Enforced sale

Enforced sale
When is enforced sale necessary?
In some cases financial claims against a person may be secured by a mortgage in real estate or other assets. If you for instance have lent money to another person with security in his/her property and he/she does not pay you what is owed, you may claim that the property needs to be sold. The charge may be agreed or established by execution or by levying a distress warrant.

What are the conditions for enforced sale?
In order to recover judgement in a petition for enforced sale you have to prove that you have a financial demand that has been breached. This has to be confirmed by court or on other grounds that the court can accept. Further you have to document that you have mortgage in real estate or other assets that belong to the person who owes you money. It may also be the case that you have mortgage in something that belongs to a third person to secure your demand. The law differentiates between general basis and specific basis for enforcement, which normally has originated by agreement. This agreement has to be made in certain ways that comply with specified demands described in the Act of Legal Enforcement. If the claim has specific basis you must normally send the debtor a warning before you recover judgement in the petition for enforced sale.

What does the petition need to contain?
There is a specific form for petition for enforced sale that has to be used and issued.
The petition must contain the following information:
- Full name and address, social security number / company number and telephone number of the claimant
- Full name and address, telephone number, and social security number / company number of the defendant
- A description of the basis of the enforcement and a summary of the different parts of the claim if it is a financial claim.

Necessary enclosure to the petition:

- Copy of the enforcement
- Copy of the warning, if sent

If the sale is connected to real estate the petition must also contain:

- The address of the property, and which property that you demand sold
- Confirmed transcript of the register of land and land charges (“grunnboka”)

By enforced sale of documents entitling the right to hold a dwelling the petition must also contain:

- Summary of liens, charges and encumbrances to the documents
- Copy of the entitling documents with partial bond
- Transcript of the defendant from The Register of Mortgaged Moveable Property

What does it cost?
For a petition to the district court of legal enforcement you have to pay 1.5 times the general court fee. The fee of petitions for enforced cover will be claimed at the end from the National Fee Collection Office
at Brønnøysund. By assisted or auction sale 9 times the general court fee will be added (10 times the fee in total). For complaints to the district court you pay the general court fee.

How is the procedure?
The defendant will normally be given one month to dispute the claim and present objections to the petition of enforced sale. The time limit runs from the time of the announcement of the petition. The objections are normally sent to the claimant for comments. If objections are received the court will take a stand on the dispute on the basis of written presentation of the case. The court may also hold a hearing.
If the claim of enforced sale is sustained, the court has to decide whether there is to be an auction sale or an assisted sale. If the defendant lives at the property in some cases he/she may be entitled to a compensatory dwelling from the claimant. A claim for a compensatory dwelling needs to be forwarded to the court within a one month deadline of the notice of intention.

How does the enforced sale take place?
Most enforced sales take place by means of an assistant who normally is an estate agent, lawyer or manager of a housing corporative. By assisted sale the property or the flat will be announced for sale through adverts in newspapers, the Internet etc. Viewings are held and the whole process will be similar to that of an ordinary voluntary sale. If the enforced sale takes place in an auction sale the execution officer will normally administer the sale. The defendant, the claimant and possessors of right will be summoned to the auction meeting. Before the meeting the execution officer has made a valuation of the property. The time and place for the auction will be announced in a newspaper that is widely read in the district. Those who wish to bid at the auction must attend themselves or be represented by a trustee. An offer has to be binding for six weeks unless all parties agree on a shorter period. It cannot be shorter than two weeks. The purchase amount must be paid within three months after the day of the auction. This point in time is called the day of settlement.

Approval of the sale
If the district court accepts the sale it will issue a so-called confirmation order. The purchase amount is divided between the mortgagees and the owner at a separate division order. If the court refuses to accept the offer given at an auction sale the execution officer must hold a ne,w auction. It may also be necessary to hand over the case to an assistant.

Appeal against the decision of the court
The confirmation order may be appealed to the appellate court. The deadline for an appeal is one month from the pronouncement of the verdict. The appeal must be delivered to the district court. The division order may also be appealed to the appellate court.  The district court pronounces the appeal to the other party and transfers the case to the court of appeal.


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