The Supreme Court determined the procedure for distributing funds received from the sale of the only home – Rossiyskaya Gazeta

Update Post: December 9, 2023 9:26 am

Let us remember that the so-called executive immunity for single homes no longer applies if we are talking about mortgage debts. Such a debt cannot be completely written off even within the framework of bankruptcy proceedings: the apartment will still have to be sold.

As stated by Aida Sabirzyanova, member of the Russian Bar Association and head of Yalilov & Partners’ bankruptcy practice, according to the law, 80 percent of the proceeds from the sale of collateral are used to pay the creditor’s claims. guaranteed. Part of the funds can be used to pay legal costs, costs of paying remuneration to the financial manager, costs associated with the sale of collateral, etc.

“In the discussed case, the Supreme Court decided the destination of funds from the sale of a mortgaged apartment,” says lawyer and partner of the BMS law firm Denis Frolov. “As a general rule, the only premises suitable for living cannot be foreclosed upon (the so-called executive immunity). The exception is the case when the owner of such housing voluntarily waived such immunity and transferred his housing to a mortgage. The question of What to do with the remaining funds from the sale of the apartment and the agreements with the guarantee were examined by the supreme court of creditors, while the lower courts wrongly considered that this money is not under executive immunity and can be used to pay the debts of other unsecured creditors, which is a mistake. The remaining money, even if there are other creditors, is still under executive immunity and must be transferred to the bankrupt citizen to solve his housing problems (this is the logic of the legislator).”

In turn, lawyer and partner of Legal Group LLC, Vladimir Shalaev, draws attention to the fact that in this case the Supreme Court drew attention to two important aspects of the distribution of funds from the sale of collateral . First: it indicated that when selling the pledged asset, the penalty must be reimbursed in favor of the secured creditor, preferably before the demand for payment of the principal debt of the unsecured creditors. “The second point, no less important, is that when the foreclosure applies to a single home, the funds remaining after the sale of the collateral are not subject to distribution among the unsecured creditors, but are left for the debtor to purchase other homes,” says Vladimir Shalaev. “This conclusion, in my opinion, is controversial, since in the overwhelming majority of cases the remaining funds will not be enough to purchase another residential property. And the bankrupt will not be able to attract additional funds. If he can buy another replacement housing, then What is the destination of the remaining funds, whether they are distributed among the creditors or remain with the debtor, whether they can be used to purchase basic necessities. Furthermore, in this particular case, the fine is eight times the amount of the main debt and almost double the interest. Such a distribution of funds in the bankruptcy procedure seems legal, but not fair. I believe that the Supreme Court of the Russian Federation had the opportunity to note the presence of signs of abuse by creditors (the amount of the principal debt is approximately 10% of the funds payable). I hope this will be taken into account when the case is reconsidered.”

At the same time, continues lawyer Denis Frolov, there is a judicial practice of foreclosing on the only habitable housing, even when the bankrupt owner has not encumbered it with a mortgage. “These are so-called luxury homes. Unfortunately, there are no uniform criteria for the luxury of a single home, and in each specific case the judge must establish these criteria taking into account the balance of interests not only of the debtor, but also of the people who live with him, and especially the minors,” says Denis Frolov.

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November 21, 2023 10:25 am