Mortgage Foreclosure and Asset Seizure in Banking

Posted on Nov 23, 2024 in Law & Jurisprudence

Concept of Embargo

An embargo is an impact decreed by a competent authority on a set of private property. It aims to ensure a precautionary measure for the eventual execution of a sentence claim that arises or is raised at trial, either to directly satisfy an executive claim or as a precautionary measure.

Subjects and Assumptions of Seizure

This section will list all subjects that can carry out the seizure and identify the assumptions.

Order of Asset Seizure

Assets should be seized in the following order:

Property consigned as collateral for the obligation claimed.
Money.
Loans made in the act.
Jewelry.
Fruits and income of every kind.
Movable property not included in the previous sections.
Real estate.
Wages or commissions.
Credits.

Exceptions to the Order of Asset Seizure

According to Article 491, the plaintiff can indicate the goods to be seized without being subject to the order established in the previous section if:

The person was authorized to do so by the obligor under an express agreement.
The defendant’s stated property is insufficient or not subject to the established order.
The goods reside in various places; in this case, those in the place of trial can be indicated.

Assets Exempt from Garnishment

Article 498 excludes the following assets from seizure:

Family assets, since their registration in the Public Registry of Property, as established by the Civil Code.
The bed, daily clothes, and furniture of ordinary use of the debtor, spouse, or children, not of luxury, according to the judge.
Instruments, equipment, and tools necessary for the art or craft of the debtor.
Machinery, tools, and animals necessary for farming, as deemed necessary by the judge, after hearing an expert report.
Books, appliances, tools, and instruments of persons employed or engaged in professional study.
Guns and horses for active-duty military use, indispensable according to the laws.
Effects, machinery, and instruments typical for commercial or industrial businesses, as necessary for their service and turnover, according to the judge, after hearing an expert opinion, but may be operated in conjunction with the business.
Crops before harvest, but not planting rights.
The right of usufruct, but not its fruits.
Rights of use and habitation.
Easements, unless the lien is on the estate on whose behalf they are made, except for water, which is attachable independently.
The annuity, as established in Articles 2952 and 2953 of the Civil Code.
Salaries and wages of workers, as established by Federal Labor Law, provided it does not concern debt for food or liability from a crime.
Allocations for pensioners of the Treasury.
Suburbs of towns and the individual plot in its division corresponding to each ejido.

Extent of the Embargo

According to Article 492, the embargo remains only on goods sufficient to cover the principal, interest, and costs, including new deadlines and revenues until full settlement, unless otherwise provided by law.

Requesting an Extension of the Embargo

Article 495 states that an extension can be requested if:

Seized assets are insufficient to cover the debt and costs.
Auctioned property fails to cover the claim amount or if, one year after remission, furniture has not been sold.
Not enough goods are seized and the debtor does not present them or acquire them after the seizure.
In cases of third parties, pursuant to Title X.

Procedure for Non-Real Estate Embargo

Article 500 states that for all property except real estate registered in the Public Registry of Property, a certified copy of the diligence of attachment is made in duplicate. One copy, after registration, will join the other documents, and the other will remain in the office.

Exceptions to Creditor-Appointed Depository

Article 497 states that in every seizure, the creditor appoints the depository under their responsibility, through a formal inventory. Exceptions include:

Seizure of readily available money or credit, made under statement, where the plaintiff receives immediate payment; otherwise, the deposit is made in an authorized credit institution.
Seizure of goods previously subject to court proceedings, where the last depository handles subsequent liens, unless the re-seizure is due to foreclosure, liens, or other real privilege predating the first seizure.
Seizure of jewelry and other furniture, which will be deposited in a legally authorized institution.

Obligations of the Depository

Article 501 and Civil Code articles 2780 and 2781 outline the depository’s obligations, including preserving the deposited goods, returning them upon request (unless a fixed term hasn’t expired), being liable for damages caused by malice or negligence, and notifying the owner or authorities if the property is stolen.

