Should a bankruptcy trustee report the arrest of property during bidding?

The complaint of the failed buyer of the debtor's property was submitted to the Supreme Court of the Russian Federation for consideration.  The house and the land plot of the latter were put up for an auction by the bankruptcy trustee, after which the only participant, an individual entrepreneur, responded to the application.  However, having paid a deposit, he found out that the property was under arrest in a criminal case and made a decision to abandon the deal, asking to return the paid money back.

Three courts found it impossible to return the deposit, citing the fact that the buyer should have carefully examined the subject of the purchase before the transaction. He learned about the arrest only after signing the documents and after he had independently requested an extended extract from the USRN.

However, the applicant continued to insist that it was the responsibility of a bankruptcy trustee to provide all the necessary information about the goods being sold, including the fact of the arrest.

He, in turn, evaded this by sending an extract about the object to the buyer after the auction, which the latter did not receive. Thus, the buyer believed that the transaction did not take place due to the fault of the seller, which means that the return of the deposit should be made.

The trustee retorted that the property had already been sold to another buyer, who was not confused by the fact of the arrest, which has been subsequently removed by him. In addition, the applicant should have carefully studied the subject of the contract before buying and depositing money.

When considering the complaint, the economic board and its three judges came to the conclusion that the arguments of the manager and lower instances were untenable. The Supreme Court of the Russian Federation cancelled all three court decisions and called for a reconsideration of the dispute in the court of first instance (decision No. 305-ES21-18687 of February 24, 2022).