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19.01.2022

Fulfillment of the creditor’s demand for repayment of the testator’s debt should not lead to an unreasonable deterioration of the property status of the heirs

On October 27, 2021, the Supreme Court, as part of the panel of judges of the Second Judicial Chamber of the Civil Court of Cassation in case No. 552/4892/19 , partially satisfied the cassation appeal of the heiress of the borrower, indicating that the norms of material law do not provide for such a method of foreclosure as recognition of ownership of property.
The lender appealed to the court with a claim against the borrower's heiress, the third party is a private notary, for collection of the inherited property.
A loan agreement was concluded between the lender and the borrower, according to the terms of which the claimant transferred the money, which the borrower undertook to return, at the same time providing the claimant with the original legal document – the State deed on the ownership of the land plot and the original technical documentation – to secure the assumed obligation on her. In connection with the death of the debtor, the plaintiff turned to his heir – his wife, who refused to return the funds.
The decision of the district court rejected the claim.
The decision of the district court was annulled by the decision of the appeals court and a new court decision was adopted on the satisfaction of the claims.
Having considered the cassation appeal of the defendant, the Supreme Court indicated that the obligation of the heirs to repay the debtor's debt in the case of acceptance of the inheritance is fully consistent with the content of Art. 1218 of the Civil Code of Ukraine, which defines that the inheritance includes all rights and obligations that belonged to the testator at the time of opening the inheritance and did not cease due to his death.
The creditor, concluding credit agreements, can be sure of repayment of the debt in the event of the borrower's death at the expense of the inherited property, which is accepted as an inheritance by the debtor's heirs, which excludes the possibility of unjustifiably imposing on the debtor's heirs the obligation to repay the debt in an amount greater than the value of the property acquired by them , which will lead to an unjustified deterioration of their property status in connection with the fulfillment of an obligation to which they are not a party and to which they did not consent.
In any case, the fulfillment of the creditor's demand for repayment of the debt owed by the testator should not lead to the deterioration of the property condition of the heir without simultaneously receiving a property benefit in the form of inherited property.
Since the obligation of the borrower's wife, as an heir after the borrower's death, remains unfulfilled, the appellate court came to a well-founded conclusion that the lender's requirements regarding foreclosure on the land plot in accordance with Art. 1282 of the Civil Code of Ukraine are subject to satisfaction.
A similar conclusion was made by the Supreme Court in the decision of April 3, 2019 in case No. 369/11454/13 and in the decision of April 10, 2019 in case No. 758/8325/16-ts , the Supreme Court does not see grounds for deviation .
In this case, the court considered the recognition of the right of ownership of the specified land plot as belonging to the creditor as an effective protection of the violated right of the creditor within the meaning of Art. 13 of the Convention on the Protection of Human Rights and Fundamental Freedoms.
However, the Supreme Court did not agree with such a conclusion, since the norms of substantive law do not provide for such a method of enforcement as recognition of property ownership.
The procedure for the sale of seized property, approved by the order of the Ministry of Justice of Ukraine dated September 29, 2016 No. 2831/5 , provides for the procedure for the sale of property through electronic auctions.
According to the conclusion of the Supreme Court, the appellate court, canceling the decision of the court of first instance and satisfying the lender's claim for recognition of the claimant's ownership of the disputed land plot, did not take into account the above and came to the wrong conclusion about the existence of legal grounds for satisfying the claim in this part. In turn, the court of first instance took into account the above norms of material law, determined the nature of the disputed legal relationship and made a correct and justified conclusion about the refusal to satisfy the lender's claims for recognition of ownership of the land plot.
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