Attachment of Real Property Under OHADA Law
By Ferdinand Doh Galabe, Esq.
I – Introduction
In a state governed by the rule of law, when a court hands down a decision which becomes final, the parties proceed to enforce voluntarily in good faith without hitches – if they adhere to the law and respect state institutions. Unfortunately, this is not always what obtains. When for one reason or the other, there’s a failure on the part of the judgment debtor to voluntarily execute a court decision, the judgment creditor can recourse to forceful execution. It goes without saying that when a litigant goes to court, s/he believes that whatever decision is delivered by the court will be enforceable or capable of enforcement. Without this assurance, no litigant will trust the judicial system and aggrieved parties will take their grievances elsewhere or simply resort to taking justice into their own hands.
To avert the above chaotic scenario and to promote a secure and enabling business environment, the Organisation for the Harmonisation of Business Law in Africa (OHADA), an international uniform business law system in Sub-Saharan Africa (SSA), was established by a Treaty in 1993 (Port Louis, Mauritius) later revised in Quebec in 2008, by and between seventeen (17) member states including: Benin, Burkina Faso, Cameroon, Central African Republic, Comoros Islands, Congo-Brazzaville, Cote d’Ivoire, Gabon, Guinea-Conakry, Guinea-Bissau, Equatorial Guinea, Mali, Niger, Democratic Republic of Congo (DRC), Senegal, Tchad, and Togo
The OHADA has since enacted a body of uniform laws in ten (10) substantive business law areas known as “uniform acts”, including: general commercial law, commercial companies and economic interest groups, simplified proceedings for the recovery of debts and measures of enforcement, securities law, law on cooperative societies, law on the carriage of goods by road, insolvency law, accounting law and financial reporting, arbitration law, and mediation law. More uniform acts are expected in the future and the OHADA is looking forward to broadening its scope of legislation. In addition to the above-mentioned body of laws, the OHADA institution has within it organs which play different roles, especially the Common Court of Justice and Arbitration (CCJA) which is both an institutional arbitration body in its own right as well as the supreme (highest) judicial body within the seventeen member states competent to entertain as a court of cassation matters relating to the OHADA body of uniform laws. The role of the CCJA is to ensure the uniform interpretation and application of the OHADA body of uniform laws in all the seventeen member states.
That said, the attachment of real property is regulated by the Uniform Act on Simplified Procedures for the Recovery of Debts & Measures of Enforcement adopted on April 10, 1998 at Libreville, Gabon. This uniform act contains 338 sections, with Sections 246-334 regulating the procedure for the attachment of real property and Sections 28- 53 touching on general provisions on enforcement measures which are equally applicable to the procedure for attachment of real property. It should be noted that the attachment of real property is one of several modes (measures) of enforcement (execution) provided by Book II of the uniform act. Besides sequestrations (sequestration of tangible movable property, sequestration of debts in the custody of third parties, and sequestration of shareholdings and other transferable securities), and known in French as “saisie conservatoire” and in other Common Law jurisdictions as “Mareva injunctions” or “freezing orders”, there are in all six enforcement measures on movable property, including: attachment & sale of tangible movable property known as “saisie vente” in French; garnishee proceedings also known as forced attribution or award of third party debts known in French as “saisie attribution de creances”; attachment & assignment of earnings (salaries & wages) or “saisie et cession des remunerations” in French; seizure-apprehension of tangible movable property or “saisie- apprehension des biens meubles corporels” in French; attachment under a prior claim of tangible movable property known in French as “saisie revendication des biens meubles corporels”; attachment of transferable securities or other partnership rights or shareholdings known in French as “saisie des droits d’associés et des valeurs mobilière”;
It is germane to note here that the Uniform Act on Simplified Procedures for the Recovery of Debts & Measures of Enforcement works hand in glove with other instruments such as the Uniform Act on Securities, as a good number of obligations, especially bank credits, are secured credits. Section 28 paragraph 2 of the Uniform Act on Simplified Procedures for the Recovery of Debts & Measures of Enforcement (UASPRDME) provides that, “Save in the case of a debt secured by a mortgage or privilege, execution shall be carried out in the first place on movable property and, where this is insufficient, on immovable property.” Movable property or personalty is that which is considered movable by the law, as opposed to real property or realty (Black’s Law Dictionary).Other instruments which regulate measures of enforcement include; the Uniform Act on Collective Procedures for Clearing of Debts, the Uniform Act on General Commercial Law, Uniform Act on Commercial Companies and Economic Interest Groups, land law, Administration of Estates Act, 1925 revised 1971, Intestacy Act 1971, matrimonial property regimes applicable in Common-law jurisdiction, and applicable Civil procedure rules.
Some experts and legal practitioners have criticized the OHADA law framework which they consider as not delivering on its promises. Indeed, the UASPRDME, for example, is one of the only Uniform Acts which has not yet been revised after twenty four (24) years of use. If we are to rely solely on this longevity, we may quickly conclude that it is flawless and that it is largely serving its purpose without need for any significant law reforms. Some criticisms which have been levied against this instrument include the exclusion of appeals in the attachment procedure which arguably infringe on fair hearing guarantees, including the possibility for third parties to challenge judicial decisions which are prejudicial to their rights. It has equally been proposed that the third party who has an interest in real property which is to be sold should be allowed to challenge the sale of the property from the moment the third party learns of the impending sale, instead of the strict and rigid eight (08) days prior to the sale proper provided by Section 299. Other proposed law reforms concern the adaptation of appeal mechanisms to the specificities of the auction sale procedure.
II – Where to Start
Essentially, real property attachment is a procedure which enables a creditor who possesses a writ of execution to pursue the attachment and sale of real property belonging to his debtor in order to get paid by the proceeds of the sale of the real property. This procedure is the subject matter of this brief paper. As previously noted, the first principle of the real property attachment procedure is to be found in Section 28 paragraph 2 of the UASPRDME which provides that, “Save in the case of a debt secured by a mortgage or privilege, execution shall be carried out in the first place on movable property and, where this is insufficient, on immovable property.”
The exceptions stated in the above proviso should be keenly noted, that is, mortgages and privileges. Per Section 195 of the Uniform Act on Securities, mortgages must be entered on the land register. The mortgage confers on the mortgagee the right to pursue the debtor’s property and a right of preference or right to be paid on the proceeds of the attached and sold the property. Likewise, a privilege or preferential right, consisting of general and special liens or privileges, is a transferable security regulated especially by Sections 179-189 of the Uniform Act on Securities, which is conferred by law to certain creditors because of the nature of their debt, allowing them to be paid before other creditors.
The implication or significance of Section 28 is that enforcement measures should primarily target only the debtor’s movable properties, before targeting immovable property, except in cases where the debtor has allocated such immovable property to the pursuing creditor on a mortgage agreement or as a privilege to secure the debt. It is only when the proceeds of the sale of all the debtor’s movable property have been found to be insufficient to satisfy the creditor’s due that the pursuing creditor can attach the debtor’s real property.
Section 28 UASPRDME is complemented by Section 251 UASPRDME which provides that, “The creditor may only pursue the sale of real property which has not been mortgaged in his favour where the real property mortgaged to him is insufficient, except where all the property constitutes one and the same commercial activity and where the debtor so requests.” Bear in mind that per Section 190 of the Uniform Act on Securities, a mortgage is, “the transfer of any determined or determinable real property belonging to a settlor to secure one or more existing or future debts provided the said debts are certain or ascertainable. A mortgage may be legal (by operation of law), conventional (based on contract) or judicial (court decision).”
