Civil enforcement proceedings, and notably attachments of movable property, are governed by article 719 et seq of the New Code of Civil Procedure.
A creditor who has an enforceable title and who wishes to recover the sum that he is owed by the debtor may implement an attachment order on his movable property, as well as movables.
The conditions that are common to all of the enforcement measures set out in e-note no. 1 must be fulfilled. Therefore, the creditor must have an enforceable title establishing a claim that is certain, fixed and due and certified enforceable.
In this E-note :
The execution title
The execution order is the procedure that enables the creditor to arrange for one or several of the movable assets belonging to his debtor to be sold, and to recoup the sum that he is owed from the profit from the sale.
Definition
An execution order is a procedure that offers a creditor the opportunity to arrange the attachment of his debtor’s assets in order for them to be sold and the price recouped.
Conditions for the implementation of an attachment sale
In order to make use of this civil enforcement procedure certain conditions have to be fulfilled:
- the attachment must relate to movable property;
- the attachment must relate to attachable property; article 728 of the New Code of Civil Procedure contains a list of objects that cannot be attached;
- a payment order must have been served upon the debtor previously; This order is the document through which the debtor is ordered to pay his debt. This document is drawn up by a judicial officer who informs the debtor of it.
The serving of the payment order upon the debtor has the effect of interrupting the limitation period (the debtor cannot plead that a certain time period has elapsed in order to elude the enforcement of his obligation).
Attachment
The attachment operations start after one clear day from when the payment order is served.
These operations are carried out at the place where the movable property is located. They are conducted by a judicial officer accompanied by 2 witnesses, who must be of legal age and Luxembourgian.
They may be carried out by the debtor or a third-party holding the property on the debtor’s behalf.
In particular, in the context of these operations, the judicial officer will take an inventory of the debtor’s assets and will draw up a writ of attachment that will establish the inalienability of the attached property.
At the end of these operations, the attached property shall then be sold.
Results of the attachment
The forcible sale of attached property can be carried out 8 days after the attachment of property.
In addition, it should be highlighted that during the execution order procedure, various incidents may occur. In fact, a person who is not party to the proceedings may plead ownership of the attached property, or the debtor may plead that the attached property is exempt from attachment.
This procedure is governed by articles 719 to 761 of the New Code of Civil Procedure.
1. The prerequisites for the attachment/sale procedure
In order to be able to implement an execution order, the property in question must be a movable asset.
The execution order can only concern movable property. Thus, the following are excluded from this procedure: property that is immovable by its nature and property that constitutes chattels real.
Whether it is held by the debtor or a third-party, any attachable property that belongs to the debtor may be the subject of an execution order.
There are assets that are exempt from attachment, which are listed in article 728 of the New Code of Civil Procedure.
Article 728 of the New Code of Civil Procedure
1. The following items are objects that the law declares to be immovable due to their intended use:
2. beds needed by the judgment debtor and his family, clothes and linen for their personal needs, as well as the furniture needed to store them in, a washing machine and iron, appliances needed to heat the family home, tables and chairs enabling the family to have a meal together, as well as the dinnerware and household utensils that are absolutely necessary for the family, a piece of furniture to store the dinnerware and household utensils, a cooker, a refrigerator, a lighting fixture per inhabited room, items needed by disabled members of the family, items intended for use by children who are dependent on those who live under the same roof, pets, the items and products needed for personal hygiene and for keeping the rooms clean and tidy, the tools needed for maintaining the garden, to the exclusion of luxury furniture and items;
3. books and other items needed so that the judgment debtor or dependent children who live under the same roof can pursue their studies;
4. the property needed for the judgment debtor’s profession, up to the value of 2478.94 euros at the time of the attachment, and as chosen by the judgment debtor, as long as this property is not for the payment of their prices;
5. items needed for worship;
6. the food and fuel needed by the judgment debtor and his family for a month;
7. a cow, or twelve ewes or goats as chosen by the judgment debtor, as well as a pig and twenty-four farmyard animals, with the necessary straw, fodder and grain needed for bedding and the feeding of these animals for a month.
8. The objects referred to in point 2, paragraph (1) can still be attached if they are located in a place other than the place where the judgment debtor normally resides or works.
