GERMANY Law and Practice Contributed by: Christian Strasser, Thomas Wambach and Yannick Greimann, HEUKING
Forced Security Mortgage and Foreclosure Sale If the creditor wants to enforce the title on the debtor′s property, they can have a forced security mortgage registered in their name in the Land Register. This requires an application to the Land Registry office where the debtor′s property is located. As soon as this forced security mortgage is listed in the Land Register, the creditor can apply for a forced sale in the next step. The application for the foreclosure sale must be sub - mitted to the local court where the debtor′s property to be auctioned is located (cf Section 15 of the Enforced Auction Law ( Gesetz über die Zwangsversteigerung und Zwangsverwaltung or ZVG)). Enforcement and Insolvency Proceedings If enforcement does not produce any effect and the debtor cannot meet their payment requirements, an application to open insolvency proceedings for the debtor′s assets can be made. As a result of insolven - cy proceedings, all single enforcement is suspended, and claims have to be noted by the insolvency admin - istrator, which might lead to a quota upon closure of the proceedings. The threat of an application for insolvency, which ruins the debtor’s reputation, can be used as a strategic weapon. 2.3 Costs and Time Taken to Enforce Domestic Judgments In general, costs for the enforcement of titles in Ger - many are very low, and the enforcement proceedings are concluded in a time-efficient manner. The time efficiency of the enforcement itself depends on the measure the creditor chooses to pursue. While the attachment and transfer of claims take place rela - tively swiftly, the registration of a forced security mort - gage and the subsequent foreclosure sale will require some time. Unlike in court proceedings, the costs are not calcu - lated based on the amount in dispute, but the court or the competent enforcement authorities charge lump- sum costs. The lawyer’s fees in enforcement proceed - ings are modest, but here the fees are calculated on the amount in dispute on the basis of the statutory tariff. Compared to the lawyer’s fees in court proceed -
ings, the costs in enforcement proceedings are sig - nificantly lower. All costs can be pursued in enforce - ment proceedings from the debtor and enforced at the same time. However, a prerequisite for efficient proceedings is always that the creditor has information about the debtor’s assets and where they are located so that the competent enforcement authorities can act upon the assignment. The bailiff in whose jurisdiction the property is located is responsible for enforcing intangible property. This means of enforcement regularly takes place relatively quickly, as the bailiff can act immediately after being instructed and even carry out necessary service at the same time as enforcement. Efficiency depends partly on the degree of co-operation by the debtor, whereby the loss of the debtor’s image through the appearance of the bailiff acts as a threat. The enforcement of titles by means of an attach - ment and transfer order is very effective as it is an almost automated procedure. The creditor submits three pre-prepared standard forms to the competent enforcement court, which then only carries out a for - mal review. The third-party debtor information is also very effec - tive, as it provides the creditor with information about the existence and value of the attached claim in a relatively straightforward manner. On the other hand, enforcement in intangible assets or real estate is very time-consuming, so the creditor should expect the proceedings to take up to a year or more when it comes to the foreclosure sale. In addi - tion, the costs incurred are higher than other types of enforcement, as in some cases, costs for expert opin - ions must first be advanced by the creditor. The debt - ors can defend themselves during the enforcement proceedings and thus delay the entire proceedings to the detriment of the creditor. On the other hand, enforcement of immovable property is a highly effec - tive means of applying pressure to the debtor, as it can jeopardise the debtor′s creditworthiness (eg, with a financing bank).
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