Section 251 which complements Section 28, addresses secured creditors (mortgagee creditors) who are disallowed from seeking the attachment of the real property of the debtor which was not mortgaged in their favour unless the property mortgaged to them is insufficient to cover the creditor’s claim and the real property to be attached forms one and the same real property with that which was mortgaged and also, the debtor has requested that the creditor should pursue attachment of such real property.
III – What is a Writ of Execution under OHADA Law?
As already mentioned, in principle the enforcement measure known as attachment of real property is reserved to bearers of a writ of execution (enforcement), that is a final judicial decision, which per Section 33 UASPRDME includes:
– court decisions bearing the executory formula and decisions enforceable immediately,
– foreign writs and arbitral awards declared enforceable by a court decision not liable to any remedy at law suspending execution in the state in which the writ is invoked,
– conciliation reports (process-verbal) signed by the judge and the parties,
– notarial deeds bearing an executory clause,
– decisions recognized as such by the courts of member states.
IV – Conditions for the Attachment of Real Property
Applicable provisions in the Uniform Act are to be found in Sections 246 to 334. As previously said, the attachment of real property is an enforcement measure available to a creditor upon order of the president of the competent high court, following the fulfilment of certain prerequisites, to cause to be attached the real/immovable property of the debtor to satisfy his debt through the allocation of the proceeds of its sale to the creditor(s). Among all measures of enforcement, it is the most onerous, complex, cumbersome, formalistic, costly and time consuming. The conditions precedent to the attachment of real property are the following:
1. Possession of a final or provisional writ of execution
We have already seen what a writ of execution is. According to Section 32 read along with 247, where the writ is a provisional writ, the procedure for attachment may be commenced, but the auction sale of the real property shall be stayed pending issuance of the final writ (See Etablissement Abou Zeid v. Harouna Garb, 2006, Niamey Court of Appeal).
Section 32 (2) provides, “Execution shall then be carried out at the risk of the judgment creditor, who shall, where the writ is subsequently modified, be bound to fully make good any damage caused by the execution, irrespective of whether he was at fault or not.”
2. Nature of the debt must be liquid and due for payment
Per Section 31 and 247 attachment of real property may only be commenced where a debt liquid and due for immediate payment is at stake. The notions of “liquid” and “due” for immediate payment have been profusely defined by doctrine and case law.
In the case of Fotoh Fonjungo v. SGBC, 2004, CCJA, the court held that the debit balance of a closed current account held at a bank, which showed a specific amount in an executory formula, was liquid. Further, where the current account agreement between the bank and the client provided that the debt will become due and owing from the moment of the closure of the account, the debt became due and owing from the moment of closure of the account, in compliance with Section 247.
Accordingly, in Telcar Cocoa Ltd v Agwu Joseph Kalu, 2010, South West Court of Appeal, the court defined a liquidated debt as a claim or demand in which
the amount was fixed or had been agreed upon or was capable of ascertainment by mathematical computation or operation of law.
3. Immunity from Execution
Section 30 of the UASPRDME provides as follows, “compulsory execution and protective measures shall not apply to persons who enjoy immunity from execution.” There is, however, provision for set-offs with creditors, subject to reciprocity. The first opportunity that the CCJA had to expound on this question was through the case of Aziablevi Yovo & 3 ors v Togo Telecom PLC, 2005.
Accordingly, the CCJA overruled the decision of a magistrate court which subjected a public entity to forceful execution contrary to Section 30 UASPRME. In spite of these provisions, the 3rd bench of the CCJA recently held that a state-owned company transformed into a public limited company cannot benefit from immunity from execution with regard to its new private law form despite the fact that the majority of the share capital of the company is held by the state. As such, it is trite that the beneficiaries of immunity from execution are legal persons under public law and public enterprises as opposed to legal persons under private law. This was not always the case, and the CCJA’s position has evolved over the years as a result of jurists calling on the CCJA to adjust its position with what obtains in other developed judiciaries, for the sake of equity and fairness, especially in relation to public entities which engage in commercial behaviour regulated by private law, where such acts have no bearing on their public service missions.
Moreover, when seeking to enforce against real property, the legal status of the land is very important. Generally, public state land is inalienable, hence not subject to attachment under the UASPRDME. Likewise, private state lands are not subject to enforcement measures as public authorities are entitled to immunity from execution. In Cameroon two laws were recently enacted to govern public entities, namely: Law No. 2017/011 of 12 July 2017 to lay down the general rules and regulations governing public corporations and Law No 2017/010 of 12 July 2012 to lay down the general rules and regulations governing public establishments.
4. Compulsory Prior Registration of Unregistered Property
It is important to bear in mind that Section 192 of the Uniform Act on Securities provides, inter alia, that, “Except otherwise provided, only existing and registered real property may be the subject of a mortgage.”
Section 8 of Ordinance No.74/1 of July 6, 1974 to establish rules governing land tenure in Cameroon provides that; “deeds to establish, transfer or extinguish real property rights shall be drawn up by notary, under penalty of being null and void.” This proviso has been interpreted by the courts of law as prohibiting real property transactions which are not done before a notary public. Conversely, the law prohibits notaries from notarizing deeds relating to unregistered lands.
Real property within the context of the law follows the maxim quicquid plantatur solo solo cedit, which is land and anything permanently affixed to land, including; buildings, ponds, canals, roads, machinery, etc. This maxim is to the effect that whatever is affixed to the soil belongs to the soil and operates to differentiate fixtures from chattels.
So, while unregistered land may be attached, it must be registered before any act of sale is carried out on it. Where the attachment is to be effected on unregistered land, the law prescribes a special procedure by which a creditor may seize the president of the high court of the place of location of the land, to authorize, by a ruling, the forceful registration of the land by the land registrar.
Per Section 253 of the Uniform Act, the ruling authorizing the registration of the land is not subject to appeal. It is only after a certificate of registration has been issued by the land registrar that the land may be validly sold. However, once the creditor has served/notified the land registrar with the ruling ordering the forceful registration of the land, the creditor may kick-start the attachment procedure using the application for registration number, pending the actual enforcement of the ruling. The registration of a piece of land is not a hitch-free task, as such distrainors can expect a lengthy attachment procedure while the issuance of the land certificate is pending, thus compromising strict compliance with the prescribed statutory deadlines intended to ensure expeditiousness of the attachment procedure. Litigations before the administrative court may further complicate matters, since the land certificate is an administrative act which can be challenged by interested persons before the administrative court. It is the custom of litigants to seek and obtain from the administrative court, pendante lite, a stay order suspending the effects of the land certificate until judicial controversies relating to the ownership of the land which is the subject matter of attachment are finally resolved. This can take several years between the lower administrative courts and the administrative bench of the Supreme Court.
5. Indivisible Property & Heirs
Per Section 249 UASPRME, indivisible property may not be attached and sold before its sharing or liquidation between joint-heirs, provided all the joint-owners did not unanimously engage the real property as security for the loan. Again, when confronted with such an obstacle, either the judgment creditor or the joint-owner may seize the court for an order to share or liquidate the joint property. Once the liquidation of the real property has been obtained, the creditor may proceed with the attachment on the portion of the property which devolves to his debtor.
Also, an attachment can be effected on the real property belonging to heirs (an estate). Principles of succession law, especially the Administration of Estates Act, 1925 revised in 1971 (Section 32 and 38) and the Intestacy Act, 1971 (as amended) will apply – provided the succession is not testate, in which case it will be regulated by the will.
