Reference for the review of difficult legal issues in enforcement - special topic on property disposal

Source: The Third Division of the Shandong High Court

Editor's note:

Property disposal is a key link in the enforcement procedure, which directly affects the realization of the rights and interests of the applicant for enforcement, and also has a significant impact on the property rights and interests of the person subject to enforcement. In order to thoroughly practice active justice, earnestly protect the lawful rights and interests of the masses, and strive to promote the modernization of enforcement work, the Third Enforcement Division of the Provincial People's Court Executive Bureau summarized some difficult issues, researched and put forward reference opinions. It is hereby released after discussion and adoption by the Provincial People's Court's Conference of Professional Enforcement Judges, to be a reference in the province's courts' enforcement work, to continuously increase the level of enforcement work, to ensure high-quality development with high-quality enforcement services, and to increase the public's sense of access to justice.

Reference for the review of difficult legal issues in enforcement (5) - special topic on property disposal

1. On the determination of the reference price for the disposal of property

1. If the disposal reference price is determined through negotiation between the parties, how does the enforcing court determine the starting price?

Reference opinion: If the parties negotiate to determine the disposal reference price and clearly request that the bargaining result be used as the starting price, the enforcing court shall allow it. Based on the actual circumstances of the case and on the premise of respecting the wishes of the parties, the enforcing court may also refer to the provisions of Articles 10 and 26 of the Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions in the People's Courts (hereinafter referred to as the "Online Auction Provisions") to determine the starting price after reducing the price.

2. If a party or interested party raises an objection on the grounds that the disposal reference price determined in the online inquiry report is lower or higher than the actual price, should the enforcing court review it as an enforcement objection case?

Reference Opinions: Article 22 of the Provisions of the Supreme People's Court on Several Issues Concerning the People's Court's Determination of the Reference Price for Property Disposal (hereinafter referred to as the Provisions on Determining the Reference Price for Property Disposal) clarifies four types of situations that should be reviewed by the people's court in accordance with the enforcement objection procedure, namely, objections raised in the case of errors in the basic information of the property, exceeding the scope of the property or omitting the property, the lack of corresponding appraisal qualifications of the appraisal agency or the appraiser, and serious violations of the appraisal procedures. However, the objections raised by the parties and interested parties to the calculation method or the results of the online inquiry do not fall within the scope of the review of the objection to enforcement, and the enforcing court will not review it as an objection case.

If a party raises an objection to the results of the online inquiry on the grounds that there are missing properties such as decoration or attachment on the property involved in the case, the enforcing court may directly entrust the appraisal.

3. If the reference price for property disposal is determined by means of online inquiry, if the price difference issued by the inquiry platform is too large, how should the enforcing court dispose of it?

Reference opinion: Where the reference price for the disposal of property is determined by means of online inquiry, if the price difference issued by the inquiry platform is too large, the enforcement judge shall, in accordance with Article 12 of the Provisions on Determining the Reference Price for Property Disposal, review whether the online inquiry report contains errors in the basic information of the property, exceeds the scope of the property, or omits the property. If the above circumstances do not exist and one of the parties does not recognize the result of the inquiry, the enforcing court may ask both parties whether they agree to entrust the appraisal. If both parties agree to entrust the appraisal, the enforcing court initiates the entrusted appraisal procedure to determine the reference price, and if one party does not recognize the result of the inquiry and does not agree to the entrusted appraisal, the enforcing court may determine the disposition reference price in accordance with the provisions of paragraph 1 of Article 13 of the Provisions on Determining the Reference Price for Property Disposal.

4. If the appraisal report exceeds the validity period during the implementation process, can the appraisal results be used as the basis for determining the reference price for property disposal?

Reference: The validity period of the appraisal report is to avoid the property to be auctioned from deviating too much from the actual auction date and the appraisal base date, resulting in the appraisal price not reflecting the true value at the time of auction. In accordance with the provisions of Paragraph 4 of Article 11 and Paragraph 4 of Article 19 of the Provisions on Determining the Reference Price for Property Disposal, if the enforcing court fails to issue an announcement of the auction or directly enter the sale procedure within the validity period of the online inquiry or appraisal results, it shall notify the online inquiry platform or the original appraisal agency to re-issue a report. If the parties and known interested parties agree to determine the reserve price by means of the overdue inquiry or appraisal report, the reserve price may be directly determined. In addition, according to the provisions of paragraph 3 of Article 27 of the Provisions on the Determination of the Reference Price for the Disposal of Property, if the people's court issues an announcement of the auction of the first auction or directly enters the sale procedure within the validity period of the bargaining, inquiry, or appraisal results, and the validity period of the auction or sale has not exceeded six months, there is no need to re-determine the reference price.

