if, for technical reasons on the part of a bailiff, this is possible. Therefore, already from the date of entry into force of the provisions regulating the described solution, its availability will largely depend on the efficiency of bailiffs and their technical capabilities to enable to take advantage of the new provisions.
Attorney at law
T: +48 22 447 43 00
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield, and is based on the facts and guidance available at the time of its release which may be subject to change. The purpose of the publication is to draw attention to the legal events indicated in it and should not be the sole basis for any decision regarding a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases.