Case Study: Bank Enforcement Contestation
Brisc Legal assisted a married couple in contesting the real-estate enforcement initiated by BANCPOST SA based on a mortgage credit contract seeking recovery of approx. €82,000.
Objectives Achieved by Brisc Legal, Cluj
In this case, the court granted the enforcement contestation, recognized the automatic prescription (statute of limitations) of the enforcement, annulled all acts of enforcement in the file, and held that the bank’s right to further enforce under the mortgage credit contract is extinguished. Thus, the debt of €82,000 was permanently erased and the foreclosure on the clients’ home was annulled.
Annulment of the Enforcement Against the Clients — Case Presentation
The couple G. entered a mortgage contract with BANCPOST SA in 2008, securing a loan of around €60,000 in favor of a company owned by someone close to them. With the 2008–2009 financial crisis, that company defaulted on repayments, and in November 2010 the general insolvency procedure was opened; by December 2011 the borrowing company was struck off, having no assets to satisfy the debt.
In 2012 the bank initiated enforcement against the spouses G., as mortgage guarantors, claiming about €82,000 (principal, penalties, enforcement costs) and sought sale by public auction of their mortgaged property — their personal residence. Though enforcement began in 2012, the first act communicated to the clients was a formal demand informing them that the bank intended to auction their mortgaged property.
Brisc Legal’s Involvement
Brisc Legal’s banking litigation team analyzed the enforcement file within the 15-day term allowed for contestation of enforcement, and identified a winning strategy to annul the entire enforcement and permanently erase the debt. Specific features of the case, together with combining several legal institutions to benefit the defendants (clients), led to that outcome.
Legal Provisions Applied
By analyzing the loan contract, it was determined that the borrowing company’s insolvency triggers early maturity of the credit on November 25, 2010. Under that condition, the bank’s right to seek enforcement is subject to prescription under Decree 167/1958, not under the new Civil Procedure Code. The same reasoning applies to the material right of action against the guarantors. Thus both the enforcement right and the substantive (credit) right were subject to a 3-year prescription term, not the 10 years under the newer regime.
Importantly, the enforcement was initiated before February 15, 2013 (when the new Civil Procedure Code came into force). Therefore, the old rules governing prescription of enforcement (which were more favorable to the debtor) apply. Analysis showed that the bank was negligent and passive between 2012–2018, with multiple stretches of more than 6 months in which it failed to carry out enforcement acts.
Under the old rules (Art. 389 of the Civil Procedure Code 1865), if the creditor lets 6 months pass after any enforcement act without doing new pursuit acts, enforcement is automatically prescribed and any interested party may demand its annulment. Under Art. 405²(3) of the new Code notion, prescription is not interrupted when enforcement was rejected, annulled, perimat (lapsed), or renounced.
Brisc Legal’s team invoked that the bank remained passive. The simple communication of the first enforcement act in 2018 was not enough to maintain enforcement, because earlier periods of inaction exceeded 6 months. The court accepted this reasoning in full, holding:
“Prescription of enforcement is a procedural sanction which extinguishes enforcement, effectively restoring the parties to their prior status. Under Article 404(1) read with Article 391 of the old Code, the court will admit the enforcement contestation and annul the enforcement acts in the enforcement file.”
In this case, since the credit was prematurely due in November 2010, the 3-year prescription term began then, expired in November 2013, and thus the bank’s right to enforce under the credit contract was extinguished. Because the mortgage is accessory to the principal obligation, its enforceability also ceases by prescription of that principal obligation. The court annulled the foreclosure and declared the debt erased.
Thus, the mortgage debt of €82,000 toward BANCPOST SA was permanently struck and the personal residence enforcement annulled.