Executory sale of a property: how it works and the risks for the creditor

If your debtor does not pay despite a judgment and owns a property, you can have that property sold to recover your claim. This executory sale (executoriale verkoop) runs from an enforceable title via a bailiff’s attachment to a public auction by a civil-law notary, but a mortgagee is paid first, so with a high mortgage little may be left for you.

Below we explain the steps under the Dutch Code of Civil Procedure (Rv) and the Dutch Civil Code (BW), and the risks that can leave a creditor with less than expected: the mortgage, a low auction price, other creditors, costs, injunction proceedings, bankruptcy and a judgment that is set aside on appeal.

What do you need to start: the enforceable title

Enforcement against a property always begins with an enforceable title (executoriale titel). The most common title is a court judgment, but a notarial deed or a court order can also serve. The judgment must be declared provisionally enforceable, or the period for appeal (three months, Article 339 Rv) must have expired.

How does the bailiff serve the judgment and issue an order to pay?

Before any attachment, the bailiff serves the judgment on the debtor and issues an order to pay. Under Article 439 Rv, the debtor gets at least two days to pay voluntarily; only after that period may enforcement start.

If service is defective or the order is issued incorrectly, the debtor can challenge the enforcement in court. Careful work by the bailiff at this stage prevents weeks of delay later.

How is the property attached?

The bailiff levies an executory attachment and has it registered in the public registers of the Land Registry (Kadaster), as required by Article 505 Rv. From then on the attachment is visible to third parties, and a later sale or mortgage by the debtor cannot be relied on against the attaching creditor.

The bailiff notifies the debtor and any mortgagees of the attachment. A mortgagee may take over the enforcement itself, as we explain under the risks below.

How does the public auction work?

The main rule is that an executory sale takes place by public auction (Article 514 Rv et seq.). A civil-law notary draws up the auction terms, announces the sale, compiles the information on the property and conducts the auction, which can also be held online via veilingbiljet.nl.

The property goes to the highest bidder. The buyer usually has to pay within a few weeks, after which the notary registers the transfer with the Land Registry.

Can the property be sold privately instead?

Yes, with the permission of the preliminary relief judge (voorzieningenrechter) under Article 3:268(2) BW. The judge approves a private sale if it is plausible that it yields more than an auction.

In practice the request usually comes from the mortgagee or the debtor. A private sale saves auction costs and often fetches a better price, so as attaching creditor it is in your interest to support it where the offer is reasonable.

What if the debtor is not the sole owner?

If the debtor owns the property together with someone else, you can in principle only attach and sell the debtor’s undivided share (Article 3:175 BW). The co-owner is not liable for the debt, so you cannot simply have the whole house auctioned.

An undivided half-share is very hard to sell: few buyers want to become co-owner alongside a stranger. That is why an attaching creditor may demand partition (verdeling) of the community under Article 3:180 BW, even against the co-owner’s wishes. The whole property is then sold and you recover from the debtor’s portion of the net proceeds.

The position is different if both owners are liable, for example spouses married in community of property (gemeenschap van goederen) with a community debt, or two borrowers under a joint loan. The whole property can then serve as recourse. Check the ownership position in the Land Registry before you attach.

How are the proceeds distributed?

The costs of enforcement are paid first, then the mortgagee, then any preferential creditors; the rest is shared by the other creditors in proportion to their claims (Article 3:277 BW). If there are several creditors, the notary draws up a ranking arrangement (rangregeling) under Article 551 Rv et seq., and disputes about it go to the court.

Ordinary creditors do not rank by the date of their attachment: an earlier attachment gives no priority over a later one. Whatever remains after all creditors are paid goes to the debtor.

What are the main risks for the creditor?

The biggest risks are a mortgage that absorbs the proceeds and an auction price well below market value. Costs, other creditors, injunction proceedings and bankruptcy can reduce what is left even further.

Risk 1: the mortgagee is paid first

A bank with a mortgage right ranks ahead of you, including for arrears of interest and costs. If the mortgage debt is high compared with the value of the property, there may be nothing left for you, even after a reasonable sale price.

Under Article 3:268 BW the mortgagee also has the right of summary enforcement (parate executie): it can sell without a court judgment and without your consent. If the debtor is also behind on the mortgage, the bank will often take over and decide on timing, method of sale and notary.

Risk 2: the auction yields less than expected

Properties sold at auction usually fetch less than on the open market. Bidders have limited opportunities to inspect, the condition is not always known, and the occupant may not leave voluntarily.

