One of the main ways to execute judicial acts is to foreclose on the debtor’s property. This could be real estate, vehicles, jewelry and securities, and other expensive assets. To determine the initial price for bidding or the price of property transferred to the claimant, an assessment is assigned in enforcement proceedings. Read about the rules for conducting the assessment procedure, ways to protect the debtor and the claimant in this material.
When is a property valuation required by bailiffs for enforcement proceedings?
Valuation is the determination of the real value of property assets. Typically, this indicator is the price for which things, objects or objects can be sold on the market. Professional assessment activities can be carried out by organizations and private experts who are members of SROs and have qualification certificates. As part of enforcement proceedings, a number of assessment powers are granted to FSSP employees, although they do not belong to professional subjects of assessment activities.
Property valuation under enforcement proceedings is carried out in the following cases:
- to determine the proportionality of the seized property and the amount of debt (it is impossible to seize assets if their market price is disproportionate to the claims of the claimant);
- to determine the starting price when selling through auction, through a specialized organization;
- to challenge the bailiff’s decision on the assessment if the collectors or debtors disagree with it;
- to determine the price of things and items transferred directly to the debtor to repay the debt.
Note!
If, by a court decision, the debtor is obliged to transfer a certain thing to the claimant, an appraisal may not be necessary. However, the value of the property can be significantly increased through repairs or other investments by the debtor. In this case, based on the results of the assessment, it is possible to determine the amount that the claimant will have to pay to the debtor.
There is no need to submit any applications to conduct assessment activities. The FSSP specialist conducting the proceedings can conduct the assessment himself or invite a professional expert and send a copy of the resolution to the parties. However, if they disagree with the procedure for determining the value, or with the final price, the claimant and the debtor may require the involvement of an independent appraiser. All costs will be borne by the initiator of the assessment.
Is it possible to sell property without appraisal?
Article 85 of Law No. 229-FZ contains a direct and unambiguous indication - for property that will be sent for sale, assessment is mandatory. It follows from this that it is not necessary to calculate the market value of seized things and objects. For example, the legislation contains a number of exceptions under which property can be seized, but cannot be sold. A typical example is the only home of the debtor and his family. Since such an object cannot be sold through auction (except for foreclosure on a mortgaged apartment), the bailiff is not obliged to evaluate it.
Where assessment results are applied
In accordance with Law No. 229-FZ, the results of property assessment by bailiffs will be applied:
- as the starting price for organizing bidding (for this purpose, the assessment decree is transferred along with the property to a specialized organization);
- as the price for selling property without bidding (according to advertisements through the media, through direct offers to the buyer);
- to set off the value of property transferred directly to the claimant;
- to determine the difference that the claimant must return to the debtor when receiving the property in kind.
Determination of market value may be required when replacing seized items and items with other (equivalent) property. The debtor can submit such a petition, although the bailiff is not obliged to satisfy it. To confirm that the interests of the claimant will not be violated by the replacement, you can order an assessment through an independent expert, submit a conclusion or report to the bailiff.
They want to clarify the procedure for challenging the result of the assessment of seized property
On July 20, the Russian Ministry of Justice published for public discussion a package of amendments to the Law on Enforcement Proceedings in terms of improving the mechanism for assessing the seized property of debtors.
According to the amendments, the bailiff will attach a property valuation report to the materials of enforcement proceedings. In this case, the results of the assessment of the property by the appraiser, as well as the decision to collect the enforcement fee, can be challenged in court.
As stated in the explanatory note, the bailiff is required to engage an appraiser to evaluate the debtor’s property worth more than 30 thousand rubles. In this case, the value of the appraisal object in the appraiser's report is mandatory for the bailiff. The latter, as a rule, does not question the reliability of the information in such a report and, thus, the role of the bailiff is reduced only to the procedural registration of the assessment results, in the receipt of which he did not participate and could not influence them.
At the same time, at present, claims for the recovery of losses caused as a result of a bailiff issuing a decree on the valuation of the debtor’s property, based on the appraiser’s report, are collected by the courts from the treasury of the Russian Federation, that is, the state compensates for losses arising due to dishonest execution by commercial organizations assumed obligations to evaluate property.
As the authors of the project indicated, it is aimed at avoiding this situation and the results of the assessment made by the appraiser, contained in his relevant act, were subject to judicial challenge.
Public discussion of the project will last until August 3.
Chairman of the Association of Professional Claimants Vadim Suprun noted that the issue of challenging the valuation of property seized by a bailiff has remained unresolved for many years. In fact, for the assessment of this property, the bailiff turns to a specialized organization with which the Service has concluded a corresponding agreement. Based on the assessment results, the bailiff receives an expert opinion, the results of which - the market value of the property - are approved by his resolution.