Per the above cited laws, a deceased’s property devolves to all the beneficiaries of his estate and the administrator of his estate must distribute all his property within a reasonable time, which has been argued at Common-law as being twelve (12) months, although this is not expressly provided by law.
Where necessary, the pursuing creditor may move the court to appoint an interim administrator for distribution of the estate of the deceased. As far as the jurisdictions of continental law extraction in Cameroon are concerned, the relevant provisions are to be found in Book III, Section 711 et seq., of the French Civil Code.
6. Matrimonial Joint Property
Matrimonial property is property which belongs to both spouses jointly. While the interest of the wife on the matrimonial home is predicated on the fact of marriage, ownership over other real property will depend entirely on the matrimonial regime elected upon marriage. The applicable rules for placing joint property as mortgage for a loan and attachment thereof are to be found in the Uniform Act on Securities (Section 194).
Essentially, where all the co-owners consented to the mortgage, attachment will have effect on the whole property. Nevertheless, where this was not the case, where the partitioned property is allotted to the co-owner who consented to the mortgage or the proceeds of such sale are allotted to the co-owner who consented to the mortgage, the mortgage shall have the same effect to the extent of the allotment or proceeds of sale received by the co-owner who consented to the mortgage.
It is germane to note here that for attachment proceedings to be commenced on joint property, evidence must be adduced that the property belongs, indeed, to both spouses. Ascertainment of the matrimonial regime is crucial as property acquired following a marriage under the joint property regime will undoubtedly belong to the spouses jointly, while property acquired by one spouse under the regime of separate property cannot be attached as such.
Evidence required to establish the status of the property may be obtained by the acquisition of a certificate of ownership from the land registry which should normally indicate the status of the land. More so, due diligence should be done to ascertain the marital regime of the spouses which is stated on the marriage certificate. The interest of the spouse must be endorsed in the land title which is the matrimonial home to be considered as joint property. It is this endorsement that binds third parties.
7. Multiple Properties Situated each in Different Jurisdictions
Section 252 UASPRME establishes a general principle according to which: “the forced sale of real properties situated within the territorial jurisdiction of different courts may only be carried out successively”, and it is only in exceptional cases that they may be carried out simultaneously, provided the properties form part of one and the same commercial activity or where the president of the competent high court has authorized same after taking cognizance that the value of the property situated within his jurisdiction is inferior to the distraining creditor’s claim and those of registered creditors.
The mischief behind this rule is to avoid unnecessary expenses from multiple attachment procedures. Likewise, unless it is averred that the value of the real property is insufficient to satisfy the creditor’s claim, procedures against multiple properties may not be commenced.
8. Attached Property
While the same writ of execution may be employed to pursue several measures of execution against different properties of the debtor as long as previous attachments did not satisfy the creditor’s debt, the same real property may not be the object of distinct and competing attachment procedures.
Additionally, after the expiry of the twenty (20) days following the summons to pay, the land registrar is barred from entering further attachments on the land register of property which is subject to attachment proceedings.
Although Section 260 prohibits the registrar of lands from registering subsequent summonses on the register of lands, he is, however, required to indicate such on the margin of the register.
Such creditors may join the procedure and rely on the distrainor’s pursuit of the procedure to later benefit from the proceeds of the sale, at the close of the proceedings.
9. Special Power of Attorney issued to Sheriff/Bailiff or Process Server
Indeed, owing to the sensitive nature of the attachment procedure, the law has prohibited any presumption of delegation in favour of the bailiff charged with executing the attachment. The creditor or his agent must personally deliver a special power of attorney to the bailiff (Section 254 (2)). There is no legal requirement for the special power of attorney to be authenticated. In case of any irregularity relating to the issuance of the special POA, the party who raises such irregularity shall prove prejudice suffered because of such irregularity, failure which his objection shall be inadmissible (Section 297). Where the donor is a moral person, the special POA must be issued by the legal representative of the company.
10. Conditions Relating to the Debtor
The general principle is that found in Section 28 b of the UASPRME which provides that, “…save in case of a debt secured by a mortgage or other privilege, execution shall be carried out primarily on movable property and, where insufficient, on immovable property”. This is the linchpin of preconditions to the attachment of immovable property.
Accordingly, unless the debtor’s real property was employed as security for a loan evidenced in a deed, the creditor has no other alternative but to recourse, first, to attachment of the debtor’s movable assets. By default, all unsecured creditors must first recourse to the debtor’s personalty or prove that he has either insufficient or no personalty (tangible and intangible) before proceeding against his realty.
In practice, once the debtor’s personalty has been found insufficient to satisfy the creditor’s due, a bailiff draws a nulla bona (no goods) report before proceeding against the debtor’s realty. Any attachment procedure commenced in non-compliance of this principle may be annulled by the competent court at the instance of any interested party.
As an extension to the above, Section 251 precludes the mortgagee creditor from pursuing the real property of the debtor which has not been mortgaged in his favour, unless and until that which was mortgaged has been found insufficient or the mortgaged and non-mortgaged property constitutes one and the same commercial activity and the debtor has requested same.
Moreover, the debtor/obligor must be the owner of the attached immovable property. This raises serious concerns since attached property may have encumbrances such as droit de suite (right to pursue the debtor’s property) to which registered creditors are entitled, or liens, charges, etc. This is the reason why indivisible property must first be shared or liquidated before any attachment is carried out.
For an attachment by a secured creditor to be successful, he must have a claim on the property and ensure the registration of such rights on the land such as a pledge, mortgage or special lien conferring the right of preference over any asset legally transferred to the creditor. To deepen your a better understanding of this technical area of law, we refer you to the Uniform Act on Securities adopted at Lomé on December 15, 2010, revising the April 1997 UA.
It is important to note that the Uniform Act on Securities defines securities as assets or property given to a creditor to guarantee the discharge of one or more existing, future, ascertained or ascertainable, conditional or unconditional and fixed or changing obligation(s), whatever their legal nature.
11. Compulsory Briefing of Counsel
In principle, per Cameroon law, briefing counsel to represent a client in judicial proceedings pending before law courts is mandatory only in exceptional cases such as before the Supreme Court (See Section 3 (1) Law No. 90/056 of December 19, 1990 Organising Practice at the Bar) or in cases of felony before the criminal bench of the high courts. The UASPRME has added another exception by providing for the mandatory briefing of counsel who is involved at every phase of the attachment, especially: drafting of the terms of reference (specifications), publicity of the sale, sale proper, applications filed before courts, etc. The creditor is equally required to elect residence at a lawyer’s chambers. This mandatory requirement is justifiable by the complexity involved in the attachment procedure which litigants cannot carry to fruition without the assistance of a competent counsel.
V – The Procedure Proper for the Attachment of Real Property
Essentially, there are several phases and steps in this procedure. An extrajudicial phase kickstarts the proceedings, then ensues the judicial phase, including disputes and incidental claims and appeals, after which follows the auction sale phase. The distribution of proceeds closes everything. These phases are checkered with multiple steps involving more than thirty (30) deadlines computed per Section 335 which provides that, “time limits provided in this Uniform Act shall be clear time limits.” The starting day of computation of the time limit is the day following the event which triggered the time limit. When the last day is a non-working or a public holiday, the deadline is postponed to the next working day.
Before getting into the various phases and steps of the procedure, we must note that, although the OHADA law prohibits the sale of real property beside the attachment procedure provided, the mortgagee creditor can always get around this by directly owning the property, as provided by Sections 198, 199 and 200 of the UAS.
