Compulsory Administration
Compulsory Administration
The receivership is a special form of compulsory enforcement. Receivership is one of the three means of execution that the Execution Code (EO) provides for enforcement against immovable property. In addition to the compulsory establishment of a lien and the compulsory auction, it enables the enforcing creditor to satisfy his claim not by selling the property, but by using its uses and income.
Pursuant to § 97 EO, the compulsory administration of a property, a building on leased land, or a building right may be approved in favor of an enforceable monetary claim. In this process, the uses and income of the property are utilized. This also includes income from a forestry or agricultural business operated on the property.
Parties in the receivership proceedings
In the compulsory administration proceedings, there are two main parties. The petitioning creditor is the person who possesses an enforceable monetary claim and applies for compulsory administration in order to recover their claim from the proceeds of the property.
The debtor is the owner of the property concerned or other object of execution against whom the claim is directed. While the petitioning creditor requests the initiation and execution of the compulsory administration, the debtor is subject to the legal restrictions associated with the ordered administration of their property.
Procedure of the receivership proceedings
In principle, the receivership proceedings consist of three procedural sections:
- Initiation proceedings
- Administrative proceedings
- Distribution proceedings
Initiation proceedings
The receivership proceedings begin, like any execution proceedings, with an application for execution. The creditor applies to the court for the execution of the receivership over a specific property or other executable object.
If the court approves the receivership, this is noted in the land register. This entry ensures that the receivership also applies to subsequent purchasers of the property.
The order of approval is served on both the creditor and the obligor. From this point on, dispositions of the property by the obligor that go beyond ordinary administration are ineffective against the creditors.
At the same time, the enforcing creditor is ordered to pay an advance on costs within a period of at least four weeks. This serves to secure the minimum remuneration of the receiver to be appointed later.
As soon as the advance on costs has been received, the court appoints a receiver. In addition, the obligor is informed that he himself is no longer allowed to carry out any administrative acts and cannot interfere in the duties of the receiver.
The order of appointment is served on several parties, including the creditor, the debtor, the administrator, and the authorities responsible for taxes and charges on the property. In addition, a public announcement is made in the Ediktsdatei (official gazette).
Peter HarlanderHarlander & Partner Rechtsanwälte „The compulsory administration does not affect the substance of the property, but rather its current uses and income, and makes these usable for the satisfaction of the enforceable claim.“
Administrative proceedings
In the administrative proceedings, the actual receivership of the property is carried out by the appointed receiver. He takes over the day-to-day management, collects the proceeds and ensures that all administrative steps are carried out in accordance with the provisions of the Execution Code.
The approval of the compulsory administration does not initially change existing lease agreements. Nevertheless, the administrator has certain powers:
- They can terminate existing contracts in accordance with the general legal rules
- File an eviction lawsuit
- Conclude new lease agreements for the customary duration
For decisions that do not fall under ordinary administration, the administrator requires the approval of the execution court. These include in particular:
- Conclusion of long-term lease agreements that extend beyond the expected duration of the compulsory administration
- Leasing of the entire property or parts thereof
- Leasing of the proceeds of the property by public auction
The activities of the receiver are monitored by the execution court. The court may issue instructions to him, obtain reports and clarifications, examine documents and carry out necessary investigations itself.
Distribution proceedings
In the distribution proceedings, the proceeds of the property generated during the receivership are distributed. These proceeds are initially used to cover the administrative costs and then to satisfy the enforcing creditor and other entitled parties.
The receiver may pay the costs associated with the administration and the usual economic use of the property directly from the proceeds. These include, for example, operating costs or necessary expenses for ongoing management. These expenses are therefore covered without additional proceedings.
Only the surplus earnings remaining after deduction of these administrative expenses are distributed. The distribution is carried out by the execution court.
Sebastian RiedlmairHarlander & Partner Attorneys „In the distribution proceedings, the proceeds obtained are first used to cover the administrative expenses and then to satisfy the claims of the entitled creditors.“
Termination of the receivership
The receivership can be terminated for several reasons. The termination can take place either ex officio or upon request. The court terminates the receivership as soon as all claims, including ancillary charges, have been settled. The obligor can also apply for the termination himself.
The receivership must also be terminated if its continuation would cause special costs that cannot be covered from the income or if, under the circumstances, no sufficient income is to be expected.
Your Benefits with Legal Assistance
A lawyer will guide you through the entire compulsory administration process and ensure that you correctly meet all formal requirements. They will submit the execution application properly, provide necessary evidence in a timely manner, and monitor every step of the process. This allows creditors to enforce their claims efficiently and avoid delays or errors.
As an obligor, you receive legal protection, understand your obligations exactly and react to court measures in good time.
- Support during the entire receivership process
- Legally compliant implementation of all necessary steps
- Safeguarding your rights and interests
