Why Market Valuation Is the Decisive Step
In enforcement proceedings, property placed under seizure is realized by auction, and the success of the auction — and the balance between the parties' interests — depends largely on how accurately the market value of the property has been determined, since the starting price is based on it. An undervaluation prejudices the creditor and reduces the prospect of full satisfaction; an inflated valuation makes the property unsellable and delays the procedure. This stage is governed by Article 47 (assessment of seized property) and Article 48 (the act of description and seizure) of the Georgian Law on Enforcement Proceedings.
This page describes when and by whom the assessment is carried out, what role is played by an expert conclusion submitted by a party to the proceedings, and what the act of description and seizure — the document that records the results of the assessment and becomes the basis for subsequent challenges — must contain.
How Seized Property Is Assessed
Under the first paragraph of Article 47, at the time of the description of the property, where it is possible to determine its market value, that value is recorded in the act of description and seizure. If determining the prices at the description is impossible, the property is assessed after the registration of the seizure by the National Bureau of Enforcement or by another competent person commissioned by the Bureau. This applies where the nature, condition or market specifics of the item do not allow its value to be fixed immediately at the moment of description.
In cases of tax arrears an additional rule operates: on the basis of an agreement between the National Bureau of Enforcement and the tax authority, when property of a taxpayer is assessed for the purposes of securing the collection of tax arrears, a repeated assessment of that property in the enforcement proceedings is not mandatory if the assessment of the property to be realized was carried out within 1 year before the commencement of the enforcement proceedings. This means that in certain tax cases an earlier assessment continues to be used, saving both time and expense.
The Expert Conclusion and the Parties' Rights
The fourth paragraph of Article 47 gives a party to the enforcement proceedings the right, at the commencement of the proceedings or before the Bureau assesses the property, to submit an expert conclusion on the determination of the property's market value, under which the property was assessed within 6 months before the commencement of the enforcement proceedings. The Bureau is entitled to rely on the conclusion submitted by a party, and where conclusions on the same property have been submitted by both parties — on one of the conclusions. The question of whether it is expedient to deem a conclusion admissible is decided by the National Bureau of Enforcement.
This is precisely where practical disputes arise: the creditor does not want the property undervalued, while the debtor does not want it carried off for less than it is worth. If a party considers that the Bureau's assessment does not reflect the real market value, the timely submission of its own expert conclusion is the instrument provided by law; any refusal to rely on it must be justified by the Bureau as a matter of expediency.
The Act of Description and Seizure
Article 48 determines what must be indicated in the act of description and seizure:
- the time and place of drawing up the act;
- the name of the enforcement bureau in whose territory the enforcement takes place, and the name and surname of the executor (in the cases provided for by law, of the private executor), the address of the place of work, and the persons present at the drawing up;
- the name of the court and the decision being enforced, or the name of the other enforcement document and the organ that issued it;
- the names of the creditor and the debtor;
- the name of each item included in the act and its distinguishing features — quantity, size, weight, wear and other characteristics;
- the separate assessment of each item and the value of the whole property, where the executor is able to set prices at the description;
- which items or premises were sealed, and the numbers of the seals;
- the name and address of the person to whom the property was transferred for storage, where storage was not entrusted to the debtor;
- an explanation that the debtor and other persons were informed of the procedure for challenging the executor's actions, and of the storage obligation and liability;
- the notes, statements of the creditor and the debtor, and the executor's explanations.
The act must also list, with the values indicated, the items that remained with the debtor under the procedure established by law, as well as the debtor's other property held in common ownership with other persons on which no seizure was placed. The act is signed by the executor, the custodian of the property, the creditor, the debtor and the other persons present at the placing of the seizure. A properly drawn-up act is the document on which any subsequent challenge and contestation of the auction's results will rest.
Frequently Asked Questions
Who carries out the assessment of the property?
If prices can be determined at the description, the value is recorded directly in the act of description and seizure; otherwise, after the registration of the seizure, the property is assessed by the National Bureau of Enforcement or by another competent person commissioned by the Bureau.
For what period is an expert conclusion valid?
A party may submit an expert conclusion under which the property was assessed within 6 months before the commencement of the enforcement proceedings.
What happens if both parties submit conclusions?
The Bureau is entitled to rely on one of the conclusions; the expediency of deeming a conclusion admissible is decided by the National Bureau of Enforcement.
Is a repeated assessment mandatory for tax arrears?
Where an agreement between the Bureau and the tax authority exists — no, provided the assessment of the property to be realized was carried out within 1 year before the commencement of the enforcement proceedings.
How We Help on Legal.ge
A mistake at the market valuation stage distorts the whole outcome of the auction, which is why it takes experience to manage. On the Legal.ge platform you can find an enforcement law lawyer who will help you with the timely preparation and submission of an expert conclusion, the review of the act of description and seizure, and the challenging of the Bureau's decisions. Choose a specialist and protect your financial interests at every stage of the realization of property.