Indeed, Section 198 of the revised Uniform Act on Securities of 2010 introduced certain reforms among which are those relative to the mortgagee creditor, who can bring an action for the transfer of the mortgaged property in his name unless he proceeds to sell the said property in accordance with the rules governing the attachment of real property which a mortgage contract shall not circumvent. The exception to this option is when the mortgage property is the principal residence of the debtor.
Section 199 further provides that: “Provided that the settlor (debtor) is a legal or natural person duly registered in the Trade and Personal Property Rights Register and that the mortgaged property is not a dwelling house, it may be agreed in the mortgage contract that ownership of the said house shall be transferred to the creditor. After the thirty days’ time limit following an unheeded notice to pay by an extrajudicial act, the mortgagee-creditor may cause the transfer to be recorded by deed made in accordance with the manner and form required by the State Party for the transfer of real property.”
Section 200 provides: “In the cases provided for in the two preceding articles, the property shall be valuated by an expert appointed by the parties or by the court. Where the value exceeds the secured debt, the mortgagee-creditor shall owe the settlor (debtor) an amount equal to the difference. Where there are other mortgagee-creditors, the mortgagee-creditor shall hold the difference on their behalf. Any contrary clause shall be disregarded.”
VI – Phase I: the Extrajudicial Phase
1. The Prior Summons to Pay
The attachment commences with a prior summons to pay, under pain of nullity. It is drawn by a bailiff and served on the debtor, and where necessary, on the third party who is in possession of the property. Per Section 297, where non- compliance with Section 254 has caused prejudice or loss to the party invoking such irregularity, the summons to pay may be invalidated if it does not contain any of the below six major mandatory details or requirements:
– a reproduction or copy of the writ of execution and the amount of the debt, as well as the full names and address of the creditor and the debtor and, in the case of a corporate person, its legal form, name and registered office;
– a copy of the special power of attorney to attach given to the bailiff or process-server by the pursuing creditor, save where the copy and the original of the summons to pay is endorsed with a special proxy (“bon pour pouvoir”) given to the bailiff or process server signed by the pursuing creditor;
– A warning that, failure to pay within twenty (20) days, the summons may be registered at the land registry and shall entail attachment from the date of publication;
– An indication of the court before which attachment shall be pursued;
– the number of the land certificate and an indication of the precise location of the property which is the subject of attachment; in the case of unregistered real property, the reference number of the application for registration; and, where expenses have been incurred by the debtor on land not belonging to him, but which had been assigned to him by decision of an administrative authority, its exact description as well as the reference of the assignment decision;
– the designation of the counsel whose address the pursuing creditor has elected as his address for service, where all oppositions to the summons, real tenders and notifications relating to the attachment shall be served.
Section 255 provides that, under pain of nullity, the summons shall be served, where necessary, on the third-party holder/possessor (such as a surety or administrator of an estate) who shall be enjoined to either:
– pay the debt in full including the principal and interest,
– surrender the mortgaged property or,
– be subjected to the attachment procedure.
Failure to summon the third party unavoidably leads to the nullity of the sale and alienation of the land title. If the third-party elects to surrender the real property, he shall do so at the registry of the High Court of the place where the land is located and it shall be endorsed by the said court.
Note that service of the summons must not be personal – it may be substituted. The High Court of Mifi in Judgment No. 20/CIV, Kamdem Dieudonne v. Tchoupou Samuel, Yemfack Madeleine Germaine, HC Mifi, June 1, 2010, held that service at the residence of the debtor was good service. A summons served on elected residence will also be valid.
Additionally, where attachment is pursued against unregistered land, the prior summons to pay may not be served on the debtor or a third-party holder/possessor unless and until the creditor has first of all filed at the land registry, the ruling of the president of the high court ordering the forceful registration of the litigious land (See Section 253 UASPRME).
The land is registered in the name of the debtor – not the creditor, otherwise the attachment itself is senseless. Per Section 253 (b) UASPRME the summons to pay must be notified/served on the debtor or a third-party holder (surety, administrator of estate, etc.) after the application for registration of the land has been filed, under pain of nullity.
Service of the summons on a surety is mandatory and failure to do so will nullify the summons which is deemed to have prejudiced the rights of the surety by robbing him of the opportunity to pay the debt and redeem the real property (See Judgment No.503, SOSERCOM v. Banque Internationale du Senegal (BIS), TRHC Dakar, March 7, 2000).
Section 256 UASPRME provides that where the property is in the hands of a third party against whom the bailiff or process server has no writ of execution, he may apply for the court to authorize him to proceed against such third party.
Section 257 UASPRME provides the possibility for a single summons to be drawn where the attachment targets several properties simultaneously.
Section 258 UASPRME contemplates expenses incurred by the debtor to develop the land which does not belong to the debtor, but which has been assigned to him by decision of an administrative authority, in which case the summons shall be served to such authority and endorsed by the same authority. Such assignments confer use (equitable) rights to the debtor. Such expenses incurred by the debtor to render the property suitable for use or a specific activity may be the object of attachment, in which case, the administrative authority who assigned the property to the debtor must be notified/served with the summons to pay.
Concerning the placement of real property acquired through an administrative decision as mortgage security, note that Section 203 (3) of the Uniform Act on Securities provides that: “whoever possesses a right on the real property of another, on public property or on national lands permitting him to build structures for himself may mortgage the said structures or construction works just commenced or simply projected; where these are destroyed, the mortgage shall be transferred as of right to new structures constructed on the same site.”
2 – Publication of the Summons to Pay at the Land Registry
The summons must be filed at the land registry and published within three (03) months following its service/notification to the debtor, failure which it becomes obsolete (See Section 259 (c)). The consequence of the obsolescence of the summons is that the creditor will be bound to start proceedings afresh (Judgment No. 019/C, Nguessi-Avenue Hotel SARL v BICEC SA, April 18, 2008, Littoral Court of Appeal). The same holds for service on and endorsement by the administrative authority who has assigned property by an administrative decision to a debtor who has subsequently developed the property and such developments are undergoing attachment.
Failure to respect provisions on publication shall render the whole proceedings a nullity, without regard to whether the party raising non- compliance suffered loss. At this stage, the land registrar endorses the original of the bailiff act (summons to pay) and receives a copy for publication.
The law implicitly requires the land registrar or abovementioned administrative authority, upon notification of the summons, to immediately proceed to endorse and register them. However, when such is impossible, they are bound to mention the date and time of service of the summons on the original of the summons. The land registrar is required by law to register every summons to pay in order of arrival, indicating the names, address and counsel for the creditor. Where there are previous summonses, the land registrar must mention such chronologically on the margin of the current transcription.
Where the land registrar refuses to register the summons, he shall mention this in the margin of the transcription which mentions also each of the summonses entirely registered, details thereof, and the court entertaining the attachment procedure. This is so because, under OHADA law the same real property cannot be the subject of two different proceedings for attachment. Subsequent registrations of creditors are simply joint to the distraining creditor’s original attachment proceedings and treated as one and the same legal proceeding. The attachment procedure may not be uplifted without the consent of distrainor creditors who were subsequently disclosed (Section 260 (d)).