“The legal subtlety of this process lies in the fact that for further actions to sell the property or transfer it to the claimant, it is necessary to issue an appropriate procedural document, which could, in a legal sense, be challenged by the party who disagrees with the assessment. The report itself and its results could not be challenged, since they were not procedurally approved by the documents of the enforcement proceedings,” the expert believes.
According to Vadim Suprun, it was not the specific expert opinion of the appraiser that was disputed, but the direct document of the bailiff, who in this case was only an intermediary. Subsequently, the property was transferred for sale and went to the new owner, and in parallel with the sale process, there could be a process of appealing the assessment, in some cases lasting for years.
The expert noted that in the case when the court decided to cancel the results of the property assessment, the injured party could file a claim for compensation for the damage caused, which, due to the peculiarities of the procedural design of the documents issued, could only be addressed to the FSSP of Russia. The amendments, he said, are aimed not only at preserving budgetary funds, but may also help speed up the process of making a decision on challenging the assessment of property seized during enforcement proceedings.
Aleksey Sharon, Third Class Advisor to Justice of the Russian Federation, also considers valuation to be the most controversial issue during the procedure for foreclosure on the debtor’s property. “The debtor wants his property to be valued at a higher price, while the claimant wants it to be valued at a cheaper price (this will make it easier to sell and pay off the debt). A number of objects are subject to mandatory assessment (real estate, accounts receivable, etc.). Property up to 30 thousand rubles. The bailiff can evaluate it independently. Due to the conflict of interests of the debtor and the creditor on the issue of valuation, many disputes arise to challenge the valuation made by the appraiser,” he explained.
At the same time, according to Alexei Sharon, the changes being made are more of a cosmetic nature and are associated with adjusting the terminology adopted in the legislation on valuation activities. To bring the norms of the Law on Enforcement Proceedings into line with the Law on Valuation Activities, the first was supplemented with the term “report on the assessment of the object of assessment.”
Methods for assessing property in enforcement proceedings
Federal Law No. 229-FZ provides for only two options for assessing property - directly by a bailiff, or by a professional appraiser. A special option is used to establish the market value of securities. To do this, the FSSP specialist makes a request to the organizer of trading (stock exchange) where the securities are traded.
Assessment by a bailiff
To understand when the bailiff can conduct an assessment himself, you need to look at Article 85 of Law No. 229-FZ. It contains 7 points for which a professional appraiser must be involved. If a thing or item does not fall under this list, the FSSP specialist has the right to calculate the market value himself. A typical example is movable property, whose preliminary cost does not exceed 30 thousand rubles.
To conduct the assessment, the bailiff uses the Methodological Recommendations approved by the FSSP Order No. 01-9 dated July 24, 2013. The evaluation algorithm is as follows:
- collection and analysis of information, documents about the characteristics and intended purpose of the item, year of manufacture, wear and tear;
- search for an analogue object for which there is publicly available information about the price (economic, technical, material and other characteristics are compared);
- using a comparative approach to calculate the market value of property (substantial and additional indicators that affect the price are compared);
- issuing a resolution indicating the value of things or objects, sending a copy of the document to the parties to the case.
The bailiff can obtain information about similar objects from the media, from auction organizers, or from a specialized organization for the sale of seized property. All requests for characteristics of analogue objects must be included in the production materials, since the bailiff is obliged to justify his conclusions.
Hiring a professional appraiser
If the parties to the proceedings do not agree with the cost indicators specified in the bailiff's resolution, they may require the involvement of a professional appraiser. As stated above, all costs for such services will be borne by the claimant. Also, a FSSP employee is obliged to involve appraisers to calculate the price of inherited assets:
- any types of real estate (plots, garages, houses, buildings, apartments, public assets, etc.);
- shares, bonds and other securities, if they are not traded on the free market or at organized stock trading (for example, this includes shares of a joint stock company if they were not issued for free sale);
- property rights, including accounts receivable;
- precious metals and stones, goods using them (metal bank accounts linked to the exchange rate value of metals are not included in this group);
- collectible banknotes, whose real value does not coincide with the face value;
- things with historical or artistic value (paintings, sculptures, antiques, etc.);
- assets whose preliminary value is above 30 thousand rubles.
Typically, FSSP units have long-term contracts with expert organizations or private appraisers. The costs of providing such services will be recovered from the debtor after the completion of enforcement proceedings and the sale of property. To determine the market value, characteristics and prices are also compared, and an expert physically examines things, objects and objects. The act that the bailiff submits to the appraiser must indicate the approximate price of the object.
Can the claimant and the debtor involve their own appraiser?
They can, but only within the framework of challenging the bailiff’s decision and the results of the appraiser’s work. Therefore, initially the FSSP specialist appoints an expert from a pre-selected list. In this case, it is checked whether there is any interest or family ties with the parties to the case, or other grounds for challenge. If creditors and debtors do not agree with the results of the assessment, they may request the involvement of a specialist who is a member of the SRO of appraisers.
