The seizure of a property is logically followed by its auction. However, in cases where a buyer has already been found for the said property, it is possible—by judicial permission—to bypass the auction procedure and transfer the property directly to the interested party.
In principle, the disposal of seized property is prohibited by law. An exception to this rule is set out in Article 998§6 of the Code of Civil Procedure, which allows for the “free sale” of the property. Specifically, paragraph 6 of the article states: “Upon the debtor’s application, the court of Article 933, which adjudicates under the procedure of Articles 686 et seq., may allow the property to be sold freely for a price determined by the court. This sale is conducted by the auction official at the latest ten (10) days before the auction with simultaneous payment of the price. If the sale does not take place under the previous sentence, the auction is conducted on the appointed date.”
Based on this article, the debtor may apply to the competent court, which hears cases under the precautionary measures procedure, to be permitted to dispose of the property. The judicial decision issued determines both the person to whom the property will be disposed of and the price, and the transfer must be made at the latest ten days before the scheduled auction; otherwise, the auction proceeds normally.
In reality, this is not a sale in the traditional sense but an auction, since the transfer to the third-party buyer is considered the last act of compulsory enforcement. In other words, even in this case, it is a forced disposal despite its “free” character, and it can only be challenged by the objection under Article 933 CCP, as a procedural act of the pending compulsory enforcement, and indeed as the last act of the enforcement procedure for satisfying monetary claims.
Thus, the “buyer” of the property takes the position of the highest bidder, which means that all the rights of the highest bidder are recognized in their person, with corresponding application of the relevant articles of the Code of Civil Procedure, such as the extinction of existing burdens by payment of the price, the claim for drafting of the award report by the auction official, the right to terminate any existing lease, etc.
Finally, given the above, the “price” paid by the “buyer” – highest bidder is essentially treated as the auction proceeds. Upon payment, creditors are notified, just as in auction cases, and then the distribution to the creditors follows according to the provisions of Articles 975 et seq. CCP. The auction official drafts an award report, which is then submitted by the “buyer” to the competent Land Registry Office for registration.