The purpose of the summons to pay, as its name indicates, is to provide the debtor with the opportunity to pay the creditor’s claim without the creditor having to proceed with attachment and sale of the real property. If this happens within the twenty (20) days deadline, the registration of the summons is uplifted or cancelled by the land registrar upon a discharge presented by the creditor (Section 261) or at the instance of the debtor or an interested party who may seize the court for same, in urgent proceedings, adducing evidence of payment of the debt. The proceedings filed before the court to cancel the registration are heard and determined by a ruling within eight (08) days and the decision of the court is subject both to appeal and opposition, as the case may be.
Where the debtor or any interested party does not show up and pay the debts within the prescribed time limit of twenty (20) days, the summons shall entail attachment with effect from the date of the registration of the real property and everything upon it being immobilized and becoming unalienable and not subject to any form of encumbrance by the debtor with a real right or charge. Once this is done, the land registrar may not carry out any further registrations.
Exceptionally, where the debtor deposits a sufficient sum to settle the principal debt, interests and costs prior to the date of the sale and serves the registered creditor(s) and distrainor with same, transfers or constitutions of real rights on the property shall be valid. The sums deposited shall be allocated to the registered creditor(s) and distrainor. Under no circumstances shall the debtor or other third party be granted further time to pay the deposit, where such is not made before the auction sale.
Where the real properties attached are more valuable than the amount of the debt, the debtor may, before or after the filing of the terms of reference, request the court to exempt one or more of his properties from the attachment. This application must show that the property upon which the attachment shall continue is valuable enough to pay-off the debts owed to all creditors and the distrainor. This application to distrain part of the debtor’s property is heard during the contingent hearing date. Where the court grants his prayer, it will not in any way affect the publication of the summons. The court will equally identify the real property which will be exempt from attachment. The creditor may however, follow the real property which was exempt by the court, where the debt was not fully paid off by the proceeds of the sale.
Per Section 265, where the debtor proves that the unencumbered net income from his property over a period of two years is sufficient to settle the debt in its principal, costs and interest and, where he offers the income to the creditor, the proceedings may be suspended and only resumed in the event of opposition or obstacles to payment.
3 – Drafting and Filing of the Terms of Reference at the Registry of the Competent High Court
Section 266 provides that the “terms of reference” is the document which is drafted and signed by the counsel of the pursuing creditor, specifying the conditions and procedure for the sale of the property attached. Under pain of foreclosure, it shall be filed at the registry of the competent court of the place of the location of the property within a maximum period of fifty (50) days following the publication of the summons to pay.
Non-compliance with the contents of the terms of reference may result to nullity where the party raising non-compliance proves loss because of such irregularity. The terms of reference shall contain under pain of nullity, the following indications:
– the title of the document (that is, “term of reference”);
– an indication of the writ of execution by virtue of which the proceedings against the debtor were instituted and the summons to pay with a mention of the fact of its publication, as well as the other acts and decisions of the court pronounced after the service of the summons to pay and which have been served on the pursuing creditor. (In Judgment No. 030/2012 of March 22, 2012, Amity Bank Cameroon SA v. Tasha Loweh Lawrence, the CCJA held that neither the writ of execution nor the summons to pay must be transcribed in extenso in the terms of reference. The law requires mentioning, and not transcription in extenso, especially as the writ of execution is reproduced in the summons or a copy of the writ is appended to the summons);
– an indication of the court or notary agreed upon by the pursuing creditor and the judgment debtor to carry out the auction sale;
– an indication of the place where the contingent hearing provided for by Article 270 below shall take place;
– full names, profession, nationality, date of birth and residence of the pursuing creditor;
– full names, capacity, and address of the pursuing counsel;
– designation of the attached property as contained in the summons to pay or report describing it, drawn up by the bailiff or process-server;
– the conditions of the sale and, especially, the rights and obligations of the vendors and successful bidders, a mention of the costs of the proceedings (In a celebrated case before the CCJA, an omission of the costs of the proceedings in the terms of reference was lethal: CCJA, Judgment No. 60/2008 of December 30, 2008, BIAO v. Segui Amessan & Charmot (ohada.com/Ohadata J-10-34)) and any special condition;
– where necessary, the parcel of land;
– the reserve price fixed by the judgment creditor which may not be lower than a quarter of the market value of the property. The value of the property shall be appreciated in accordance with the valuation made by the parties during the conclusion of the mortgage contract, or failing this, by comparison with the transactions concerning the property of a similar nature or location.
The draftsman of the terms of reference is legally required to annex to them a statement of the real property rights registered in relation to the property concerned, issued by the land registrar on the date of service of the summons to pay. The date of the sale is fixed on a date not earlier than forty-five (45) days and not later than ninety (90) days following the deposit deed.
4 – Summons to Consult the Terms of Reference
Once the terms of reference have been filed, counsel must on behalf of his client, at most eight (08) days following filing of the terms of reference as mentioned above, summon the distrainee debtor and other registered creditors to consult the terms of reference and cause their statements and observations to be entered therein. This summons, under pain of nullity must be personally served on the distrainee or at his residence and to the elected residence of registered creditors.
The summons to consult the terms of reference shall state the following three (03) details:
– date & time of contingent hearing during which the court shall rule on the statements and observations and submissions made. Such hearing may not take place less than thirty (30) days after the last summons;
– the date and time envisaged for the auction sale which shall take place between the thirtieth (30th) and sixtieth (60th) day (Per Section 268 UASPRME, the auction sale must be scheduled not earlier than forty-five (45) days and not later than ninety (90) days following the deposit deed (evidence of sums deposited prior to auction sale) after the contingent hearing;
– under pain of forfeiture, that the statements and observations and submissions shall be received up to the fifth (5th) day preceding the contingent hearing and that where they fail to file an application for a resolutory action against a previous sale or file proceedings against an irresponsible bid of a previous forced sale and mention same pursuant to the terms of reference within the same period, they shall forfeit their right to exercise these actions against the successful bidder.
Where the application for resolution or the proceedings for an irresponsible bid are duly filed, the proceedings in relation to the property concerned shall be stayed. The application for resolution shall be brought before the court of the place where the action for the sale of the attached property is pending. It shall be subject to the procedure, time limits and remedies at law which apply in applications for the diversion of the attached property.
VII – Phase II: the Judicial Phase
5. Filing Declarations & Observations at the Registry of the High Court
Once the relevant parties have been served with the summons to consult the terms of reference and file their declarations and observations, they have up to five (05) days preceding the contingent hearing date (that is at least 25 days) to file their declarations and observations at the registry of the High Court entertaining the matter.
Failure to file these within five (05) days bars subsequent filing and the attachment proceedings will continue without the declarations and observations (See Ntarinkon Cooperative Credit Union Ltd v. Mbeleck Olivain Nah & Lefang Christopher Tah, High Court of Mezam November 19, 2012 and Judgment No. 14/CIV/TGI of December 12, 2005, First Trust Savings & Loans v. FDH Rachel, High Court of Menoua). The court may then proceed, without further ado, to fix the date of the auction sale. The court may however, suo motu, maintain the contingent hearing and revise the terms of reference or divert part of the attached property if it considers that the value of the property is disproportionate to the amount of the debt.
6. The Contingent Hearing Date
The declarations and observations shall be heard after the exchange of written submissions between the parties; the hearing shall be adversarial (principle of fair hearing) and where there is an objection relating to the reserve price, the onus shall lie on the party who raises such objection to substantiate same and he may request the president to appoint an expert at his expense with fees payable in advance.
The reason why the hearing is described as “contingent” is because it may, as well as it may not take place, depending on whether the declarations and observations are filed and whether the court doesn’t exercise its discretion per Section 273 read along with Section 275 to fix a hearing date and make certain orders in view of modifying the terms of reference.