2. Precondition for the execution order procedure: the payment order
Under the terms of article 719 of the New Code of Civil Procedure, a payment order is a necessary pre-condition for the execution order procedure. Attachment operations start properly after this stage.
The payment order is the document ordering the debtor to pay his debt, through an enforceable title. This document is drawn up by the judicial officer (see e-note no. 2 – the actors of enforcement) who serves it upon the debtor.
It must be served at the debtor’s actual address (i.e. the place at which someone habitually resides) according to the standard rules for service by a judicial officer.
Service of the payment order constitutes formal notice given to the debtor. As a consequence, the claim’s limitation period is interrupted and default interest starts to be incurred.
A payment order, ordering the debtor to pay the amount owed, and the judgment sentencing the debtor to pay the amount owed, may be served at the same time, if they have not been served already.
In accordance with article 720 of the New Code of Civil Procedure, the payment order must contain the following, under pain of being declared null and void:
“1. – Mention of the enforcement order by virtue of which proceedings are undertaken, with a separate account of the sums demanded in principal, costs and incurred interest;
“2. – Order that a debt must be paid within one clear day, failing which it may be necessary to attach movable property.”
3. Attachment
The attachment operations start after one clear day from the serving of the payment order. These operations are carried out at the place where the movable assets are located and are performed by the judicial officer accompanied by 2 witnesses who must be of legal age and Luxembourgian. The attachment creditor cannot accompany the judicial officer.
These operations may be carried out by the debtor or a third-party who is holding the movable assets on the debtor’s behalf.
Attachment operations against the debtor
Reiterated order
Once he is on site, the judicial officer reiterates the request for payment orally to the debtor at the premises: this is the “itératif commandement” (reiterated order) (article 722 of the New Code of Civil Procedure).
If the debtor fails to comply, the judicial officer asks him to indicate any assets that may have been the subject of a prior attachment (article 747 of the New Code of Civil Procedure).
Access to premises
If the debtor opposes the judicial officer’s entry onto the premises, or there is no person present there, the doors may be forced open, after seeking assistance from a judicial police officer.
Inventory
The judicial officer shall then draw up an inventory of the property that may be attached. In the event that the property cannot be attached, or if none of the assets has a market value, the judicial officer shall draw up a statement of deficiency.
Following these operations, an attachment report is drawn up by the judicial officer. This attachment report indicates the steps taken by the latter.
The attachment document is signed by the judicial officer, the witnesses and the judicial police office (in the event of forced entry of doors).
Delivery of the writ of attachment
The procedure differs depending on whether or not the debtor is present during the attachment operations:
If the debtor is present, the judicial officer hands over the copy of the writ to the debtor directly. This delivery therefore constitutes service. The judicial officer reminds the debtor verbally that the assets have been made inalienable (i.e. they cannot be alienated, or used to secure a debt) and a custodian has been appointed.
If the debtor was absent during the attachment operations, the judicial officer shall serve a copy of the writ and shall hand over a copy to the judicial police office in the presence of whom the doors were forced open.
Effects of the writ of attachment
The writ of attachment makes the attached assets unavailable. The debtor cannot alienate them or move them under pain of being subject to the penalties set out in article 507 et seq of the Criminal Code.
If sums of money are found at the places of attachment, these sums shall be deposited by the judicial officer to the place established for deposits.
Attachment operations carried out against a third-party
Inventory
One clear day after the service of the payment order, the judicial officer may proceed with the attachment of property held by a third-party on the debtor’s behalf.
The judicial officer demands that the third-party declares the assets that he is holding on the debtor’s behalf and indicate if they have been the subject of a prior attachment. If the third-party is holding any asset that belongs to the debtor or refuses to reply, the judicial officer shall draw up a deed concerning them.
If the third-party declares that he is holding assets on the debtor’s behalf, the judicial officer shall draw up an inventory of these assets.
Delivery of the report
If the third-party is present during the attachment operations, the judicial officer shall remind him verbally about the content of the writ of attachment. The judicial officer must serve a copy of the execution order on the debtor.
Effects of the writ of attachment
The writ of attachment makes the asset unavailable to the third-party.
The third-party cannot use the attached assets, unless a decision prior to the attachment gave him that right.
