Cyprus Mail

Stay of execution against a guarantor

Nicosia court

THE registration of a court judgment over an immovable property registered in the name of the debtor constitutes an estate in land securing the  payment of the judgment debt. The judgment is deposited at the Land Registry of the district where the property situates, together with an application signed by the judgment creditor or his authorised representative, describing the property and claiming that the debtor’s interest in it remains as a security for repayment.

The court judgment can be registered regardless of the debtor being a guarantor or the principal debtor as long as there is an immovable property registered in his name. In the case of banking institutions where the debt is secured by a mortgage and its forced sale is ordered, the guarantor is protected by the provisions of the law for the protection of a certain category of guarantors of 2003 (L.197(I)/2003), especially through the radical change introduced by the amending law L.58(I)/2015. In particular, article 9 empowers the court to order a stay of execution issued against a guarantor, regarding the attachment and forced sale of his movable property or the sale or encumbering (memo) of his immovable property or an application for the payment of monthly instalments or even the issue of a bankruptcy order, either at the time the judgment is issued – provided the guarantor submits to the court all the necessary details – or at any time later with or without the consent of the creditor and the principal debtor or at the time of the issue of the judgment.

A relevant application filed by a guarantor was examined by the District Court of Nicosia with reference to the provisions of the aforesaid law, claiming the issue of an order prohibiting the District Land Registry Officer from proceeding with the procedure for the forced sale of the guarantor’s immovable properties, which were burdened with a memo, as well as an order for the stay of execution of the court judgment regarding the forced sale of the mortgaged or encumbered property of the guarantor until the forced sale of the immovable property of the principal debtor, which is stated in the judgment.

The bank objected but the court found the guarantor’s application to be justified and issued the orders claimed, stating that the principal debtor had immovable property and it was up to the bank to proceed with its forced sale for the satisfaction of the debt. It added that the court has the power to order the stay of any measures of execution, even bankruptcy, and therefore an application for stay is filed and decided during the bankruptcy proceedings or otherwise during the procedure concerning the execution measure. Article 9 specifies the execution measures which can be stayed, including the encumbrance (memo) of an immovable property.

The court stated that the only thing the guarantor can do is to file an application before the court after the issue of the judgment against him proving that the principal debtor has property of such a value to satisfy the debt under the guarantee agreement. In the case under examination, the guarantor proved to a great extent that the principal debtor has property or financial capacity and all the parties concerned, the bank, the guarantor and the principal debtor agree that the latter had mortgaged the said property in favour of the bank. It concluded that the case was fully governed by the provisions of the relevant law, stating that the civil society and the legal principles governing it, expect this and not the execution of a judgment against the guarantors, while the principal debtor remains untouched.

George Coucounis is a lawyer specializing in the Immovable Property Law, based in Larnaca, email [email protected], (tel.:- 24818288)

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