Seizure of motor vehicles: legal significance and consequences in transactions with seized motor vehicles

Author. Nikola Arabadzhiev 

What are the significance and consequences for the parties is practically important in dispositive transactions with motor vehicles . In the case of a seizure, the vehicle remains the property of its owner, which is quite different from a stolen car. In the case of a sale of a motor vehicle we have a sale of a movable asset which however requires notarisation of the signatures of the parties - , but the absence of a register in which the parties or the notary can make reference to the presence or absence of a lien, this leads to corresponding adverse consequences.

What those consequences are is practically important.

The attachment of movable property is an action by the CSE which orders that the debtor's property is intended for enforcement and prohibits the debtor from disposing of it. Pursuant to the Civil Procedure Code (CPC), the creditor-claimant may direct the execution on any property or claim of the debtor (Art. 442 of the CPC), i.e. in the absence of voluntary performance of a due debt and the initiation of an execution process under the relevant legal procedure for the enforcement of the due claim, the object of execution in the process is the entire property of the debtor - any property and any claim.

/Exception are statutorily defined non-executable assets /Article 444 CCP/.

When the enforcement is directed against a movable property, such as a car, pursuant to Art. 450, par. 1 of the CCP, the bailiff shall impose a seizure on the relevant movable property - by inventorying the property. However, the attachment may also be imposed upon receipt of the notice of inventory or attachment, provided that it specifies precisely the property or claim on which enforcement is sought.

From the moment the attachment is imposed, the debtor shall be deprived of the right to dispose of the claim or the property and may not, on pain of criminal liability, alter, damage or destroy the property /Article 451, para. 1/. These consequences occur for the debtor from the moment of receipt of the invitation for voluntary execution /VPI/, when the execution is directed against an object - specified in the invitation. Or the imposition of a "seizure" of a motor vehicle is aimed at preserving the physical integrity of the seized item and its belonging to the debtor's property, and therefore, by imposing it, the debtor is prohibited from disposing of the item.

Pursuant to Article 469 of the CCP, the described movable property may also be given to the debtor for safekeeping. It shall be delivered for safekeeping against signature.

It follows from the above legal provisions that the attachment deprives the debtor of the right to dispose of the attached property, but he remains its owner and the property normally remains in his possession. The deprivation of the possession of the property shall take place upon the debtor's refusal to take possession of the property or at the discretion of the bailiff. In that case, the property shall be seized from the debtor and given to the claimant or to a bailiff-appointed custodian for safekeeping.

In short, once the seizure of the motor vehicle has been imposed, there may be two consequences - the criminal liability of the debtor and the custodian of the seized property under Article 277(2) in the event that he sells the seized property and, for its eventual purchaser, the relative nullity of the transaction vis-à-vis the enforcement creditor. The attachment does not lead to the nullity of the transaction, but only to the relative nullity of the transaction vis-à-vis the creditor-claimant. The nullity is not absolute (in relation to all) but only in relation to the enforcement creditor in the specific enforcement process.

It has become clear that the dispositions made by the debtor with the seized property after the seizure are invalid only against the creditor, unless the third party - the transferee, may invoke Article 78 of the Civil Code /Article 452, paragraph 1 of the CCP/. We now come to the question of the consequences for third parties, potential purchasers of the seized movable property - motor vehicles. The consequences under the aforementioned Art. 452, par. 1 of the Civil Procedure Code, are the relative nullity with respect to the claimant in the enforcement proceedings /case/ in which the seizure was imposed, unless the third party - the acquirer, may invoke Article 78 of the Civil Code /Article 452, paragraph 1 of the Civil Procedure Code/. I.e., it seems that the decisive meaning becomes the surrender of possession of the property, because according to Art. 452 para. 1 of the CCP, even if it is made after the seizure, the disposition, i.e. the sale, will be valid if the third party purchaser can invoke Article 78 of the Law on Property, because if the conditions of Article 78 of the Law on Property are met - the right of the claimant to satisfy the seizure is overcome. However, since the transfer of a car requires, pursuant to Article 144(2) of the Road Traffic Act, a contract with notarized signatures, it should be pointed out that there is a binding case law of the SCC, rendered pursuant to Article 290, according to which it is held that, when amending Article 78(2) of the Road Traffic Act, a contract with notarized signatures is required. 1 of the Civil Code of 31.10.1997. an explicit exception to the rule for the acquisition of movable property by bona fide possession if acquired for consideration by a non-owner, once the transfer of ownership requires a notarial deed or notarial certification of signatures. The above-mentioned legislative amendment explicitly establishes a new exception to the rule that the person who acquires possession of a movable property in good faith and for consideration becomes its owner. This exception is independent and separate from the exception provided for in Article 78(2) of the Civil Code.

According to the reasoning of the SCC, this essential in the amendment of Art. 78 para. 1 of the Civil Code of 31.10.1997 is to introduce an explicit exception to the rule of acquisition of movables by bona fide possession if they are acquired for a consideration from a non-owner, once a notarial deed or a notarial certification of signatures is required for the transfer of ownership thereof. With this exception, the conflict between the interest of the owner and the interest of the bona fide possessor who has acquired possession from a non-owner is resolved in favour of the owner according to the principle 'Nemo dat quod non habet' or 'no one can give what he does not have'.

Although the transaction is valid and effective as between the seller of the seized property and the third party buyer, the third party can adequately organize its defense, since this transaction can be rescinded according to the norms of civil law /Articles 189-192 of the Civil Code/. Thus, pursuant to Article 189 of the LPA, the buyer may rescind the sale pursuant to Article 87 of the LPA. In this case, the seller is obliged to return to the buyer the price paid and to pay him the costs of the contract as well as the necessary utility costs for the property. For other damages the seller is liable according to the general rules of non-performance.

As regards the consequences for the creditor-claimant in the execution proceedings in respect of which the attachment has been imposed, it should be borne in mind that, since the transaction is void as far as he is concerned, execution may take place on the attached property, but only on condition that it is in the debtor's possession. If, however, there is a delivery of the thing to the purchaser and he refuses to return it, the claimant must establish the nullity by action and order the purchaser to hand over the thing.

In addition to all the foregoing, it should be emphasised that the registration of transactions and attachments in the register of the CAT does not entail third-party opposability, because the registers of the CAT have no such significance, which, as we have pointed out above, from our point of view constitutes an imperfection of the legal framework.

Lastly, since the purchaser is obliged to register the change of ownership with the traffic police within two weeks of the date on which the sale was effected, the question of the consequences and significance of the refusal to register the seized vehicle transferred must be raised separately, since under Article 143 para. 9 of the Road Traffic Law, a change in the registration of vehicles with a seizure or other legal restriction shall be made after revocation or written permission of the authority that ordered the seizure or of another competent authority. The refusal is subject to appeal under the procedure of the Code of Civil Procedure, but it should be stressed that the registration of the change of ownership is not an element of the factual composition of the transfer transaction and, in that sense, cannot be relevant to the above concerning the transfer effect and the validity of the transaction between the parties.
Law Firm Arabadzhiev has the capacity to help you in all the problems that may arise in the disposal of a seized car and to assist in finding the right solution, so contact us for assistance and consultation.