4. Sale of attached property
Forcible sale takes place at public auctions, eight days after the attachment of movable property.
The sale must be advertised. This advertisement must be posted publicly and appear in the press. The judicial officer must certify that these advertising formalities have been fulfilled.
The sale is carried out, either at the place where the attached property is found, or at an auction room or public market, the geographical location of which is the most appropriate for soliciting competition at a low cost. This can be chosen by the attachment creditor subject to the rules relating to the territorial competence of the judicial officer responsible for the sale.
The debtor is informed of the location, day and time of the sale at public auction at least eight days before the fixed date, in a summons to attend the forcible sale.
The sale is carried out by a judicial officer qualified by his status to carry out the sales at public auction of tangible property (a judicial officer or a notary).
The operation that aims to sell attached property at public auction and to the highest bidder is the auction of attached assets.
This sale at public auction is open to anyone (excluding those conducting the sale) and aims to obtain the best price. The attached assets are sold to the highest bidder after three calls have been made by the auctioneer.
The sale shall come to an end when the price of the sold property enables the attachment creditor to be paid in principal, interest and costs. The price can be paid in cash.
An auction sale report is drawn up naming the property sold, the auction amount, the surname, name and place of residence of the highest bidder.
The sale brings about a transfer of ownership, upon payment of the price in cash.
Failing payment, the item shall be resold following a frivolous bid by the highest bidder (i.e. a new sale procedure is carried out due to a frivolous bid having been placed by a person who did not fulfill his obligations, such a non-payment of the price). In the event of resale at a lower price, the irresponsible bidder shall be responsible for the difference between the initial sale price and the resale price.
5. Incidents
Incidents may result from disputes between the creditors, third-parties or the debtor:
Incidents resulting from creditors
Involvement of creditors of the same debtor who have been informed of the implementation of attachment proceedings.
Besides the attachment creditor, other creditors may be involved in the proceedings. In order to be joined to the proceedings, the other creditors must follow the procedure for opposition by third-party creditors with regard to money from the sale. In the context of these proceedings, these creditors are called “opposing creditors” while the attachment creditor is called the “first attachment creditor”.
In order to be involved in the proceedings, the opposing creditor must have an enforcement order establishing a claim that is certain, of a fixed amount and due (see e-note no. 1). The opposition by third-party creditors has the effect of making the opposing creditor a party to the initial proceedings. Nevertheless, the first attachment creditor shall remain the one that starts proceedings.
Opposition by third-party creditors with regard to the money from the sale may be lodged until the proceeds from the sale are distributed.
This is done by a judicial office who shall indicate, under pain of being declared null and void, the enforcement order by virtue of which the opposition is being lodged, and the separate account of the sums claimed in capital, costs and interest incurred.
The deed is served upon the first attachment creditor and the judicial officer in charge of the auction sale. The first attachment creditor alone carries out the sale in his own name and that of all the opposing creditors, who shall be included in the distribution of the sales price.
Supplementary attachment
In addition, a supplementary attachment may be carried out by the first attachment creditor or opposing creditor. The judicial officer draws up a report that is subject to the execution order rules. This report is served at the same time as the deed of opposition if the supplementary opposition is done at the same time as the opposition.
If the first attachment creditor has not arranged for the forcible sale formalities to be carried out, the opposing creditor may be subrogated to the rights of the first attachment creditor for the carrying out of the execution order. The opposing creditor give notice to the first attachment creditor that he must fulfill the necessary requirements within eight days, failing which, the opposing creditor shall be automatically subrogated to the rights of the first attachment creditor.
The nullity of the first attachment shall not have any effect on the supplementary attachment.
The execution order can only be released (i.e. the removal of the obstacle to the exercising of the execution order by the debtor and his rights to his property) after having obtained a decision by a judge or the agreement of the attachment creditor and opposing creditors.
Incidents raised by third-parties
In principle, incidents raised by third-parties relate to ownership of an asset. These incidents suspend proceedings for the assets to which they relate until the end of the opposition proceedings.
Third-parties may contest the execution order proceedings by two types of actions:
- action for diversion: this is defined as the action by which a third-party petitions the court to exempt an asset that he owns from attachment;
- action for recovery: the purpose of this action is to establish the right of ownership that someone has over an asset.