5. In the equity disposal of a non-listed company, if the appraised value of the equity of the company to be disposed of is negative, how should the starting price be determined?

Reference: In the property disposal procedure, if the equity of a non-listed company with a negative appraisal value should not be disposed of in principle, but if the applicant for enforcement clearly knows that the equity value is negative, but still requests to dispose of it and pay the relevant expenses in advance, the enforcing court shall allow it, but the determined starting price shall be higher than the total amount of the appraisal fee, enforcement fee and other enforcement costs.

2. Measures for the disposal of property such as auctions, sales, and repayment of debts in kind

6. If the property of the person subject to enforcement fails to be sold or fails to be sold through auction, and the creditor does not accept the repayment of the debt, should the third party apply for purchase at the unsuccessful auction price?

Reference opinion: According to Article 9(4) of the Opinions of the Supreme People's Court on Further Strengthening the Concept of Good Faith and Civilized Enforcement in Enforcement Work, if the property is unsold after auction and the enforcement creditor does not accept the repayment of debts, the third party may apply for the purchase at the unsuccessful auction price. If a third party intends to purchase after the first or second auction fails, it shall submit an application before the next disposal process is initiated, and if it intends to purchase after the completion of the sale procedure, it shall submit an application within a reasonable period of time. If two or more persons apply in writing to purchase at the unsuccessful auction price, they shall be informed to participate in the bidding through the subsequent auction procedures.

7. After the auction or sale of the property of the person subject to enforcement is completed, if no one is willing to buy the property at the auction reserve price, and the applicant for enforcement or other enforcement creditors do not accept the repayment of debts, can the property be re-evaluated and auctioned?

Reference opinion: In accordance with the provisions of Article 25 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts, after the auction or sale of property is completed, if no buyer is willing to buy the property at the reserve price of the third auction, and the applicant for enforcement or other enforcement creditors still do not express their acceptance of the property for debt payment, the sealing or freezing shall be lifted and the property shall be returned to the person subject to enforcement, except where other enforcement measures may be taken against the property. The phrase "other enforcement measures may be taken" in this provision includes a re-auction of the property. Even if the enforcing court has returned the property to the person subject to enforcement after unsealing it, it does not mean that the property has become exempt from enforcement, and if the property has the possibility of being sold within a reasonable period of time, it can be seized again, frozen and the appraisal auction procedure can be initiated.

8. After the property in the name of the person subject to enforcement is auctioned off, if all the creditors of the person subject to enforcement who have obtained the basis for enforcement jointly apply for repayment of debts in kind, should the enforcing court approve it?

Reference opinion: After the property in the name of the person subject to enforcement is auctioned off, all the creditors of the person subject to enforcement who have obtained the basis for enforcement jointly apply for enforcement of the property of the person subject to enforcement in the form of repayment of debts in kind after consultation, if the application does not harm the interests of the creditor and the person subject to enforcement, the enforcing court shall respect the autonomy of the creditors and approve it.

9. In the process of auctioning immovable property, if the lessee requests to continue leasing the immovable property until the expiration of the lease term on the grounds of prior creation of the lease right, how should the enforcing court deal with it?

Reference opinion: In principle, the enforcing court should issue a notice of vacating the immovable property within a time limit before conducting the auction. If the lessee requests to continue leasing the immovable property until the expiration of the lease period on the grounds that the lease right has been created before the immovable property to be auctioned is seized or mortgaged, the enforcing court shall conduct a review in accordance with the procedures for objections by outsiders. After examination, if the lessee has signed a written lease contract and takes possession of the immovable property before the applicant for enforcement establishes a mortgage on the immovable property and the court seals it, the court shall suspend the auction of the immovable property and give the parties the right to file a lawsuit. If the right of lease is confirmed to be legal and valid through the objection procedure of an outsider and can be prevented from being compelled by the court, the enforcing court shall auction the lease. If the lessee raises an objection, it is generally not appropriate for the enforcing court to directly auction the lease without the review of the objection procedure by an outsider.

