SEPARATE CONDITIONS ARE REQUIRED FOR THE JUDICIAL PROCEDURE OF FORECLOSURE ON THE SUBJECT OF COLLATERAL

The plaintiff (the pledgee) appealed to the court with a demand to the defendant to foreclose on the subject of the pledge by transferring it to the plaintiff. In support of the claim, the plaintiff pointed out that a loan agreement was concluded between the parties to secure the fulfillment of obligations, under which the defendant pledged real estate.

The courts of three instances satisfied the claim, referring to the fact that the debt under the loan agreement was not repaid by the defendant.

The Supreme Court of the Russian Federation sent the dispute for a new consideration and noted that only an out-of-court procedure for foreclosing on the collateral was agreed between the parties. At the same time, the parties did not comply with the notarial form of such an agreement, and there was no separate agreement on the procedure for foreclosing on the collateral by keeping it by the creditor at an agreed cost in court between the parties, which is why the collateral could not be sold otherwise than by selling at public auction.

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