Where the court exercises its discretion to maintain the contingent hearing date, the parties shall be invited to file further submissions. Where no declarations and observations are filed, the hearing becomes pointless and purposeless, as such the distrainor creditor can publish the sale in a newspaper empowered to publish legal notices. The court shall take cognizance of the failure to file the declarations and observations and shall adjourn the matter to the sale date which may be before the court itself or by notary public.
In principle, once the declarations and observations have been filed, the contingent hearing may only be adjourned for serious and duly justified reasons or where the competent court decides on its own motion to exercise its right of control over the terms of reference as provided for in article 275 following an expert report to order the diversion of property or alter the reserve price which was fixed in non-compliance with Section 267 (10).
When the court, pursuant to the above decides to alter the terms of reference, it shall request the parties to file further submissions before the next hearing date within a period not exceeding five (05) days. Where it was impossible for the court to hear the matter on the date initially scheduled, the court shall inform the parties of the date and time when the matter shall be heard.
The ruling of the court after the contingent hearing which rules on the merits of the declarations and observations and where applicable on further submissions, shall be transcribed in the register kept for terms of reference by the registrar. The ruling shall be reproduced and served on the parties on the application of the most diligent party. Where the date scheduled for the contingent hearing cannot be maintained, the competent court shall fix a new date.
It must be noted that the principal point of contention during the contingent hearing is usually the determination of the reserve price. The distrainee who will not have his property undervalued, is motivated to see it at least evaluated at its just value or even overvalued, as doing so ensures that the proceeds of the sale will not only satisfy the claims of all his creditors, but will leave him with surplus to take home. Likewise, the distrainor creditor, who may be awarded the real property where there is no successful bidder (Section 283 (5)), is interested to secure a low bid price, the same way it is in the interest of bidders to secure as low a price as they can possibly obtain.
This conflict of interest is usually the focus of the submissions of counsel during the hearing. Section 272 resolves this controversy by providing for the appointment of an expert valuator at the expense of the party who prays the court for the appointment of the expert. Where it is the debtor who is most in need of such remedy, his state of impecuniosity will obviously be a serious hindrance to access such a remedy. Unfortunately, the OHADA law does not envisage recourse to legal aid in such circumstances, especially as it may significantly delay a procedure which is already very complex and is meant to be expeditious.
It must be underscored that though the OHADA law-maker consecrated the sacrosanct principle of the immutability of the contingency hearing date with a view to defeat delays in the procedure for attachment of real property, unfortunately, it is only in very exceptional cases that the matter is heard on the initial contingency date despite the peremptory provisions of Section 273.
According to some practitioners, the most frequent reason for non-observance of the principle of immutability of the contingency hearing date is supposedly the obligation to comply with due process or fair hearing, specifically, with the adversarial principle (“principe du contradictoire”). As such, counsel may file written submissions and request for several adjournments. Other delay tactics may include briefing counsel after the procedure for attachment has already commenced. And as a matter of course, counsel who has just been briefed invariably requests and is rightly entitled to an adjournment to take cognizance of the case file and subsequently make submissions to defend his client. This right is basic and undeniable at law.
7. Publication of Auction Sale
Publication formalities must be completed at the earliest thirty (30) days and at the latest fifteen (15) days before the auction sale itself. For example, an extract of the terms of reference of a sale scheduled for March 31, should be published at the earliest on March 1st and at the latest on March 16th.
It is drafted, signed and sealed by counsel and published at the following four (04) places mandatorily:
– firstly, in a newspaper empowered to publish legal notices;
– secondly, by affixing notices (posters) at the door of the residence of the judgment debtor;
– as well as on the notice board of the competent court or the entrance of the place where the approved notary public carries out his practice, and
– finally, at the local council where property is located.
Per Section 297 of the Uniform Act, failure to comply with the above formalities of publication shall constitute a ground for absolute nullity of the sale, without any need for the party raising the nullity to prove any loss resulting from such irregularity.
The extracts of the terms of reference which are published as the announcement in view of the auction sale must indicate the following, under pain of nullity, where it causes loss to the party raising it:
– full names, profession, residence or place of abode of parties and of their various counsel;
– description of the attached property, as stated in the terms of reference;
– the reserve price;
– an indication of the date, place and time of the auction sale, and
– mention of the competent court or the approved notary to carry out the sale.
Following an application, and depending on the nature and the value of the property attached, the scope of the legal publication may be extended or limited by a ruling of the president of the competent court.
The following shall be admissible proof of compliance with the requirements of publication, per Section 278;
– a copy of the newspaper empowered to publish legal notices duly signed by the publisher, and
– where publication is by affixing notices on posters, proof shall be by bailiff/process-server report drafted, for that purpose, on a copy of the poster.
8. The Auction Sale
The court is moved by counsel for the distrainor creditor as well as counsel for the registered creditors on the date of the auction sale. They shall state the costs of the proceedings in open court as previously determined by the president of the court.
At least five (05) days prior to the auction sale, any party may apply for the court to adjourn the auction sale to a later date based on serious or legitimate reasons. The court then proceeds to fix a new date for the auction sale which may not be more than sixty (60) days from the date of the court session. The distrainor creditor shall then proceed with publication formalities de novo. The decision to adjourn the auction sale is not subject to appeal, except when the date of adjournment is in violation of the sixty (60) days’ time limit provided in Section 281 (b) of the Uniform Act which provides that, “In case of an adjournment, the decision of the court shall fix a new date for the auction sale which may not be more than sixty (60) days from the date of the court session.”.
The bidding rules are provided in Section 283 et seq. Illegal bids nullify the auction sale, especially where counsel bids on behalf of members of the court entertaining the sale or for members of the notary public’s office before whom the sale is conducted. Likewise, counsel may not bid for himself, for the judgment creditor or for persons known to be insolvent. The auction sale shall be pronounced either by a ruling of the court in favour of the last bidder or in a report drawn up by the notary public.
Where the bid was done via counsel who was last bidder, he shall have three (03) days to disclose the successful bidder on behalf of whom he won the bid. He shall equally file his acceptance or power of attorney which shall be attached to the original of the court ruling or the notary public’s report. Where the counsel fails to comply with the above, he shall be deemed to be the successful bidder.
The successful bidder who did not bid in his own account shall, within twenty-four (24) hours, disclose in an act known as “declaration of real purchaser”, the name of the person on account of whom he did the bid.
Within ten (10) days at the latest, following the date of adjudication, a person may, by extrajudicial act, make a higher bid, provided that such bid shall be higher than the purchase price by at least 10%. Such a higher bid shall be filed at the registry of the competent court or before the notary who conducted the auction sale. It shall equally be disclosed to the successful bidder or person to whom the property was adjudicated, to the distrainee, to the distrainor creditor and to registered creditors, within five
(05) days from the date when it is made.
Within five (05) days following its declaration, the registrar shall, at the instance of the higher bidder, enter the higher bid in the register kept for terms of references, failure which the distrainee, distrainor creditor, or any registered creditor may, at the higher bidder’s expenses, disclose it within five (05) days following the expiry of the five (05) day time limit provided for the higher to declare his bid.
The act disclosing the higher bid shall mention the date of the contingent hearing, during which parties may raise objections in relation to the validity of the higher bid. The contingent hearing date may not be fixed beyond twenty (20) days following the disclosure date. The court shall set a new auction date which shall not be more than thirty (30) days after the contingent hearing date. The submissions of parties shall be filed and served to adverse parties not later than five (05) days before the contingent hearing.
