The Basis of Forced Realization of Movable Property
The forced realization of a car or other machinery in enforcement proceedings is regulated in detail by the Law of Georgia on Enforcement Proceedings. After a lien is imposed, movable property — a vehicle — awaits a defined path: valuation, the announcement of a public auction, the identification of the winner and the distribution of the proceeds. The law regulates each stage of this process with exact periods and rules, which matters to the debtor, the creditor and the purchaser alike.
Valuation of the Seized Property
The process begins with valuation. When the property is described, its market value — where it can be determined — is recorded in the act of description and seizure. Where fixing the price is impossible, the National Enforcement Bureau, or another competent person on its instruction, values the property after registration of the lien. Where property of a taxpayer is valued under an agreement between the Bureau and the tax authority, repeated valuation is not mandatory if the valuation was carried out within 1 year before the start of enforcement proceedings.
A party to the proceedings may submit an expert conclusion on the market value, under which the property was valued within 6 months before the start of the proceedings. The Bureau may rely on that conclusion — and where both parties submitted conclusions, on one of them. This means that at the valuation stage a party has a real instrument of influence.
Announcement of the Public Auction and Self-Realization
Other seized items are sold publicly at auction by the National Enforcement Bureau. For movable property the auction is announced within 1 month from the imposition of the lien, and in the statutory tax case — within 2 weeks from the start of enforcement proceedings. Before the public announcement of the auction the Bureau may give the debtor the opportunity to realize the property itself under its control — but only where the realization covers the fee, the enforcement costs and the creditor's claims.
Another option before the auction is realization in another manner: where the creditor and the debtor agree, on the basis of their applications, the Bureau may determine that the seized property be realized otherwise than prescribed by the law. This exception requires the active consent of both parties and must be used before the auction.
Pledges and Distribution of the Proceeds
Where a pledge in favour of another pledgee is registered on the movable property whose forced realization the creditor requests, the Bureau notifies the pledgee of the start of the proceedings under civil procedure rules and sets a period for submitting claims. Another pledgee must submit its monetary claims within 10 calendar days of receiving the notice and is responsible for their accuracy.
From the proceeds, the fee and the enforcement costs are covered first, after which the pledgees' claims are satisfied in their order of priority. Where a tax pledge exists, the tax authority's claim is satisfied first regardless of its registered rank — except where the pledge of a licensed financial institution was registered before the tax pledge. The purchaser's position also matters: on the transfer of ownership, all liens and rights over the property are extinguished, unless the purchaser expresses the wish to become a party to the obligation.
The Auction Fails or the Winner Does Not Pay
If the winner of the auction does not pay the price of the property within the established period, it loses the sum deposited as a guarantee on the day of the auction, which passes into the ownership of the National Enforcement Bureau. The Bureau issues a decree cancelling the results of the auction and, within 3 days of its issuance, announces a repeated auction, which is not counted as a repeat auction.
In proceedings conducted for the benefit of the budget, if no winner appears at the first auction or the winner does not pay, the Bureau may, within 15 days of the end of the auction, issue a decree transferring the property in kind into state ownership; if no decree is issued, it holds a repeat auction. If the second repeat auction also fails, the property is released from the lien and returned to the debtor. From the seized sum, or the sum paid by the debtor, the remainder — after deduction of the fee and enforcement costs — is transferred to the creditor.
Frequently Asked Questions
When is an auction on movable property announced?
Within 1 month from the imposition of the lien, and in the statutory tax case — within 2 weeks from the start of enforcement proceedings.
Can the debtor sell the property itself?
Yes — before the announcement of the auction the Bureau may allow self-realization under its control if the fee, enforcement costs and the creditor's claims are covered; realization in another manner by agreement of the parties is also possible.
What happens to the proceeds?
The fee and enforcement costs are covered first, then the pledgees' claims in order; a tax pledge ranks first regardless of order unless a financial institution's pledge preceded it. The remainder goes to the creditor.
What awaits a winner who does not pay?
It loses the guarantee deposited, which stays with the Bureau; the auction results are cancelled and a repeated auction is announced within 3 days.
How We Help on Legal.ge
The forced auction of a vehicle demands exact knowledge of the periods, the valuation and the distribution of proceeds. On Legal.ge we help the debtor assess the lien and self-realization options, and the creditor and purchaser control the legality of the procedure. Contact us — we will defend your interests under the law's exact norms.