Analyses the conditions and deadlines for exercising the right of redemption.
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According to Article 842 of the Civil Code, ‘The spouse who is not legally separated and the descendants or ascendants of the defendant are recognised as having the right to redeem all or part of the property awarded or sold for the price for which the award or sale was made’.
As established in the doctrine and case law of the higher courts, the right of remission has its origins in the ‘idea of protecting the family heritage, being a right with procedural origins, which is constituted at the time of the sale or adjudication of the goods and which in its exercise has the same effects as the real right of preference’.
This right belongs, successively and preferentially, to the defendant's spouse, descendants and ascendants, preferring those of the closest rank, and, in equal rank, bidding is opened between them (art. 845 of the CPC).
This right takes precedence over the right of pre-emption (article 844 of the CPC).
With regard to the time and terms of exercising this right, Article 843(1) of the CPC determines the following possibilities:
a) In the case of a sale by sealed bids, until the title of transfer of the goods to the bidder has been issued or within the time limit and under the terms of Article 825(3) [‘The preferred bidder who has not exercised his right during the opening and acceptance of bids may, within five days of the expiry of the time limit of the defaulting bidder or preferred bidder, deposit the price offered by the latter, regardless of further notification, and the award will be made to him’].
b) In the case of other types of sale, until the goods are delivered or the title documenting the sale is signed.
Article 843(2) stipulates that ‘[it] shall apply (...) to the redeemer who
[a] exercises his right at the opening and acceptance of bids by sealed letter, the provisions of Article 824 shall apply, with the necessary adaptations,
["1 - Bidders must enclose with their bid, as security, a certified cheque made out to the order of the enforcement agent or, in cases where enforcement proceedings are carried out by a bailiff, the registry office, for an amount corresponding to 5 % of the advertised value, or a bank guarantee for the same amount.
2 - If a bid is accepted, the bidder or preferential bidder shall be notified to deposit all or part of the outstanding price with a credit institution to the order of the enforcement agent or, in cases where enforcement proceedings are carried out by a bailiff, the registry office, within 15 days."].
[b] as well as the provisions of Article 825(1) and (2),
[1 - On expiry of the period referred to in paragraph 2 of the previous article, if the bidder or preferred bidder has not deposited the price, the enforcement agent, after hearing the parties interested in the sale, may:
a) Order the sale to be cancelled and accept the immediately lower bid, with the bidder forfeiting the amount of the deposit made under the terms of paragraph 1 of the previous article; or
b) Decide that the sale has no effect and sell the goods by the most appropriate method, whereby the bidder or non-preferred bidder cannot be allowed to purchase the same goods again and forfeits the value of the security deposit made under the terms of paragraph 1 of the previous article; or
c) Settle the liability of the defaulting bidder or preferred bidder, and the seizure of sufficient assets to guarantee the missing amount, plus costs and expenses, shall be promoted before the judge, without prejudice to criminal proceedings, and the seizure shall be simultaneously enforced in the same proceedings for payment of that amount and any additions thereto.
2 - The distraint shall be lifted as soon as payment has been made, with the increases calculated.’]
[c] the price must be deposited in full when the right of cancellation is exercised after that time, with the addition of 5% to compensate the bidder if he has already made the deposit referred to in Article 824(2), and
[d] in any case, the provisions of Article 827 shall apply.
[1 - Once the price has been paid in full and the tax obligations inherent to the transfer have been satisfied, the goods shall be awarded and handed over to the bidder or preferred bidder, and the enforcement agent shall issue the title of transfer in his favour, which shall identify the goods, certify that the price has been paid or that the deposit has been waived and declare that the tax obligations have been complied with or waived, as well as the date on which the goods were awarded.
2 - The enforcement agent then notifies the competent registry office of the sale, attaching the respective title, and the latter registers the fact and, of its own motion, cancels the entries relating to the rights that have lapsed, under the terms of Article 824(2) of the Civil Code."]."
In this case, the children of an insolvent couple wanted to exercise their right to redeem certain assets.
The respective assets were awarded, following a closed bid sale, on 05/05/2021 and 21/12/2022.
The children of an insolvent couple have expressed this intention, but have not paid the final price for the properties.
The Insolvency Administrator insisted on the down payment.
It wasn't until 05/05/2023 that post-dated cheques were sent to the Insolvency Administrator to pay the price.
These cheques were returned, the deadline for payment having passed, and the Insolvency Administrator awarded the property on 19/06/2023.
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Displeased with this decision, the children of the insolvent came to complain about it, and the court ruled that the decision was assertive, stressing that the ‘cheques are not only from a company bank account (and not that of the insolvent's son), but are also post-dated cheques, so they do not, of course, constitute immediate payment of the price at issue in the case’.
An appeal was then lodged against this order, alleging that ‘the insolvency practitioners informed the Administrator in due course that their son had sent cheques to deposit the price of the goods awarded to a company in which he is a partner, a payment that should have been accepted’.
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The Évora Court of Appeal held that
‘the redeemer did not fulfil the requirements to pay the price or the time stipulated for the payment of these sums. Thus, as stated in the case, if payment does not take place, since this is a sine qua non of the perfection of the deal, the redeemer has lost the right to make his own the property that was part of his parents' estate.
In this case, by exercising the right to redeem after the tenders had been opened in a closed letter, the redeemer had to make an immediate and full deposit of the price, in accordance with the provisions of Article 843(2) of the Code of Civil Procedure.
Therefore, under the provisions of Article 825 of the Code of Civil Procedure, with the necessary adaptations, the insolvency administrator was authorised to determine that the redemption was without effect and, consequently, to accept the bids previously submitted and conclude the act of sale.
With this in mind, it is valid to say that if the redeemer wishes to exercise the right after the opening and acceptance of sealed bids, he must accompany his declaration with proof that he has deposited the entire price (plus 5 per cent to compensate the unsuccessful bidder who has already deposited the price), otherwise his declaration cannot produce the desired effects.
It is only by making an immediate and full deposit of the price that the redeemer is validly exercising that right and perfecting the right enshrined in the law to protect the family, by preserving the assets within his family.’
And, consequently, dismissed the appeal.
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Summary:
‘1 - If the redeemer intends to exercise the right after the opening and acceptance of bids in a closed letter, he must accompany his declaration with proof of the deposit of the entire price (plus 5 per cent to compensate the unsuccessful bidder who has already deposited the price), failing which his declaration cannot produce the intended effects.
2 - In the event of non-payment, the insolvency administrator was authorised to order that the redemption be cancelled and, consequently, to accept the bid submitted by the bidder and conclude the sale.’
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