10. Can the "sole residence" of the person subject to enforcement be enforced?

Reference opinion: In the course of enforcement, the enforcing court shall distinguish different situations and handle them separately based on the specific circumstances of the "sole housing" and the enforcement content of the case. Under any of the following circumstances, the "sole house" may be enforced: (1) the person who has the obligation to support the person subject to enforcement has other residential houses in his name that can maintain the necessities of life, (2) after the enforcement basis takes effect, the person subject to enforcement transfers other houses under his name in order to avoid debts, and (3) the "only house" in the place where the person subject to enforcement is registered or intends to be enforced (4) The person subject to enforcement enjoys a house with defects in the ownership of a house with small property rights and cannot be freely transferred; (5) the "only house" of the person subject to enforcement is the house that the person subject to enforcement should deliver as determined on the basis of enforcement; (6) the person applying for enforcement provides residential housing for the person subject to enforcement and his or her dependents in accordance with the local standard for the guaranteed area of low-rent housing, or agrees to deduct five to eight years' rent from the price of the house with reference to the average rent standard of the local housing rental market.

11. How to grasp the "local low-rent housing guarantee area standard", "local" in "local housing rental market" and "average rent standard of housing rental market" in Article 20, Paragraph 1, Item (3) of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objections and Reconsideration Cases by the People's Courts?

Reference opinion: In accordance with Article 20, Paragraph 1 (3) of the Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Enforcement Objections and Reconsideration Cases by the People's Courts, if the applicant for enforcement provides a residential house for the person subject to enforcement and his or her dependents in accordance with the local standard for the guaranteed area of low-rent housing, or agrees to deduct five to eight years' rent from the price of the house with reference to the average rent standard of the local housing rental market, the court may enforce the only house in the name of the person subject to enforcement. The "local" in this item refers to the municipal district, county, or county-level city where the disposed house is located. For the determination of the "average rent standard of the housing rental market", the court should refer to the information provided by the local housing rental management department and market conditions, and study and determine it in light of the specific circumstances of the case.

12. After the property of the person subject to enforcement is unsold at auction, and the applicant for enforcement applies for repayment of debts at the unsold price, but the unsold price exceeds the amount of the creditor's rights, and the applicant for enforcement is unable to make up the difference, should the enforcing court issue a ruling on the repayment of debts in kind? Can the case be closed by terminating the enforcement procedure?

Reference: Article 20 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts stipulates that: "Where the auction is concluded or the unsold property is used to settle debts, the people's court shall make a ruling and deliver it to the buyer or receiver within 10 days after the full payment of the price or the difference in the price that needs to be paid." Therefore, if the applicant for enforcement applies for repayment of debts in kind but cannot make up the difference, the enforcing court shall not make a ruling on repayment of debts in kind. If the person subject to enforcement has no other property available for enforcement, and meets the provisions of Article 1 and Article 4 (1) of the Provisions of the Supreme People's Court on Strictly Regulating the Termination of the Enforcement Procedure (for Trial Implementation), a ruling shall be made to terminate the enforcement procedure.

13. Can the following circumstances be determined as "other circumstances that seriously violate the online judicial auction procedures and harm the interests of the parties or bidders" as provided for in Article 31(6) of the Online Auction Provisions?

Reference opinions: The following circumstances may be found to be the circumstances provided for in Article 31(6) of the Online Auction Provisions, and where the parties or interested parties request the cancellation of the auction on this basis, they should be supported: (1) the auction website announced in the online auction announcement is inconsistent with the platform on which the auction is actually conducted, harming the interests of the parties or bidders;

14. After the immovable property is unauctioned, if the applicant for enforcement applies for repayment of debts in kind, how to bear the taxes and fees?

Reference: Article 30 of the Provisions on Online Auctions stipulates that: "Taxes and fees arising from online judicial auctions shall be borne by the corresponding entities in accordance with the provisions of relevant laws and administrative regulations; According to the provisions of this article, the enforcing court shall clarify the subject and method of tax burden in the auction announcement. If the applicant for execution applies for repayment of debts in kind after the auction fails, the applicant for execution shall pay the tax payable for the registration of the immovable property to the tax authorities.