9. Transcription of Ruling in the Court Registry
Once the judge hears the merits of the case of the parties and delivers his ruling, the registrar proceeds to transcribe same in a registrar kept by the court for terms of reference. Upon request by the most diligent party, a copy is issued by the court and served to the parties.
The successful bidder has up to twenty (20) days from the date of the auction sale to fulfill the terms of reference of the sale, pay the costs of proceedings and the bid (purchase) price, after which a copy of the ruling is issued to him by the registrar. If the successful bidder is the distrainor creditor, he shall be required to pay only purchase price in excess of his claim and costs of proceedings. These shall all be attached to the ruling. The executory formula shall be affixed on the ruling which is not subject to appeal.
An action against an irresponsible bidder may be brought against the successful bidder who does not fulfill the conditions of the terms of reference and costs within twenty (20) days of the auction sale.
10. Application for Nullity of the Decision of the Court or the Notary Report
The grounds of nullity must be based on issues concomitant with or subsequent to the contingent hearing. Nullity shall invalidate the procedure only from the contingent hearing and following, depending on the grounds of nullity relied on (See Section 297).
Notwithstanding the principle that appeals may not be filed against the ruling of the court, Section 313 provides for the court which heard the proceedings to entertain applications for nullity of the ruling or notary report, from all interested parties except the successful bidder, within fifteen (15) days following the auction sale.
11. Filing of the Court Ruling or the Notary Public’s Report for Registration at Land Registry
Once the auction sale has become final, the successful bidder shall file the court ruling or notary public’s report at the land registry for registration within two (02) months under pain of resale on grounds of irresponsible bidding. A similar procedure is provided in the case of a debtor who developed land allotted to him by administrative decision.
12. Disputes & Incidental Claims in Attachment of Real Property Proceedings Arising After Service of Summons to Pay
The UASPRME does not provide any definition to the notion of incidental claims and disputes. However, case law has attempted some definitions.
Sections 289-323 Chapter 5 of Part VIII of Book II of the Uniform Act regulates incidental claims which may arise from the time when the summons to pay is served downstream. These are essentially:
– incidents relating to multiple attachments;
– application for diversion;
– application for annulment;
– irresponsible bidding;
Section 299 provides that “any dispute or incidental claim shall be raised prior to the contingent hearing under pain of forfeiture. However, under pain of forfeiture, claims founded on a fact or an act which happened or was disclosed after such hearing and those likely to cause the diversion of all or part of the attached property, the nullity of all or part of the procedure of the contingent hearing or the annulment of the attachment, may still be raised after the contingent hearing within eight (08) days before the date of the auction sale.”
The mode of seizing the competent court in such actions is by way of a simple process drafted and filed by counsel (“simple acte d’avocat” in French) containing the grounds of fact and law, where the plaintiff is assisted by counsel, or by writ of summons where the plaintiff has not briefed counsel.
- Incidents relating to multiple attachments
Real property which is already the object of an attachment procedure, may not be the object of a second attachment procedure independent of the first one. This rule is in application of a principle according to which property attached cannot be attached anew, known in French as, “saisie sur saisie ne vaut”. The land registrar may not, pursuant to Section 260 (2) & (3), publish the second summons, though he must mention same on the margin of the first transcription, plus his refusal to transcribe same. This measure allows for all creditors to know each other. The procedure, from that point on is pursued by the first creditor, although the attachment may not be annulled without the consent of creditors subsequently disclosed.
As such, whenever several creditors are pursuing the same debtor, without the intervention of the court, a joinder of causes results, to allow for the first pursuing creditor to pursue the debtor on behalf of the other creditors. There are instances, however, where another creditor may apply for subrogation based on Sections 304-307 of the UASPRME.
As aforesaid, the intervention of the court is not always necessary to resolve issues relating to multiple attachments of real property. Section 302 provides for joinder where different creditors are pursuing different properties belonging to the same debtor before the same court. In such a case, the causes are joined and the earlier (first) creditor continues the pursuit on behalf of the others.
Also, another scenario may occur where a second summons to pay involves the real property of a first summons, plus other real properties. In this case, the second pursuing creditor must disclose his summons to the first pursuing creditor who will pursue both procedures if they are at the same phase or stage. Where this is not the case, he will stay his procedure and pursue the second procedure until both procedures are at the same phase after which they may be joined and prosecuted before the court where the first attachment procedure was commenced.
It is possible for the first (earlier) pursuing creditor to whom a later procedure has been disclosed, abstains from pursuing the second procedure. Where this happens, the second creditor may seize the land registrar with a written application for subrogation.
Moreover, Section 305 envisages a scenario where there is alleged collusion, fraud, negligence or lack of diligence on the part of the first pursuing creditor. In this case, the second creditor may seize the land registrar where his summons through counsel addressed to the distrainor creditor to pursue the procedure has been unfruitful.
Where there is subrogation, the proceedings will not be commenced afresh, but the subrogating creditor will continue the proceedings from where the last creditor left off. The previous distraining creditor shall transmit all relevant documents to the new distrainor who has subrogated him in the procedure.
- Application for diversion by third parties only
This action may be brought by a third party who claim to be the real owner of the property which is undergoing attachment and sale. His application is to have the court order the exclusion of the property from the procedure of attachment. The third party should neither be personally liable for the debt nor should the real property over which he is claiming ownership have any connection with the debt. Although this application may be brought after the contingent hearing, it must be brought at least eight (08) days prior to the date of the auction sale (Section 299 (2)). Application for diversion stays the procedure where the property targeted by the application constitutes the totality of attachment of real property proceedings. Where this is not the case, the proceedings may continue for the portion of the real property which is not the object of the application for diversion. Nevertheless, in the latter case, any interested party may request the court to stay the proceedings over all the real property.
- Application for annulment
Found in Section 311 et seq., this forms the bulk of litigious issues that raised during the attachment. Pertaining to deadlines, per Section 299 (2) read along with 311 (1), they may be raised, under pain of nullity, as below:
- Pertaining to claims founded on facts or acts which transpired or were disclosed after the contingent hearing and those liable to cause the diversion of all or part of the attached property, or lead to the nullity of all or part of the procedure of the contingent hearing, or lead to the annulment of the attachment, they may be raised after the contingent hearing within eight (08) days to the auction sale.
- Pertaining to grounds relating to challenges as to form and the merits of the case, except for those raised above (Section 299 (2)), they may be raised against the procedure preceding the contingent hearing, under pain of forfeiture, by way of a statement annexed to the terms of reference, not later than five (05) days before the date fixed for the contingent hearing. Where the grounds of nullity raised are sustained, the attachment may be recommenced from the last valid act and the time limits for accomplishing the subsequent acts shall be computed from the date of the notification of the decision which pronounced the nullity.
- Additionally, and most importantly, Section 313 provides for an application to be filed after the sale to nullify the decision of the court or the notary public’s process-verbal/report of the sale. Such an application may be commenced before the court which entertained the attachment. This application must be lodged at the latest fifteen (15) days following the auction sale date. Where the application for nullity is upheld, the attachment may be resumed from the last valid act and the deadlines to continue the following steps or phases of the attachment start running from the date of service of the court decision which upheld the nullity. Where the decision annulled was the court decision, the effect of the nullity judgment will be the invalidation of the attachment procedure beginning from the contingent hearing or prior to it, as the case may be.