Article 85. Valuation of the debtor’s property
1. The assessment of the debtor's property, which is being foreclosed on, is carried out by the bailiff at market prices, unless otherwise established by the legislation of the Russian Federation.
2. The bailiff is obliged, within one month from the date of discovery of the debtor’s property, to engage an appraiser to evaluate:
1) real estate;
2) securities not traded in organized trading (with the exception of investment units of open-end and interval mutual investment funds);
3) property rights (except for accounts receivable that are not sold at auction);
4) precious metals and precious stones, products made from them, as well as scrap of such products, with the exception of precious metals held in accounts or deposits with banks or other credit organizations;
5) collectible banknotes in rubles and foreign currency;
6) items of historical or artistic value;
7) things the cost of which, according to preliminary estimates, exceeds thirty thousand rubles.
3. The bailiff is also obliged to involve an appraiser to evaluate the property if the debtor or claimant does not agree with the assessment of the property made by the bailiff. A party to enforcement proceedings challenging the assessment of property made by a bailiff shall bear the costs of engaging an appraiser.
4. If the bailiff is obliged to involve an appraiser to evaluate a separate thing or property right, then the bailiff:
1) in the act (inventory of property) indicates the approximate value of the thing or property right and makes a note about the preliminary nature of the assessment;
2) appoints a specialist from among the appraisers selected in the prescribed manner;
3) make a decision on the valuation of a thing or property right no later than three days from the date of receipt of the appraiser’s report. The value of the object of assessment, indicated by the appraiser in the report, is mandatory for the bailiff when making the said decision, but can be challenged in court by the parties to enforcement proceedings no later than ten days from the date of their notification of the assessment;
4) sends to the parties a copy of the appraiser’s conclusion based on the results of the assessment report no later than three days from the date of its receipt.
5. The cost of securities traded in organized trading is established by the bailiff by requesting the price of securities from the trade organizer, whose relevant securities are included in the list of securities admitted to trading, and the cost of investment shares of open-ended and interval mutual investment funds - by requesting prices for investment units from the management company of the relevant investment fund.
6. Copies of the bailiff’s decision on the assessment of property or property rights are sent to the parties to enforcement proceedings no later than the day following the day of its issuance.
7. An assessment of property made by a bailiff without the involvement of an appraiser may be appealed by the parties to enforcement proceedings in accordance with this Federal Law or challenged in court no later than ten days from the date of their notification of the assessment.
8. If the validity period of the report on the assessment of the debtor’s property established by the legislation of the Russian Federation on valuation activities has expired, the bailiff is obliged to engage an appraiser within one month from the date of expiration of the specified period to re-evaluate the debtor’s property in the manner established by this article.
Deadlines for assessing property by a bailiff
Law No. 229-FZ specifies several procedural deadlines that are directly related to the valuation of property assets:
- The bailiff is obliged to involve a professional appraiser no later than a month after the discovery of the debtor’s belongings and objects;
- The deadline for the assessment will be indicated in the resolution of the FSSP specialist. since it depends on the list of assets, their characteristics and location;
- within 3 days after receiving the assessment report, the FSSP employee is obliged to issue a resolution indicating the market value in it;
- no later than one day after the resolution is issued, a copy of it is sent to the parties to the case;
- within 10 days after receiving information about the assessment, creditors and debtors can challenge it in court.
The validity period of the assessment report does not exceed three months. If this period has expired and the bailiff has not managed to sell the assets, a re-calculation of the market value will be carried out.
What to do if you do not agree with the assessment of property by bailiffs
The claimant is always interested in the lowest possible price for the property so that it is guaranteed to find a buyer at auction. The debtor, on the contrary, is almost always confident that the value of his assets is being deliberately understated. To protect their interests, the parties may demand a re-evaluation, or challenge the bailiff’s decision or the appraiser’s report.
If the FSSP specialist himself carried out the calculation of the market value, his decision can be appealed in the order of subordination, or through the court. The parties are given no more than 10 days to do this. If the calculations were carried out by a professional expert, the assessment can only be challenged in court.
Challenging the assessment in court
You can go to court to challenge the assessment within 10 days. This period is counted from the moment of receipt of a copy of the resolution, or transmission of information about the assessment in another way. The algorithm for challenging in court is as follows:
- you need to independently order an independent assessment (if possible), or prepare evidence about the discrepancy between the value of the property and the market price;
- the application is submitted to the court at the place where the enforcement actions were performed;
- If the applicant was unable to order an assessment before filing a claim, a corresponding petition can be submitted to the court.
Note!
If doubts arise in the conclusions of the appraisers, the court has the right to order a merchandising, economic or other examination. The costs of its implementation will be borne by the budget. However, if the application is not satisfied, the court will recover the amount of costs from the applicant.
If the challenge is successful, the court will indicate the proper market value of the property. The bailiff will be required to indicate it in the resolution and apply it when selling the debtor’s assets through auction, or when transferring them to the recoverer.