In accordance with the provisions of "Improving the Registration Process for Judicial Disposal of Immovable Property" in the Implementation Plan for Optimizing the Business Environment Innovation and Breakthrough Action in Shandong Province issued by the Shandong Provincial People's Government, the enforcing court issues a legal document to the immovable property registration agency to assist in the enforcement of the registration of immovable property in kind, and the tax authorities collect the tax payable by the transferee for the registration of the immovable property in accordance with the law. After the transferee pays the tax, the immovable property registration agency handles the registration of the immovable property.

15. In the execution auction, if the applicant for enforcement participates in the bidding, can the auction payment payable be offset with its creditor's rights after the bidding is concluded?

Reference opinion: If the applicant for enforcement participates in the auction of the property of the person subject to enforcement, in principle, it may claim to use the creditor's right to offset the final payment payable for the auction. Before the payment, the enforcing court shall ascertain whether there are other prior rights and interests in the auctioned property; if the person subject to enforcement is a citizen or other organization, the enforcing court shall ascertain whether there are other creditors who have applied to participate in the distribution. Under the condition that the prior rights and interests are protected and the legitimate rights and interests of other creditors are not harmed, the applicant for enforcement may offset the auction money payable with its creditor's rights.

16. If the enforcement court auctions or sells the real estate jointly owned by the person subject to enforcement and the person not involved in the case, does the person not involved in the case need to share the transfer taxes and fees that should be borne by the seller in accordance with the law?

Reference: Article 304 of the Civil Code of the People's Republic of China stipulates that the co-owners may negotiate to determine the method of division. If no agreement can be reached and the common immovable or movable property is divided and the value of the property is not diminished by the division, the physical property shall be divided;

According to the above-mentioned legal provisions, in the auction of the real estate jointly owned by the person subject to enforcement and the person not involved in the case, the division and disposal shall be considered first, and the auction shall be carried out only when the property subject to enforcement cannot be divided or the value will be reduced due to the division. If the joint property is auctioned as a whole, since the outsider is not the person subject to enforcement in this case, and only passively enters the enforcement procedure because of the joint relationship with the person subject to enforcement of the auctioned property, the overall auction is also the choice when the auctioned property does not meet the conditions for division, and it is not appropriate to let the outsider bear a heavier burden than the divided auction. Therefore, when the auction transaction between the person subject to enforcement and the person not involved in the case is completed at auction, the transfer taxes and fees that should be borne by the seller in accordance with the law should not be shared by the outsider.

17. In the course of enforcement, if the person applying for enforcement does not actively apply for the disposal of the property of the person subject to enforcement who has been sealed, how should the enforcing court deal with it?

Reference opinion: For the property of the person subject to enforcement that has been sealed, the enforcing court shall actively promote the disposal of the property. If the applicant for enforcement does not actively apply for the appraisal auction, the enforcing court may notify the applicant in writing to apply within a reasonable period of time. If the person subject to enforcement applies in writing to dispose of his property and pay the appraisal auction fee, the enforcing court shall initiate the appraisal auction procedure and no longer calculate the interest on the debt during the period of delayed performance from the date of initiation of the procedure.

If the property involved in the case is seized by other courts at the same time, the enforcing court may take the initiative to coordinate the transfer of the right to dispose of the property involved in the case to the court waiting for seizure, and the court waiting for seizure will reserve a corresponding share for the applicant for enforcement after disposition.

3. On the disposal of several types of special property

18. What kind of disposal method should be adopted for the tradable shares (shares) of the listed company held by the person subject to enforcement?

