The Government resolved to achieve the following aims with regard to home repossessions and auction procedures: reduction of court costs and burdens; introduction of e-administration and e-auctions for real estate; the closing of loopholes which lead to abuses in public auctions. Related legislative proposals will be put to parliament in the near future.
The Ministry of Public Administration and Justice shall amend existing legislation on court procedure and other aspects of the justice system in the following areas:
- deadlines for court proceedings
- the routines for court proceedings
- sales of repossessed property
- costs related to the above
The overall number of court cases in progress has grown in recent years due to the economic and financial crisis and excessive accumulation of debt in both the private and public sectors. Court proceedings aim to recover debt, or to impose other sanctions if debtors are unwilling or unable to comply. All affected parties – creditors, debtors and the authorities – have an interest in proceedings being as simple, cost-efficient and effective as possible; the proposed legislative amendments contain many measures which will contribute to these aims. Thus creditors will have a greater chance of debt recovery, and there will be more debt relief. It is also of primary importance to all that both the costs of proceedings and administrative burdens should decrease. The Government also set out this goal in the Széll Kálmán Plan: the in the crisis, more effective and cost-efficient legal processes are needed to aid not only creditors but also those debtors who are doing all they can to meet their obligations and are co-operating with the authorities.
In several ways the legislative proposal offers more specific regulation on conducting proceedings, and sets strict deadlines for the actions of courts, notaries and operatives carrying out proceedings. It also introduces e-administration services in many areas.
Adoption of the legislative proposal will enable reduction in work of the courts in many areas: the processing of applications will be simplified, and a new regulation will be introduced to prevent submission of unfounded objections. In addition to this, the possibility for a third round of proceedings will be abolished. A significant proportion of verdicts involving transfers will no longer be subject to appeal, and in guardianship cases no separate court ruling will be needed on procedure. The court resources thus released can be diverted to other tasks.
One of the more significant amendments is the further development of regulation on auctioning of real estate and assets, which aims to create transparency in conducting public auctions, free from abuse. If there is no other possibility for debt recovery, proceedings should at least be more effective by defining a higher auction purchase price. The main objective of proceedings is not that debtors should lose their properties, but to wind up proceedings effectively and in the shortest possible time. The legislative proposal offers wider scope for mandatory e-auctions of assets, while real estate auctions will only be possible electronically. Consequently one bidder will not be able to exclude others from the auction, and the whole procedure can be followed by everyone on the internet.
To broaden the range of potential buyers, information available on real estate and assets for sale will be increased. The legislative proposal also includes preventative measures against abuses and cuts the time of possible appeals which may delay final decisions. In every auction there will be financial sanctions against those bidders who deliberately omit to pay, and so postpone procedures and raise additional costs. To this end executives will have to submit documents ex officio to court. Regulations on exclusion of certain people from auctions will be tightened, and will be made more transparent and clear.
Costs on starting proceedings will also be changed: if recovery proceedings are initiated against joint debtors, fees and duties levied will not be calculated by the number of people involved; only a lump-sum payment will be needed, plus a small additional charge. This initiative will also reduce costs of proceedings affecting mortgage borrowers, since in such cases proceedings are often initiated against those jointly liable for the debt. Owing to repossession sale quotas there will be fewer auctions in the coming years; according to the new legislative proposal, those debtors who move out of real estate already auctioned off and who hand it over to the new owners in an appropriate condition will be given back a certain amount of the money arising from the sale.
(Ministry of Public Administration and Justice)
