The Council of State has set up a double layer of protection for primary residences against debts owed to the state, with a ruling that creates a new legal landscape.
In essence, the top judges ruled that before seizing a debtor’s only home, the competent authorities must have checked for and clearly ruled out the existence of other assets that could be used to pay the debt. In addition, as the reasoning behind this important decision shows, they go one step further by opening the door to canceling the auction of a debtor’s only asset.
Specifically, the Sixth Section of the Council of State, chaired by Vice President Ioannis Gravaris, blocks the seizure and auction of a primary residence that serves as a family home over debts owed to the state, the tax authority and other public bodies.
According to the judges of the Council of State, a debtor’s family home cannot be seized and included in an auction schedule if the debtor has other assets that can cover the amount owed.
NEWSLETTER TABLE TALK
Never miss a story.
Subscribe now.
The most important news & topics every week in your inbox.
The ruling covers all cases of debts owed by citizens to the state, tax offices, local governments, social security funds, public law entities and others. In other words, it covers all debts collected under the provisions of the Code for the Collection of Public Revenue (KEDE).
The ruling also states that debtors can now file an objection at any stage of the auction process. This means they can object from the initial stage, when the seizure report on the property to be auctioned is served, up to the final stage, when the auction schedule is issued. This is especially important because, until now, it had been accepted that an objection could only be filed at the initial stage of the seizure report.
The key case
The case that reached the Council of State involved the auction of a property in Moschato, half-owned by the CEO of an industrial corporation, due to the company’s overdue debts to the state totaling 142,917 euros.
The CEO filed an objection against the auction schedule at the Athens Administrative Court of First Instance. He argued that including 50% of the home where his family lives in an auction schedule violates the requirements of the Constitution, which establish “the obligation of state bodies or public law entities to effectively protect marriage and the family and to ensure the protection of the family home.”
He also argued that the constitutional principle of proportionality was being violated, since the property being auctioned was the only home of himself and his family, and the Greek state could have taken less burdensome measures against him to collect its claim, such as first going after other real estate he owned.
The court of first instance accepted the objection and canceled the forced auction schedule, ruling that issuing the schedule went against the principles of good administration and proportionality.
The state then appealed, and the Athens Administrative Court of Appeals rejected the appeal as unfounded. However, the state turned to the Council of State, asking for the appeals court ruling to be overturned on the grounds of an incorrect interpretation of the Constitution, KEDE and the Code of Administrative Procedure.
The Sixth Section of the Council of State, with Councilor of State Eleni Papadimitriou as rapporteur, rejected the state’s request as unfounded. It stressed that, according to the Constitution, “people’s homes, as an essential element for their dignity, security and the free development of their personal and family life, are the subject of special state care.”
The court added that state care for primary residences “relates to the protection of fundamental human rights that are guaranteed by the state, and all state bodies are required to ensure that this protection is effective, as Article 25, paragraph 1 of the Constitution characteristically states.”
In this context, the judges point out that according to constitutional requirements, as well as “the principle of proportionality, which stems directly from the rule of law, whenever the pursuit of a public interest goal involves a measure that results in depriving a person of their home, then for any act aimed at carrying out that measure to be valid, regardless of which state body issues it and at every stage of the relevant process, it must be proven that the measure was absolutely necessary in the specific case, meaning that every effort had first been made to achieve the public goal through other suitable but milder measures.”
Finally, the ruling stresses that under the provisions of KEDE, “the seizure of a debtor’s property that is proven to be their only home (theirs and their family’s) is only lawful when the existence of other assets suitable for satisfying the specific claim has first been investigated and clearly ruled out. Otherwise, choosing the home for this purpose is not lawful.”
In fact, the illegality does not apply only to the seizure report but also to the subsequent steps of the auction process.