Procedure for Seizing Credits

Article 501 explains that when seizing loans, the seizure involves notifying the debtor or payer to withhold payment and remit the amount to the court. The lender is warned of double payment if they disobey and is penalized if they claim not to have those credits.

Removal of the Depository

Article 513 lists reasons for removing a depository, including failure to file or have an approved monthly bill, changing residence, and not informing the court about the deposit’s location within 48 hours.

Auction of Goods

Article 519 states that real estate auctions are held publicly in court, under the jurisdiction of the enforcing judge.

Documentation for Property Appraisal

Articles 520 and 521 detail the process of obtaining certificates of taxes from the Property Registrar for the last ten years before appraising seized property. If levies appear, creditors are notified to intervene in the appraisal and auction.

Rights of Creditors with Registered Liens

Article 522 outlines the rights of creditors with inscribed liens, including intervening in the auction, using the auction approval document, and other relevant rights.

Preparing for the Auction

Article 524 describes the process of preparing for the auction, including advertising it twice, seven days apart, in public places and newspapers if the value exceeds five thousand dollars.

Legal Position and Bidder Requirements

Article 527 sets the legal position at two-thirds of the appraised value or the agreed-upon price, provided the cash covers the loan and costs. Article 528 requires bidders to deposit at least ten percent of the property’s value before participating.

Auction Procedure

Article 533 details the auction procedure, including listing bidders, granting a half-hour for additional bidders, reviewing proposals, and rejecting those without legal standing or the required deposit.

Post-Auction Requirements

The winning creditor must recognize other mortgage credits, pay them upon maturity, and deliver the property free of encumbrances to the debtor.

Payment to the Performer with Outstanding Loans

In cases of preferential loans, the equity from the sale is apportioned among all creditors, with the performer receiving their due, and the share of other titles deposited until canceled.

Auction Procedure for Movable Property

Article 551 outlines the auction procedure for movable property, including cash sales through brokers, price reductions if unsold after ten days, and awarding goods to the plaintiff for the offered price.

Special Mortgage Procedures

Special mortgage procedures apply to establishing, expanding, dividing, registering, and terminating a mortgage, as well as its nullity, cancellation, payment, or priority.

Requirements for Foreclosure Based on Payment Priority

Foreclosure based on payment priority must adhere to specific rules and requires the mortgage to be granted according to Articles 3096, 3097, 3098, 3099, and 3108 of the Civil Code, concerning mortgage registration and notarization.

Exceptions in Foreclosure

Possible exceptions in foreclosure include absence of the creditor, grounds of non-signature, alteration or falsification of the document, lack of representation, breach or cancellation of the contract, payment or compensation, remission, offer not to charge, novation, lis pendens, and res judicata.

Requirements for a Foreclosure Demand

A foreclosure demand must be accompanied by the enforceable action document, proof of property registration for the defendant, confirmation of no prior liens registered at least ninety days before the application, adherence to Articles 3096-3099 and 3018, accurate information, statement of facts with witness names and supporting documents, and offered evidence.

Conducting the Site Visit in Foreclosure

Articles 644-I and 644-J describe the site visit procedure, requiring the debtor to pay or have the property, fruits, and objects inventoried and considered immobilized. The debtor must cooperate, or the judge will compel them. If the debtor doesn’t accept depository responsibility, they are evicted, and the property is delivered to the plaintiff.

Procedure for Acquiescence in Foreclosure

This section will describe the procedure if the defendant acquiesces in foreclosure.

Evidence Preparation in Foreclosure

Article 644-K states that parties are responsible for preparing evidence, including presenting witnesses, experts, and documents. If expert opinions conflict, the judge appoints an umpire. Failure to present admitted evidence voids the offer.

Auction Price in Foreclosure

Article 644-N details how the auction price is determined, using the agreed-upon appraisal or, if none exists, following a process involving appraisals by each party, averaging them if they are within 30% of each other, or ordering a new appraisal if not.

Registration Effects in Foreclosure

Articles 644-F and 644-H describe the effects of registering the foreclosure application in the Public Registry, preventing further liens or precautionary measures on the property, except for previously registered sentences or superior claims in earlier lawsuits.