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ARTICLES

Auction of Movable and Immovable Property

On November 22, 2023, Law 415 of November 22, 2023 was published in the Official Gazette No. 29915-A, “Amending articles of the Judicial Code, related to auctions of movable and immovable property”. In this document we will make a comparative table of the way in which the amended articles were drafted and the new wording as of their reform, and we will also explain the new rules regarding the fixing of the basis for the auction of real estate.

Comparative table of regulations

Text prior to Law 415 of 2023 Text amended by Law 415 of 2023

Article 1652. When real property or its income, ships or aircraft are seized, the director of the corresponding Registry shall be ordered to make the provisional inscription.

When real estate is seized, the executor shall present within the following two days a certificate from the Public Registry, stating whether the real estate is free or whether it is encumbered with mortgages or antichresis. He shall also present another certificate from the respective employee of the Treasury Department, regarding the value of the property in the Cadastre.

Article 1652. When real property or its income, ships or aircraft are seized, the director of the corresponding Registry shall be ordered to make the provisional inscription.

When real estate is seized, the executor shall present within the following two days a certificate from the Public Registry, stating whether the real estate is free or whether it is encumbered with mortgages or antichresis. Likewise, an appraisal made by a qualified professional, stating the market or commercial value of the property, shall be submitted. The debtor may submit, prior to the date of the auction, his own appraisal made by a qualified professional, stating the market or commercial value of the property.

Article 1657. The Court shall set the value assigned in the respective Cadastre to real estate that pays a contribution to the Tax Authorities. Article 1657. The Court shall assign a market or commercial value to real estate, based on the average value of the appraisals presented by the parties. If there is no record of the submission of the debtor’s appraisal, the judge shall assign its value on the basis of the appraisal submitted by the executing party.
Article 1743. Unless the parties have agreed on the basis of the auction, the provisions of Article 1652 shall apply to mortgage foreclosures. Article 1743. The provisions of Articles 1652 and 1657 of this Code shall serve as the basis for the auction.
Article 1744. When in the mortgage deed the formalities of the executive process have been waived, the Judge, in view of the claim and the documents referred to in Article 1734, shall order the sale of the property with notification of the present owner of the mortgaged property, but no incidents may be proposed nor may any exception be presented other than that of payment and prescription. Payment may be made and proven at any stage of the process. If the foreclosed party proves that he has paid before the filing of the lawsuit, he will not be ordered to pay the costs incurred. The proof must consist of an authentic document, a private document or a judicial act from which it clearly appears that the payment has been made.

Article 1744. When in the mortgage deed the formalities of the executive process have been waived, the judge, in view of the claim and the documents referred to in Article 1734, shall order the sale of the property with notification of the present owner of the mortgaged property, but no incidents may be proposed nor any exception other than that of payment and prescription. Payment may be made and verified at any stage of the process. If the foreclosed party proves that he has paid before the filing of the lawsuit, he will not be ordered to pay the costs incurred. The proof must consist of an authentic document, a private document or a judicial act from which it clearly appears that the payment has been made.

The provisions of Articles 1652 and 1657 of this Code shall serve as the basis for the auction.

 

Main effects of Law 415 of November 22, 2023

The new rules regarding the setting of the basis for the auction of movable and immovable property are as follows:

  • According to the new article 1652, the executor must always present an appraisal signed by a qualified professional certifying the commercial value of the property. For the debtor it will be optional (“may”) to submit an appraisal signed by a qualified professional certifying the commercial value of the property.
  • According to the new article 1657, the basis for the auction of a real estate property shall be fixed according to the following rules:
  • If the executor and the debtor each submit an appraisal of the real estate to be auctioned, the basis will be fixed with the average value of those two appraisals.
  • If the debtor does not submit an appraisal of the property to be auctioned, the basis will be fixed taking into account the appraisal provided by the executing party.
  • According to the new article 1657, the possibility of auctioning real estate based on the cadastral value disappears.
  • Pursuant to the new article 1743, the basis for the auction of real estate will be set according to the rules of the new articles 1652 and 1657 of the Judicial Code. The text of the new article 1743 eliminates the possibility for the parties to agree on the basis of the auction.
  • According to the new article 1743, the basis for the auction of a real estate property will be fixed according to the rules of the new articles 1652 and 1657 of the Judicial Code.
  • Law No. 415 of November 22, 2023, became effective with its publication in Official Gazette No. 29915-A of November 22, 2023.
Author

Maximiliano Quintero

Senior Associate

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