The SC again Drew Attention of Courts to the Conditions for Eviction of Citizens in Case of Levying an Attachment upon Mortgaged Property

The Supreme Court represented by the panel of judges of the First Judicial Chamber of the Civil Cassation Court having considered the case No. 754/4727/16ц in its Resolution of 28 November 2018 (cassation proceedings No. 61-25345св18) cancelled the judgments of courts of the first and appeal instances and refused to satisfy the claim on the removal of obstacles to the realization of the right to possess, use and dispose real estate by means of eviction.

The courts found that due to the fact that the defendants had violated the terms of the contract on the provision of consumer credit, Kei-Kolekt LLC had settled the issue on levying an attachment upon mortgaged property extrajudicially by means of acquisition of ownership rights to disputed property; such a procedure was stipulated by the mortgage contract. On the basis of the sales contract, Sol-Properti LLC purchased the mortgaged property from Kei-Kolekt LLC. However, Sol-Properti LLC may not utilize its property since the defendants pose obstacles and refuse to leave voluntarily.

While satisfying the claim, court of the first instance in its judgment, confirmed by appeal court, considered that the defendants lived in the disputed apartments without legal grounds and posed obstacles to the claimant while realizing its right to possess, use and dispose real estate, which belonged to the claimant. Thus, the claimant’s rights should be protected by means of eviction of the defendants from the apartment.

The panel of judges of the Supreme Court disagreed with such opinion of the courts.

Pursuant to Article 10 of the Housing Code of the Ukrainian Soviet Socialist Republic, citizens evicted from dwelling premises shall be simultaneously provided with another permanent dwelling premise, except for eviction of citizens while levying an attachment upon dwelling premises purchased by them at the expense of loan of a bank or another entity, the repay of which shall be secured by the mortgage of the relevant dwelling premise. The permanent dwelling premise, provided to the evicted individual, shall be noted in a judgment.

The existing practice of the Supreme Court as for the consideration of the noted category of cases provides the procedure of application of Article 40 of the Law of Ukraine “On Mortgage” and Article 109 of the Housing Code of the Ukrainian Soviet Socialist Republic.

The Supreme Court remarked that Part 2 of Article 109 of the Housing Code of the Ukrainian Soviet Socialist Republic set the general regulation about the guaranteed non-eviction of citizens without providing them with another dwelling premise, which was not purchased through a loan.

The state persistently implemented legislative restrictions as for the eviction aimed at the protection of Ukrainian citizens’ rights; such restrictions dealt with the fulfillment of undertakings upon loans provided in foreign currency and secured by mortgage. The noted circumstance is caused by the fact that an individual, who has got a loan in foreign currency, does not have impact on the cheapening of hryvnia, fluctuation in the exchange rates; however, the state shall be obliged to secure the observance of rights of all subjects, as well as the balance of rights, particularly, the rights of loan provider and borrower in credit legal relations.

At the same time, while concluding the sales contract with the previous mortgage holder of this property, Sol-Properti LLC should be aware of encumbrance represented by the presence of persons, who were registered and living there. I. e. the new owner may partially renew its rights by means of the application either to the vendor regarding the compensation of a loss, if it has not appropriately fulfilled the obligation as for complete informing possible vendee of apartment about its encumbrance, or to the bank concerning the fulfillment of the obligation by the last one as for the provision of individuals to be evicted with another dwelling premise and the compensation of losses.

Taking into account the fact, that the courts had untimely made a conclusion about the satisfaction of the claim, the Supreme Court cancelled the judgments of the courts of previous instances and refused to satisfy the claim.

Follow the link http://www.reyestr.court.gov.ua/Review/78215384 to see the full text of the Resolution.