The gap is not a fixed percentage; it depends on the property, the location, the market and whether the property is sold vacant. Do not rely on the WOZ value or an ordinary appraisal, but on a valuation that states an enforcement value (executiewaarde) next to the market value.

Risk 3: other creditors share in the proceeds

Other creditors may also have attached the property or may register in the ranking arrangement. Because ordinary creditors share pro rata under Article 3:277 BW, every additional claim reduces your part of the proceeds.

Risk 4: costs reduce the net proceeds

Bailiff’s fees, notary and auction costs, Land Registry fees and any eviction costs are deducted from the proceeds before creditors are paid. For a property of low value or with a high mortgage, these costs can absorb most of the surplus.

Risk 5: the debtor starts injunction proceedings

The debtor can ask the preliminary relief judge to suspend the enforcement in enforcement injunction proceedings (executiegeschil, Article 438 Rv). The judge intervenes where there is abuse of the power to enforce, for example new facts after the judgment, a manifest error or payment already made.

Mere inability to pay is in principle not enough. Even if you win, such proceedings delay the sale by weeks and cost money.

Risk 6: the debtor goes bankrupt

On bankruptcy, your attachment lapses (Article 33 of the Bankruptcy Act, Faillissementswet) and individual enforcement stops. The trustee (curator) sells the property for the estate, while the mortgagee may still enforce as if there were no bankruptcy (Article 57 Faillissementswet).

As an unsecured creditor you then receive a percentage of your claim at best, often after the trustee’s costs and preferential claims such as tax debts have been paid.

Risk 7: a residual debt remains

If the proceeds do not cover your claim, the debtor remains personally liable for the rest. A judgment remains enforceable for twenty years (Article 3:324 BW), so you can act again if the debtor later acquires assets or income, but in practice collection is often difficult.

Risk 8: the judgment is set aside on appeal

A provisionally enforceable judgment can be enforced while an appeal is pending. If the court of appeal sets it aside, you have enforced without a valid basis and are in principle liable for the debtor’s loss, even if you acted in good faith.

The sale to a buyer in good faith usually cannot be undone. You then have to repay what you received and compensate the additional loss, such as the difference between the enforcement value and the real value, moving costs and consequential damage. Weigh the strength of your case before you enforce against a property during an appeal.

What should you check as a creditor?

Check the numbers before you instruct a bailiff: the net expected result decides whether an executory sale is worth it.

• Is your judgment provisionally enforceable, or has the three-month appeal period expired?
• Who are the registered owners according to the Land Registry, and is the debtor the sole owner?
• How high is the mortgage debt compared with a realistic enforcement value?
• Are other creditors or attachments registered on the property?
• Are there simpler assets to attach, such as bank balances or salary?
• Is an appeal pending that could make you liable if the judgment is set aside?

What should you check as a debtor?

As a debtor you still have options after an attachment, but deadlines are short once the auction date is set.

• Was the judgment properly served and was the two-day order to pay issued (Article 439 Rv)?
• Have you already paid part of the claim, and is that reflected in the amount being enforced?
• Are there new facts that justify injunction proceedings under Article 438 Rv?
• Would a private sale under Article 3:268(2) BW yield more than an auction?
• Can you offer a payment arrangement before costs increase further?

What can we do for you with an executory sale?

Our civil lawyers assist creditors and debtors at every stage of enforcement against a property.

• We check your enforceable title and the ownership and mortgage position in the Land Registry.
• We estimate the net expected result after mortgage, costs and other creditors.
• We instruct the bailiff and coordinate with the notary on the attachment and the auction.
• We claim partition of a co-owned property under Article 3:180 BW.
• We conduct or defend enforcement injunction proceedings before the preliminary relief judge.
• We negotiate a payment arrangement or private sale as an alternative to the auction.

Summary

• An executory sale requires an enforceable title, service with a two-day order to pay, and an attachment registered with the Land Registry.
• The main rule is a public auction by a notary; a private sale needs the preliminary relief judge’s permission under Article 3:268(2) BW.
• Enforcement costs and the mortgagee are paid first; ordinary creditors then share pro rata, regardless of the date of attachment.
• Against a co-owned property you can only sell the debtor’s share, unless you claim partition.
• Bankruptcy ends your attachment, and enforcing a judgment that is later set aside makes you liable.

Frequently asked questions