Incidents raised by the debtor
Dispute linked to the ability to attach property
As in the case of incidents raised by third-parties, a dispute relating to the ability to attach property (see the list of property that cannot be attached p.2) of one or several asset(s) shall suspend the proceedings for the property to which they relate until the end of the proceedings before the enforcement judge.
The debtor may raise a dispute relating to the ability to attach certain assets.
Nullity
The attached debtor may request that the attachment be declared null and void. Nullity (i.e. the sanction of a legal deed vitiated by a flaw) that is invoked may be ‘nullity due to a substantive defect’ (e.g.: lack of capacity) or ‘nullity due to a procedural defect’ (.e.g.: non-fulfillment of a formality).
A nullity request shall not suspend attachment operations, unless otherwise decided by the judge. Cancellation of the execution order shall involve the lifting of the initial attachment for the property concerned, which becomes available again. If the nullity only concerns certain deeds, the proceedings shall recommence, apart from the deeds that are the subject of the petition of nullity.
Due to the non-suspensive nature of a petition of nullity, a sale may still occur. Therefore, two cases can be distinguished:
- if the cancellation was declared after the sale but before the distribution of the price, the debtor may request that the proceeds from the sale be returned;
- if the cancellation is announced after the price has been distributed, recovery of undue payments can be envisaged against the creditor if the debtor was not in reality liable for any debt. On the other hand, if the cancellation is based on the irregular nature of the attachment, the debtor may claim compensation against the creditor.
Glossary
- Recovery of undue payment action which enables a person, who paid a sum even though he was not the debtor, to claim in court the return of this sum by the person who received it.
- Highest bidder: person whose bid is successful.
- Auction of attached assets: operation for the purpose of selling an attached asset at public auction to the highest bidder.
- Immovable property (or real property): property that, by its nature, cannot be moved.
- Inalienable property: an asset that may neither be disposed of, nor used as security for a debt.
- Movable property (or a movable): an object that has physical existence and that can be moved.
- Lapse: the penalty for an act that was initially valid but whose full effectiveness depended on a subsequent event that has not occurred.
- Pledgee creditor: a creditor whose claim is secured by a pledge (the pledge is a guarantee based on tangible movable property).
- Opposing creditors: all of the debtor’s creditors other than the attachment creditor.
- Attachment creditor: creditor who starts the attachment proceedings.
- Address for service: address at which the person is considered to domiciled for the purpose of the service process.
- Actual address: a person’s habitual place of residence.
- Frivolous bid: bid made by a person who becomes the highest bidder but who does not fulfill his obligations (non-payment of the price or auction fees). This person is called the frivolous bidder.
- Chattels real: Objects regarded as statutorily immovable, since they can be permanently affixed to an immovable or are intended for the use or service of an estate.
- Permanent fixture: a movable object physically attached to real property that cannot be removed without causing damage.
- Inadmissibility: the penalty for a claim advanced by a person without the right, interest or capacity to take legal action.
- Release: the lifting of a blocking of, or a legal obstacle to, the realization of an act or the exercise of a right.
- Intangible personal property: property having no physical existence, and that is intangible.
- Movables by anticipation: immovable objects that have not yet been separated from the land, but that will then become movables and are considered as such.
- Moratory penalty: reparation for prejudice caused by a delay in the performance of an obligation (e.g. moratorium interest). moratorium interest).
- Nullity: the penalty for a legal deed that is vitiated by a defect of form (e.g. omission of a formality) or a defect of substance (e.g. lack of capacity to take part in court proceedings).
- Opposition by third-party creditors: a procedure allowing other creditors of the same debtor to join the proceedings brought by the attachment creditor in order to share in the proceeds from the attachment, or even to amplify the property to be attached to it by incorporating other assets.
- Limitation period: means of acquisition or extinction of a right by the lapse of a certain period of time.
- Attachability: the attachable nature of an asset.
- Service: the service of formal notice by a judicial officer, consisting of the delivery of a procedural document to its addressee.
- Formal Notice: a document addressed to the debtor containing a demand to perform his obligations and indicating the consequences that would be incurred by his refusal to comply.
- Subrogation: the option offered to a creditor to take the place of a negligent creditor in an enforcement procedure.
