Upon claiming payment for property, the property shall be seized and sold. A claim of a claimant shall be satisfied out of the money received from the sale of the property. Basis: § 52 of the Code of Enforcement Procedure. A bailiff determines the order of seizure of property after hearing the proposal of a claimant.
The prevailing opinion is that bailiffs seize and sell any assets belonging to debtors cheaply. A bailiff has the right to seize assets that are subject to seizure for the purposes of the Code of Enforcement Procedure and have good sales prospects. The actual market value of a thing is ascertained before an asset is seized, using the capacity for analysis, experience and, if necessary, the opinion of an expert who knows the area of the asset to determine the price. If an auction fails, the price is adjusted by agreement with the claimant. The conditions of determining the price and revaluation are stipulated in subsection 100 (5) of the Code of Enforcement Procedure. An auction is a way of selling assets, which leads to several participants taking part in the auction. It is possible that the price does not decrease, but will increase due to the bids made by the participants. The objective of enforcement proceedings is to satisfy a claimant’s claim in the fastest manner without damaging the interests of the debtor.
A debtor has the right to be present when assets are seized (subsection 70 (1) of the Code of Enforcement Procedure), participate in an auction (subsection 87 (1) of the Code of Enforcement Procedure) and submit applications or notations concerning the action (subsection 75 (5) and § 92 of the Code of Enforcement Procedure).
The debtor, a representative of the debtor or an adult family member of the debtor must be present or the bailiff must summon two impartial observers or a police officer to be present at the action when assets are recorded or another action is performed in the debtor’s premises (§§ 29 and 70 of the Code of Enforcement Procedure). An oral auction is to be conducted in the presence of impartial observers (subsection 88 (5) of the Code of Enforcement Procedure). The duty of the independent observers is to describe the circumstances of the action and whether it was conducted pursuant to law in the case it is disputed later.
The debtor has the right to sell a seized thing themselves outside an auction with the consent of the claimant or the bailiff (§§ 102 and 157 of the Code of Enforcement Procedure). In such a case, the asset is sold under the supervision of the bailiff, which means that the bailiff participates in the entry into the contract and guarantees that the thing is not sold at a price that is lower than that indicated in the instrument of seizure of assets and that the sales price is paid into the occupational current account of the bailiff. The consent of the claimant is not required for the sale if the auction has previously failed or it may be presumed that the thing cannot be sold at an auction or the revenue achieved at an auction would be considerably smaller than it would be if the thing were sold outside an auction.
Compulsory sale will be commenced after the seizure, i.e. an auction will be declared for the assets seized by the bailiff.
As a rule, a bailiff sells the seized movable and immovable property at a public electronic auction. An action takes place at the time determined by the bailiff. Pursuant to subsection 82 (1), the starting price of a thing at an auction is the price that is set out in an instrument of seizure. An announcement will be published in the publication Ametlikud Teadaanded and in a public computer network at least ten days before the auction when movable property is sold and at least 20 days before the auction when immovable property is sold.
If an auction fails, a bailiff prepares an instrument of failure of auction. Upon failure of an auction, a claimant may demand that a repeated auction be organised.
A repeated auction will be conducted pursuant to the procedure prescribed for the first auction. The bailiff may reduce the price of the items, but by no more than 25 percent of the starting price of the previous auction by requesting the opinion of the debtor and the collector about the price reduction in advance. The prices of items may not be reduced by more than 70 percent of the starting price of the first auction.
If the sales price of a thing is bigger than the amount of the debt to the claimant and the bailiff, the remaining amount will be transferred to the current account indicated by the debtor.
A bailiff organises compulsory sales, but they are not a specialised salesperson. The law stipulates what a bailiff must do and proceeding from law, a bailiff makes every effort to sell the property as fast as possible and for the highest price possible. We point out from the above that the debtor has the possibility and right to help with the compulsory sale. (For example: it is possible for the bailiff to advise the people interested in the property sold by the debtor.) The faster the debtor’s assets are sold, the lower the default interest accrued (if set in the enforcement instrument).
More information about the rights and obligations related to the organisation of auctions can be found on our website under Assets – Procedure for conduct of an auction, rights and obligations of participants.