The third-party mortgagor in enforcement proceedings

Mihail Tomov, Lawyer | Varna

Under Article 429(3) of the Code of Civil Procedure, a writ of execution issued against a debtor is also effective against a third party who secured the debt by a mortgage. The enforcement creditor has no personal claim against that mortgagor, only a right to obtain payment from the mortgaged property. Thus the enforcement officer, whether private or public, must serve copies of the order for payment on the debtors named in it, but not on the third-party mortgagor. In these circumstances the mortgagor becomes a party to enforcement proceedings only when enforcement is directed against the property mortgaged to secure another person’s debt. The third party was not a party to the earlier order-for-payment proceedings brought solely against the debtors under the secured obligation.

Accordingly, under Articles 419(1) and 423 of the Code, only the debtor personally liable for the claim, and not the mortgagor, has standing in that situation to appeal the direction for immediate enforcement or object to the order for payment (Supreme Court of Cassation, Order No. 456 of 8 October 2015 in interlocutory civil case No. 3947/2015).

Under established case law (Supreme Court of Cassation, Order No. 603 of 4 July 2012 in interlocutory commercial case No. 168/2012 and Order No. 531 of 25 September 2012 in interlocutory commercial case No. 498/2012), a third party who has mortgaged their property to secure another person’s debt may also be a debtor party in the order-for-payment proceedings themselves. That is the case where an application is made and an order is issued against the mortgagor under Article 417, point 6 of the Code of Civil Procedure in conjunction with Article 173(3) of the Obligations and Contracts Act. The mortgagor may then bring an interlocutory appeal under Article 419 against the direction for immediate enforcement.

If you have questions or need advice on enforcement proceedings, it is advisable to consult a lawyer experienced in this area.