Criminal Seizure of Real Property and Judicial Liquidation: Who Decides the Sale?

Imagine for a moment: you are the owner of a house in Le Barcarès, a nice seaside property that you rent out seasonally. One day, you learn that a judicial investigation has been opened against you for money laundering, and your house is criminally seized. At the same time, your company is placed into judicial liquidation. For the liquidator, this property is part of the assets to be realised. But the criminal justice system blocks the sale. Who prevails? The liquidator or the investigating judge? This question, crucial for owners, creditors, and real estate professionals, was settled by the Court of Cassation on 15 November 2017. The answer is clear: the liquidator must apply to the criminal judge, not the judge-commissioner. Analysis.

The Facts: A Story That Happens Every Day

Mr X, owner of a building in Perpignan, is under investigation for drug trafficking. As part of the investigation, the investigating judge orders the criminal seizure of his real property, in accordance with Article 706-150 of the Code of Criminal Procedure. At the same time, Mr X is placed into judicial liquidation. The liquidator, SCP Pimouguet-Leuret - Devos-Bot, considers that this property must be sold by auction in the context of the collective proceedings to satisfy creditors. He therefore applies to the judge-commissioner for a forced sale. But the judge-commissioner notes that the property is subject to a criminal seizure rendering the property unavailable. He rejects the application. The liquidator appeals, but the Court of Appeal upholds the decision. The liquidator then appeals to the Court of Cassation, arguing that the criminal seizure does not prevent the sale ordered by the judge-commissioner. The Court of Cassation had to settle this conflict between criminal procedure and collective proceedings.

The Reasoning of the Court — Analysed

The Court of Cassation dismisses the appeal and upholds the reasoning of the lower courts. It relies on Article 706-150 of the Code of Criminal Procedure, which provides that criminal seizure renders the property unavailable and that any challenge to its validity or enforceability must be brought before the criminal court. In other words, the legislature has established the primacy of the criminal judge when the property is seized as part of an investigation. What does this mean in practice? That the liquidator, despite his powers, cannot bypass the criminal seizure by requesting the sale from the judge-commissioner. He must, if he believes the seizure is unjustified or cannot be opposed to the collective proceedings, bring an appeal before the investigating judge or the investigating chamber. The Court clarifies that the judge-commissioner's decision is lawful, as he cannot order the sale of a property rendered unavailable by a criminal measure. In short, the criminal seizure blocks the realisation of the asset by the liquidator. This is not a jurisprudential development but a strict application of the law. However, this decision clarifies a frequently disputed point: the liquidator has no choice of jurisdiction. He must follow the criminal path. Note however: this does not mean the property can never be sold. If the investigation leads to a release of the seizure, or if the criminal court orders confiscation, the liquidator can then act. But as long as the criminal seizure is in force, the judge-commissioner lacks jurisdiction.

What This Changes for You — Practically

For a landlord owner in Prades, whose property is criminally seized and who is in judicial liquidation, this decision means that the liquidator cannot sell the property quickly. You will have to wait for the outcome of the criminal proceedings. If you are exonerated, the seizure will be lifted and the property can be sold by the liquidator. But in the meantime, you cannot dispose of the property. For a tenant of a seized property, the situation is delicate. Criminal seizure does not automatically render the lease void, but the liquidator cannot evict you to sell. Your rent must be paid to the judicial administration. For a potential buyer, beware: a criminally seized property cannot be sold without the consent of the investigating judge. undefined, I have encountered cases where buyers signed a preliminary sale agreement without knowing the property was seized. Result: the sale is impossible, and the buyer may lose their deposit. For a co-owner, criminal seizure of a unit can block general meeting decisions if the liquidator is not represented. It is therefore essential to check the legal status of the property. If you are in this situation, you should contact a specialised lawyer to assess possible remedies. The liquidator, for example, can ask the investigating judge to lift the seizure if it is not necessary for the establishment of the truth. But this takes time. In practice, expect several months or even years, depending on the complexity of the case.

Four Tips to Avoid This Type of Dispute

• Check for the absence of criminal seizure before any real estate transaction. Request a certificate of mortgage situation and inquire at the registry of the judicial court. A simple check can save you years of blockage.
• If you are in judicial liquidation, inform your liquidator of any ongoing criminal proceedings. Transparency allows anticipating conflicts of jurisdiction and directing appeals to the correct court.
• For liquidators: do not apply to the judge-commissioner for the sale of a criminally seized property. You waste your time. Apply directly to the investigating judge or the investigating chamber to challenge the seizure or request an amicable sale under judicial supervision.
• Consider an amicable sale with the consent of the investigating judge. Article 706-150 allows the investigating judge to authorise the sale of the seized property if it does not compromise the rights of the parties. This can unblock the situation but requires a reasoned request.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line. Already, a ruling of the Criminal Chamber on 14 September 2016 (No. 15-84.953) had affirmed that the liquidator could not sell a criminally seized property without the consent of the investigating judge. The Court of Cassation here confirms that the judge-commissioner lacks jurisdiction to order the sale. What is the trend in the courts? They protect the effectiveness of criminal seizure, considered an essential protective measure in the fight against organised crime. The Law of 9 July 2010 strengthened this mechanism. In the future, one can expect the primacy of criminal law to be maintained, unless the legislature intervenes to better articulate the two procedures. What few people know is that the liquidator can ask the investigating judge to lift the seizure if it is no longer necessary. But the burden of proof is heavy. In practice, investigating judges are reluctant to lift a seizure while the investigation is ongoing.

Checklist Before Acting

• Am I affected by a criminal seizure? Check with the registry of the judicial court or your lawyer.
• Who has jurisdiction to challenge? The investigating judge, not the judge-commissioner.
• What are the deadlines? An appeal against a criminal seizure must be brought within 10 days of notification of the seizure order.
• Can I sell the property despite the seizure? Yes, if the investigating judge authorises it, but this is rare. You must demonstrate that the sale will not harm the investigation.
• What if the liquidator wants to sell? Oppose the criminal seizure and inform the investigating judge. Do not sign any sale deed without the judge's consent.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →