March 2025

Decision of the Athens Single-Member Court of First Instance on the Suspension of an Order for the Return of a Property

Recently, the Athens Single-Member Court of First Instance issued Decision No. 696/2025, which granted our client’s application for a stay of execution initiated against them based on an order for the return of a property (following its auction and adjudication to the highest bidder). The Court found a likelihood that the objections filed by our client would be upheld, leading to the annulment of the disputed auction and subsequent procedural acts, including the Compulsory Auction Report, its Summary, and the order for the return of the property served on our client.

In this case, the compulsory execution process resulted in the auctioning of our client’s property without following the proper pre-auction procedure, particularly the legally required (pursuant to Article 995(4) of the Greek Code of Civil Procedure) service of the extract of the seizure report to a preferred creditor. This omission rendered the contested auction invalid.

The Court, in reviewing the stay application, found one of the two grounds for objection likely to succeed, specifically the procedural irregularity concerning the failure to properly serve the extract of the seizure report to a preferred creditor. This issue was further complicated by the prior transfer of the disputed claim to a special purpose entity, which then became the preferred creditor. The omission of service to this entity rendered the auction null and void.

Finally, the Court also found that the return of the property to the highest bidder would cause irreparable harm to our client, making it necessary to suspend the enforcement proceedings initiated through the order for the return of the property.

The decision included the following critical findings:

"Therefore, at the time of the seizure of the above-described apartment – horizontal property, which took place on 9-1-2023, and within 15 days of that date, the special purpose entity 'PILLAR FINANCE DAC' had become the mortgagee of the claim in question. However, although the special successor of the claim did not proceed with a notation of this change in ownership in the cadastral records of the Athens Land Registry, such omission may establish liability for damages on the part of the assignor or the preferred creditor, but it does not affect the validity of the assignment or the accompanying transfer of the pre-notation mortgage securing the claim (Article 1312 of the Greek Civil Code). Since the recordation of such a change is not considered a notice of assignment, which had already occurred through the entry of the summary of the assignment agreement in the public books of the Athens Pledge Registry, which was accessible to the first of the defendants in the objection, the failure to serve the extract of the seizure report to the foreign special purpose entity 'PILLAR FINANCE DAC,' as the preferred creditor, resulted in the nullity of the auction of the G-1 apartment – horizontal property, conducted electronically on 20-9-2022, and consequently the invalidity of the order for the return of the property dated 12-12-2024 along with the first enforceable copy of the adjudication report."