Selling a property subject to judicial attachment through a real estate agency: how?

The owner of a property entrusts a real estate agency with a sales mandate but, in the meantime, the property becomes subject to judicial attachment. Regardless of any potential liability, what can the agency do, if there are people interested in purchasing the property, to try to complete the transaction safely?

The first aspect to consider is that the agency cannot manage the sale as though the property were freely transferable. Judicial attachment, in fact, imposes a legal restriction that also produces effects against third parties: any subsequent deeds of sale are neither effective nor enforceable against the creditor who initiated the proceedings or any other creditors who have joined them.

It is therefore not a safe solution to have a preliminary agreement signed with the intention of resolving the attachment at a later stage. Furthermore, failing to carry out a search at the Real Estate Registry Office (Conservatoria dei Registri Immobiliari), or informing an interested buyer of the existence of the attachment without adequately explaining its effects, would be contrary to the duty to provide accurate information.

The safest approach is to provide the prospective buyer with complete and accurate information and take the necessary steps to fully resolve the situation related to the enforcement proceedings.

To proceed in this direction, one fundamental condition must be met: the sale price must be sufficient to satisfy the creditors in full, so as to obtain their withdrawal from the enforcement proceedings, bring the proceedings to an end and secure the cancellation of the encumbrances on the property.

The Italian Supreme Court of Cassation has clarified that, once the sale has been scheduled, a debtor who intends to release the property from attachment must directly pay the creditor in full, or all creditors who may have joined the enforcement proceedings. The creditors must then withdraw from the enforcement proceedings.

From an operational standpoint, therefore, if the agency wants to try to complete the sale outside the judicial auction process under safe conditions, it must first verify:

• who the creditor that initiated the enforcement proceedings is;
• whether other creditors have joined the proceedings;
• what amount is required to settle the debts in full;
• whether the creditors are willing to accept payment, withdraw from the enforcement proceedings and allow the cancellation of the mortgages and the attachment.

Without these steps, the transaction cannot be considered safe: the property could still be transferred through an agreement, but it would remain exposed to the continuation of the enforcement proceedings because the transfer would not be enforceable against the creditors.

The marketing of the property must therefore follow a different process from that of a standard real estate transaction. First, it will be necessary to obtain all documentation relating to the enforcement proceedings, particularly:

• the identifying details of the enforcement proceedings;
• the appraisal report, if already available;
• the names of the creditor who initiated the proceedings and any other creditors who have joined them;
• precise information on the current status of the proceedings.

The next step is the most delicate phase for the successful outcome of the negotiation: attempting to reach a satisfactory agreement with all the creditors involved. Through this agreement, the creditors may recover the full amount owed or a percentage of their claim that they consider sufficient to withdraw from the enforcement proceedings.

Operational guidelines for the real estate agency

The objective is to verify, before obtaining any financial commitments from the buyer, whether the purchase can be completed within the enforcement proceedings or through an agreement that allows the property to be released from attachment.

The sales mandate granted by the owner to the agency does not, in fact, remove the restriction arising from the attachment.

To comply with the duty to provide accurate information under Article 1759 of the Italian Civil Code, the agency must:

• inform prospective buyers in writing of the existence of the enforcement proceedings;
• clarify that the procedures and the very possibility of purchasing the property depend on the stage reached by the proceedings and the position of the creditors;
• avoid presenting the cancellation of the attachment as certain;
• refrain from encouraging payments of money to the owner on the assumption that the owner will subsequently settle their debts.

In essence, the agency does not necessarily have to stop marketing the property, but it must approach the process correctly, presenting the transaction for what it is: the potential sale of a property subject to judicial attachment, the feasibility of which has yet to be verified.

In practice, for the successful outcome of this type of negotiation, a particularly useful point of contact is represented by the creditors who have joined the enforcement proceedings and, above all, the attorneys representing them. With these professionals, it is possible to agree upon and determine the amounts necessary to satisfy the claims, either in full or in part, and establish the timeframes required to complete the transaction.

Until these aspects have been clarified, it is prudent to keep prospective buyers' interest at an exploratory stage, without having them pay money to the owner and without guaranteeing that the property can be purchased free of encumbrances.

Even after an agreement has been reached with the creditors, the notarial deed cannot be arranged as though it were a standard sale of a property free of encumbrances. It is, in fact, necessary to carefully coordinate a series of steps:

• payment of the purchase price;
• withdrawal from the enforcement proceedings and termination of the proceedings;
• cancellation of the attachment;
• cancellation of the mortgages or consent to their cancellation;
• protection of the buyer until all necessary formalities have been completed.

From an operational standpoint, the agency should therefore facilitate the organization of the sale and the notarial deed in a way that does not make the buyer's security dependent on mere future commitments by the seller.

In the final stage of the transaction, it therefore becomes essential to coordinate the termination of the enforcement proceedings with the execution of the notarial deed of sale.

In particular, it is necessary to ensure that the deed of sale becomes effective and that the funds paid by the buyer are released only after the judge has declared the enforcement proceedings terminated and ordered the cancellation of the attachment, and after that termination has become final in the absence of any objections.

For this reason, the notarial deed must include specific clauses and provide for the deposit with the notary of the amounts payable to the debtors and, where applicable, any remaining amounts due to the seller. These amounts will be released in accordance with the conditions and procedures established in the deed.