September 2023

Decision of the Piraeus Court of Appeal on the Cancellation of the Foreclosure Report Due to Lack of Written Proof of Assignment to a Servicer

The decision of the Piraeus Court of Appeal No. 456/2023 has been published, in which the court, after having annulled the original court decision that had rejected the objection of our client, annulled the compulsory seizure report and the cheque for payment, by which an auction of horizontal properties in Piraeus was accelerated for the satisfaction of a claim of approximately 200.000,00 euros.

The court held that the documents communicated by the management company together with the payment order did not show that it had taken over the management of that claim against that debtor. In particular, the document summarising the contract of administration did not make any reference to the individual claims for which administration was delegated. 

As the Court of First Instance held, the above document 'makes no reference to the requirements of the specific contracts to which the second defendant was entrusted with the management of the claim in question, nor does it refer to any annex showing that the management of the claim in question was entrusted by the first defendant to the second defendant [...]. Nor is there any reference to the summary of the management contract as to the identity of the claims in any other document [...], nor is it even stated that the first defendant entrusted to the second defendant all the claims arising from the loans which had been transferred to it up to that time'. 

This defect is often found in the summaries of management contracts communicated to debtors by management companies when they initiate enforcement proceedings and is now highlighted by the case-law of our courts. As we have reported elsewhere (see here): 'The problem lies in the fact that the form of the summary of the management contract submitted by Servicers to the competent pawnshops, which was adopted on the basis of a relevant ministerial decision of the Minister of Justice in 2003 (YA161337/30.10.2003), does not include a claims annex and therefore the Servicer must prove in another way that the management of the specific disputed claim (loan) has been entrusted to him and not to someone else. The signed servicing agreement (i.e. not the summary thereof) obviously exists and is lengthy with detailed provisions which, however, the parties involved (Funds and Servicers) do not wish to disclose to third parties; therefore, Servicers are covered by the law and only file the summary, which is published in the pawnbroker's office and usually contains 2-3 pages with what the above mentioned Ministerial Decision of 2003 provides for. This summary, however, does not contain an annex setting out the individual loans that are to be administered'. 

(for more in relation to the issues arising with the proof of the assignment of management to Servicers see here)