31.07.2022
1146
The new owner is not entitled to evict the debtor from mortgage housing
The Supreme Court of Ukraine considered the case on the eviction of the former owner (debtor of the bank) from the apartment purchased (by the new owner). A relevant legal conclusion has been published, informative for real estate buyers and bank borrowers.
Thus, a new non-owner who has bought “risky” real estate from a mortgagee cannot evict a person without providing other housing from a mortgaged apartment, even one acquired at the expense of credit funds. It’s illegal!
The ban was established by the Supreme Court of Ukraine, promulgating a legal opinion on case No. 754/4727/16-c on 28.11.18!
By conclusion, the supreme instance canceled the decisions of the courts of previous instances, which satisfied the claim (requirement to remove obstacles in the implementation of the right of possession, use and disposal) of the company against two citizens who pledged an apartment as security for a consumer loan.
The Supreme Court of Ukraine categorically opposed the eviction of bank debtors “to nowhere” from mortgaged dwellings purchased with borrowed funds, backing up their decision with well-established jurisprudence and legal conclusions governing the moratorium on eviction.
The Supreme Court explained the following
“In a crisis, Ukrainian legislation is purposefully “corrected” by introducing restrictions that protect the rights of citizens from the threat of eviction arising from the failure to fulfill obligations secured by mortgages on foreign currency loans, since individuals borrowing in foreign currency can not influence the depreciation of the national currency and fluctuations in the exchange rate.”
The state in such conditions must ensure the balance of the rights of lenders and borrowers, and the courts, representing the authorities and the law, must ensure the protection of the rights of all participants in credit relations.
In the analyzed case, the first instance did not take into account the instructions of Part 2 of Art. 109 HC, at the time of consideration of the case, already containing a ban on the eviction of debtors without providing them with other living space.
The new owner of distressed real estate, in order to protect their rights, must file a claim for damages against the seller:
- If he proves that the mortgagee acted inappropriately – did not warn the buyer about the existing encumbrance as part of the obligation to fully inform, he will be able to partially renew his rights.
- Also, the problem will be resolved if the bank will comply with the legislation regarding the provision of another housing to the debtor.
Bank borrowers and lenders need to closely monitor the legislative activities of the Supreme Court of Ukraine in this area. Each case of eviction is individual.
In this situation, the debtor should have been evicted, and the fact that this did not happen is the result of the legal assistance of his lawyer, who managed to turn the current legislative restrictions in favor of his client.
