The very interesting Decision No. 116/2026 of the Single-Member Court of First Instance of Heraklion was recently published. The Court ruled in favor of our clients, who were the successful bidders in a conducted auction, upholding the validity of the auction (for the risks associated with purchasing real estate at auction and the legislative changes regarding the protection of the successful bidder, see our previous article here).
With regard to the facts of the case:
In the present matter, a fifth consecutive auction of a property was conducted following the cancellation of the previous four as unsuccessful. The Greek State held a mortgage over the auctioned property. The auction was carried out:
(a) without an intervening court decision pursuant to paragraph 3 of Article 966 of the Greek Code of Civil Procedure, and
(b) without dual service of the extract of the seizure report upon the Greek State, namely one service pursuant to Article 56 of the Code for the Collection of Public Revenues (KEDE) upon the Head of the competent Tax Office (D.O.Y.) of the debtor, and one service pursuant to paragraph 4 of Article 995 of the Greek Code of Civil Procedure upon the Governor of the Independent Authority for Public Revenue (AADE), due to the State’s capacity in this case as a mortgage creditor.
The Court ruled in favor of the validity of the auction on the following grounds:
First, regarding the conduct of a fifth consecutive auction without obtaining prior court authorization, it held that the debtor suffered no prejudice, since the property was auctioned at a price exceeding the 65% threshold provided by the relevant statutory provision.
Furthermore, as to whether dual service of the extract of the seizure report upon the Greek State is required when the latter has the capacity of mortgage creditor over the auctioned property, the Court accepted the following: “…Under paragraph 3 (i.e., of the current Article 56 KEDE), service of a copy of the summary of the seizure report […] upon the Minister of Finance (and currently the Governor of AADE) is not required […]. This specific paragraph was amended by Article 3 para. 9 of Law 4038/2012, and the explanatory memorandum to Law 4038/2012 expressly noted that ‘The additional service of copies of the summary of the seizure report […] upon the Minister of Finance (now the Governor of AADE): (a) is redundant, (b) unnecessarily burdens the central service of the Legal Council of the State, (c) creates additional costs for those initiating the auction, and (d) causes damage to the ranked creditors — including the State — since the aforementioned service expense is deducted as an enforcement cost from the auction proceeds when drawing up the distribution table of creditors.’ Therefore, a copy of the seizure report […] is no longer served upon the Minister of Finance (now the Governor of AADE), but only one service is effected upon the Head of the competent Tax Office. It should be noted that the reference in the explanatory memorandum to the ‘additional service of copies of the summary of the seizure report […] upon the Minister of Finance (now the Governor of AADE)’ encompasses the service under Article 995 para. 4 of the Code of Civil Procedure upon the State as mortgage creditor, since prior to the enactment of Law 4038/2012, the service of the extract of the seizure report upon the Minister of Finance (now the Governor of AADE) was based solely on the above legislative provision […]. By logical necessity, therefore, this amendment aimed solely to regulate the issue of the previously prescribed obligation to effect service […] upon the Minister of Finance only in cases where the Hellenic State was a mortgage creditor. It follows that when the State has registered a mortgage over the auctioned property of the debtor and the auction is initiated by a third party, the initiating party, for the validity of the auction, must effect a single service, namely upon the director of the public treasury of the district of the debtor’s residence and place of professional activity pursuant to KEDE […] (Court of Appeal of Eastern Crete 127/2023, NOMOS database)…”
Accordingly, the Court held that in cases where the Greek State has registered a mortgage over the auctioned property of the debtor, for the validity of the auction it is required — and sufficient — for the initiating party to effect a single service of the extract of the seizure report upon the director of the public treasury of the district of the debtor’s residence and place of professional activity. No additional service upon the Governor of AADE is required. On this basis, the objection was dismissed.
