Litigation & arbitration /

Removal of discrepancies in the land and mortgage register will not help when property enforcement is pending

In the practice of trading, there are sometimes situations in which a person entered in the land and mortgage register as the owner is not actually an owner. Such a situation may be a consequence of the acquisition of the property right by way of an invalid legal transaction, for example as a result of concluding a sale agreement in violation the statutory pre-emption right or, by way of transfer of title to secure a non-existent debt, or as a result of the conclusion of an ownership transfer agreement to cancel a non-existent debt (datio in solutum).

In such a situation, the actual owner of the property has the right to demand that the court remove the inconsistencies between the legal status of the property disclosed in the land and mortgage register and the actual legal status, pursuant to art. 10 of the act on land and mortgage registers and mortgage.

However, what if the execution against a person incorrectly entered in the land and mortgage register as its owner is brought against such a property?

This problem was addressed by the Supreme Court in one of its recent rulings. The Supreme Court, in the resolution of November 27, 2020, III CZP 83/19, took the position that the judgment allowing for the action to reconcile the content of the land and mortgage register with the actual legal status, issued against the debtor, does not render the execution previously directed against this property inadmissible due to its subject matter (Article 824 § 1 point 2 of the Code of Civil Procedure). In other words, a judgment stating that the debtor is not the real owner of the property does not justify ex officio discontinuation of the enforcement. This means that bringing an action for the reconciliation of the content of the land and mortgage register in the course of enforcement against real estate will not provide the actual owner with the desired legal protection.

In the opinion of the Supreme Court, in such a situation, however, the owner of the property not entered in the land and mortgage register, whose ownership rights were infringed by the enforcement against that property, is entitled to an action for exemption from enforcement (Civil Procedure Code Art.841 § 1). By way of an anti-enforcement (intervention) action, the owner of real estate not disclosed in the land and mortgage register should defend his / her rights violated by enforcement against the real estate.

In this context, it should be noted that the intervention under Art. 841 § 1 of the Code of Civil Procedure must be filed within one month of becoming aware of the violation i.e. from the date when the claimant found out about enforcement proceedings against its real property. If the debtor entered in the land register denies the right of ownership of the undisclosed owner, the defendants in such a process are both the creditor carrying out the execution and the debtor entered as the owner in the land register.

Undoubtedly, the interpretation of the provisions adopted by the Supreme Court provides greater protection of the interests of creditors executing real estate. Firstly, it significantly reduces the time during which an undisclosed owner can claim its rights. Secondly, it grants the creditor the status of a party to the proceedings (defendant), thus enabling his interests to be active.

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Author team leader DKP Legal Marcin Kręglewski
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