- – Irresponsible bidding
Section 314 et seq., regulates irresponsible bidding. It is a procedure which sanctions failure by the successful bidder to comply with certain legal requirements and execute the terms of reference of the sale within twenty (20) days from adjudication, by the cancelling his title and the conducting of sales anew.
- – Appeals & Oppositions
Applications to challenge or set aside (oppositions) judicial decisions on attachment of real property shall not be entertained. Such judicial decisions may however be subject to appeal, where the decision contested purportedly violates the principle of the claim or are founded on grounds relating to the incapacity of one party, or relate to ownership, the non-distrainability or the inalienability of the attached real property.
Appeals are notified to all parties concerned and notified to the registrar of the competent court within the prescribed time limit for appeals and enter such details in the register of terms of references. The notice of appeal shall contain the grounds of appeal on pain of nullity. Appeal shall be filed at the latest 15 days following the decision against which appeal lies (Section 49). The court shall rule on the appeal within fifteen (15) days.
VIII – The Distribution of the Proceeds of the Sale of the Attached Real Property
Sections 324-334 UASPRME enumerates the applicable rules for the distribution of proceeds. The obvious purpose of the sale is the eventual distribution of the proceeds to creditors. There are two scenarios here: a single creditor or a multiplicity of creditors.
1. The Case of A Single Creditor
Where there is only one creditor, the proceeds of the sale are paid to him up to the amount of his claim in principal, interests and costs, within fifteen (15) days from the date of the payment of the purchase price which is normally supposed to intervene at the latest twenty (20) days after close of auction sale. Add up the fifteen (15) days to the twenty (20) days and you get not later than thirty-five (35) days within which the single creditor must be paid from the date of the close of the auction sale. Where payment is not effected within this time, interests begin to accrue at the legal rate (Section 324 (3)). This rate corresponds to the Central Bank’s (BEAC) Tender Interest Rate known in French as “taux d’intérêt des appels d’offres (tiao)“.
Where there is a surplus or balance from the proceeds after payment of creditor’s claim, such will be paid to the debtor within the same fifteen (15) days deadline. Contrariwise, where the proceeds of the sale are insufficient to cover the creditor’s claim, he shall be paid partially after costs of proceedings have been deducted. He may then commence attachment proceedings on other properties of the debtor for the outstanding debt, in compliance with Section 28 (2) UASPRME which, once again, provides that, “Save in the case of a debt secured by a mortgage or other privilege, execution shall be carried out in the first place on movable property and, where this is insufficient, on immovable property.”.
2. The Case of Many Creditors
Where there are several creditors or several registered and preferred creditors concerned with the attachment of real property, they may enter into a proceeds of sale sharing agreement. They shall file the agreement, which may or may not be authenticated, at the registry of the court which entertained the attachment procedure or before the officer of the court in custody of the funds.
The holder of the funds has up to fifteen (15) days from the date of receipt of the agreement to pay the creditors and pay the balance, where applicable, to the debtor. Interest shall accrue, at the legal rate from the date of expiry of the fifteen days.
Where within one (01) month of the payment of the purchase price by the successful bidder, the creditors have not arrived at an agreement, the most diligent party may, by writ of summons, seize the president or any other judge delegated by the president of the court which entertained the attachment proceedings, to rule on the distribution of the proceeds of the sale.
The writ of summons shall state the hearing date and enjoin the creditors to enter appearance and prove their claims, that is, state their dues, the rank on which they expect to be placed, plus all documents in support thereof. The rank of creditors is governed by the Uniform Act on Securities.
The writ of summons seizing the president of the court with the action relating to the distribution of the proceeds of sale shall state that, within twenty (20) days from its date of service to the creditors, the latter shall, under pain of forfeiture deposit their claims at the registry of the competent court. The writ of summons shall also be served on the distrainee.
The hearing date, indicated on the writ, may not take place earlier than forty (40) days after service of the last summons. The statements of defense of other parties shall be filed at the latest five (05) days before the date of the hearing. Such statements of defense shall be served on the other parties. The decision closing the controversy on the distribution on proceeds of sale is appealable, on grounds that the contested amount is above the amount stated in the final ruling of the court, within fifteen (15) days from notification.
The way the distribution of the proceeds of the sale will be carried out will equally depend largely on rules contained in the Uniform Act on Securities, especially Section 190 et seq., and Section 224 & 225. Section 224 provides, “Subject to the provisions relating to the order of distribution here below, the procedure for distributing the proceeds obtained from a sale shall be fixed by the rules governing measures of execution.” So, Section 224 refers to Section 225 for the order of settlement of creditors from the proceeds of sale of the real property.
Section 225 provides as follows: “Proceeds obtained from the sale of real property shall be distributed in the following order:
1) To creditors owed statutory costs (costs of proceedings) incurred in the realization of the real property sold and in the distribution itself of the proceeds;
2) To creditors of super privileged wages;
3) To creditors who have a conventional or forcible mortgage, and to separate creditors who are registered in the land publication register within the legal deadline, each according to the rank of his registration;
4) To creditors with a general privilege which is subjected to publication, each according to the rank of his registration in the Trade and Personal Property;
5) To creditors with a general privilege which is not subjected to publication in accordance with the order laid down by article 180 of this Uniform Act;
6) To unsecured creditors with a writ of execution issued in their favour when they intervened in attachment proceedings or objected to the procedure. Where the funds to pay the creditors of the same rank mentioned in 1, 2, 5 and 6 of this article are inadequate, the funds shall be distributed in proportion to their total claims and on a prorata basis.”
Where collective proceedings are concerned in the attachment proceedings, regard should be had, especially, to Section 166 of the UA on Collective proceedings (the OHADA insolvency law). Section 166 provides:
“Proceeds from the sales of immovable property shall be distributed as follows:
1) to creditors with privilege provided for in articles 5-11, 11-1 and 33-1 above;
2) to creditors with court fees incurred for the purpose of the realization of a sold asset and the distribution of proceeds;
3) to creditors with super priority salaries in proportion of the value of the property in relation to the entire estate;
4) to creditors holders of a conventional or judicial mortgage and individual creditors registered within the statutory period, each according to the rank of his registration in the land register to creditors of the union as defined in article 117 above;
5) to creditors of the union as defined in Article 117 above;
6) to creditors with a general privilege according to the order established by the Uniform act on Security Interests, namely creditors with a general privilege subject to publicity, each according to the rank of registration in the Register of Commerce and Securities and to creditors with a general privilege not subject to publicity pursuant to the order laid down in article 180 of this Uniform act;
7) to unsecured creditors with an enforceable title;
8) To unsecured creditors devoid of an enforceable title.
Where the proceeds are insufficient to fully pay off the creditors of any of the categories mentioned in points 1°, 2°, 4°, 5° and 6° of this Article and the said creditors have equal rank, the funds shall be distributed proportionately to their total debts.”
In conclusion, to carry out the attachment of real property, it is imperative to master the subtleties of this complex procedure as well as demonstrate remarkable dexterity in carrying out the required acts at each step of the procedure. The rules do not leave much room for error and the slightest oversight can ruin the whole procedure and with it, sometimes, the hope of recovering a critical debt. Our lawyers are past-masters in this procedure, having assisted a variety of clients, including individuals, banks and other corporations to pursue the sale of real property belonging to their debtors in order to recover debts owed to them from the proceeds of the sale. We equally assist debtors who are victims of illegal attachment proceedings as well as assist investors and businesses to draft and/or review mortgage contracts and related contracts.