Reference opinion: When the enforcement court disposes of the tradable shares (shares) of a listed company held by the person subject to enforcement, it may adopt the following methods according to the specific circumstances: first, the person subject to enforcement sells it on its own, that is, the person subject to enforcement sells it by itself through secondary market transactions within a time limit, and the enforcement court controls the corresponding price by freezing the capital account of the person subject to enforcement; second, it is forced to sell by centralized bidding, that is, it instructs the securities company to sell within a time limit and transfers the proceeds to the court's account; third, it is forced to sell by means of block trading, that is, if the number or value of the shares is large and the selling may cause large fluctuations in the stock price, it may instruct the securities company to sell in a block transaction within a reasonable period of timeFourth, the use of shares for debts, that is, with the consent of both parties, without prejudice to the interests of other creditors and the public interest, the enforcement court will directly transfer the frozen unrestricted tradable shares to the name of the applicant for enforcement in the form of non-transaction transfer at a price not lower than the closing price of the day before the transfer;

If the number of shares is large, the value is high, the equity relationship of the listed company is complex, the risk of disposal through the secondary market is large, or the disposal cannot be disposed of through the secondary market due to other factors, the auction shall be conducted through the online judicial auction platform.

19. Can the enforcing court dispose of an unlicensed house built on state-owned construction land?

Opinion: Unlicensed houses built on state-owned construction land are not property that the court may not seal, seize, or freeze as stipulated in the law and judicial interpretations. Therefore, the court can enforce unlicensed houses built on state-owned construction land. In the course of implementation, the housing registration authority should be consulted on whether the house can be converted into a licensed house, and it should be used as a reference for determining the value of the unlicensed house. When disposing of a house that has not been initially registered, if the conditions for initial registration are met, the court may, after disposing of it, issue a Notice of Assistance in Enforcement to the housing registration agency in accordance with the law; if the conditions for initial registration are not met for the time being, the court may issue a Notice of Assistance in Enforcement to the housing registration agency after disposing of it, and specify that the housing registration agency shall register it in accordance with the Notice of Assistance in Enforcement after the buyer or receiver of the house completes the relevant formalities and meets the initial registration conditions That is, the current situation that the house does not meet the initial registration conditions is disclosed before disposal, and the buyer or receiver acquires the house according to the status quo of the rights of the house, and the subsequent property right registration matters are the responsibility of the buyer or the successor.

20. Can a house built on collective land be disposed of by the enforcing court?

Reference: On houses built without permission on collective land. Referring to the spirit of the Notice of the Supreme People's Court (Fa [2012] No. 151), houses built without approval on collective land can be "disposed of as is", and the buyer shall meet the qualifications required by relevant laws or policies. At the time of disposal, the current situation and the nature of the land shall be disclosed in the auction announcement, and the buyer or receiver shall acquire the house according to the current status of the house, and the subsequent property rights registration matters and the risks that may be faced in the future such as demolition, demolition and compensation shall be borne by the buyer or the assignee. If the price cannot be realized, the creditor can accept the house to pay off the debt. The above contents and risks should be stated in the valuation or redemption ruling.

21. When the enforcing court disposes of the vehicle of the person subject to enforcement, it finds that the vehicle has been identified as a scrapped vehicle by the vehicle management department, how should it be disposed of?

Reference opinion: In the process of enforcing the vehicle of the person subject to enforcement, if the vehicle is determined by the vehicle management department to be a scrapped vehicle, it shall be disposed of as a scrapped vehicle and the remaining residual value of the vehicle shall be enforced. Scrapped vehicles can be registered, dismantled, destroyed and other disposed of by scrapped motor vehicle recycling and dismantling enterprises in accordance with regulations, and if there is residual value, the court may take enforcement measures against the residual value.

22.Can the cash value of a life insurance policy be enforced?

Reference: Article 2 of the Provisions of the Supreme People's Court on the Sealing, Seizure and Freezing of Property in Civil Enforcement by the People's Courts stipulates that: "The people's court may seal, seize and freeze the movable property in the possession of the person subject to enforcement, the immovable property registered in the name of the person subject to enforcement, specific movable property and other property rights. "Although life insurance is based on people's life and body as the subject of insurance, and has both personal protection and investment and financial management functions, the insurance policy itself has savings and value, and its savings and value are reflected in the fact that the policyholder can withdraw the cash value of the policy by terminating the insurance contract, surrendering the policy, etc., and the cash value belongs to the liability property of the policyholder, and it does not have personal dependence and exclusivity in legal nature, and can be executed in accordance with the law. In the course of compulsory enforcement, the court should pay attention to distinguishing the nature of life insurance for investment profit and life insurance, and should not ignore the protection function of the life insurance contract itself, so as to achieve humane and rational law enforcement.