Mortgage Enforcement - an Auction That Does Not Clear the Debt, and Two Weeks Before the Price Drops
When a mortgage loan falls into arrears the bank does not need a court: a notarised agreement allows a notary to issue a writ of execution, and the case goes straight to the National Bureau of Enforcement - notification, valuation, auction. That chain takes weeks, not years, and most debtors learn of it only when the flat is already listed at a starting price well below market.
This page sets out the enforcement procedure step by step and what can be done at each stage: how the lawfulness of the writ is checked, how the real debt is calculated once the penalty caps are applied, when a court suspends enforcement, why a voluntary sale is almost always better than an auction, what happens to the residual debt when the flat sells for less than the loan, and what rights family members and tenants have. Loan restructuring and penalty disputes have their own pages.
The Five Stages of Enforcement and What Can Be Done at Each
A different tool works at each stage, and the later the stage the fewer options remain - which is why the best moment to see a lawyer is the first notice, not the auction announcement.
An Enforcement Case - From Requesting the Documents to Discharging the Debt
Requesting documents from the bank and the Bureau
The loan agreement with all annexes, the mortgage agreement, a detailed statement of payments with charges broken down, the writ of execution, every notice from the Bureau and the valuation report. The client is entitled to these documents, and it is precisely in the statement that the real principal and the real penalty become visible.
Recalculating the debt under the caps
Penalties may not exceed 0.27% of the obligation per day and 1.5 times the outstanding principal in total; the effective rate may not exceed 50%. The lawyer recalculates the whole history and, where there is a difference, sends the bank a written demand - an inflated sum in the writ is a ground to challenge it and to suspend enforcement.
Checking the procedure
Notice to the address and proof of delivery, the contractual rule for calling in the loan, the basis for applying to the notary, the Bureau's deadlines, the valuation method and the appraiser's report. A procedural breach is an independent ground and often the fastest route to buying time.
Court: suspension and claim
A claim to determine the amount of the debt, to void a contractual term or to challenge the writ - together with a motion to suspend enforcement filed with the claim. Without suspension the auction goes ahead while the case is pending and the flat is sold before it is decided.
Parallel negotiation with the bank
An auction is a loss for the bank: a low price, costs, and the problem of collecting the residual debt. The lawyer puts a calculated proposal - a voluntary sale at market price within a fixed period, with penalties written off and the debt fully discharged. The proposal must be backed by figures and a real buyer, not by pleading.
Closing the sale and "the debt is discharged"
In a voluntary sale the central clause is not the price - it is the statement that the obligation is deemed fully performed and the bank retains no claim. The lawyer agrees that wording with the bank and monitors the removal of the mortgage and the update of the credit history record - three separate actions.
The Flat Was Sold, the Debt Remains - the Most Common and Most Painful Outcome
The most widespread misconception runs: "they will take the flat and the debt will be gone". In law it is not so: a mortgage is security, not a substitute for the debt, and if the property sells for less than the loan the difference remains an obligation of the debtor. At auction the price is almost always below market - at the valuation price in the first round and lower in the second - and enforcement costs and penalties are added on top. The result: a family loses the flat and keeps the debt, often tens of thousands of lari of it.
That is exactly why a voluntary sale is the central strategy: a flat sold on the market fetches 20-40% more than at auction, the costs are lower, and if the agreement with the bank states that after the sale the obligation is deemed fully performed, no residual debt arises at all. Banks agree to this more often than debtors expect - because the alternative is worse for them too. But that clause does not appear in the contract by itself.
Where a residual debt already exists, the lawyer's work splits in two: recalculation (residual debts are often inflated with unlawful penalties) and negotiation on a write-off or instalments. For a creditor a residual debt is already a "bad" asset whose collection takes years and money - so an offer that pays part of it today is often accepted. At this stage any acknowledgement or new schedule must be seen by the lawyer before signature: such a document frequently revives a time-barred debt.
What an Enforcement Case Rests On
- The notary's writ of execution
- A notarised agreement containing an enforcement clause allows the creditor to enforce without a court; the lawfulness of the writ and the sum stated in it are checked and challenged separately.
- Penalty caps
- Fines and contractual penalties together may not exceed 0.27% of the obligation per day or 1.5 times the outstanding principal; anything above those caps is void and is a ground for reducing the sum stated in the writ.
- Valuation and the auction price
- The property is valued by the Bureau or an appointed appraiser; the valuation is challenged with an independent appraiser's report. At the second auction the starting price falls - one of the main reasons why selling before the auction is better.
- Suspension of enforcement
- A court suspends enforcement while a claim is pending where the claim is substantiated - the amount is disputed, the procedure was breached, the writ is unlawful. Suspension is not automatic and is requested by a separate motion.
- Residual debt
- Realisation of the property does not automatically clear the debt - the difference remains an obligation and is collected from other property, wages or income. Only a written agreement that the obligation is fully performed closes it for good.
- Eviction
- The new owner seeks eviction through enforcement; the presence of family members and minors slows the procedure but does not prevent it. A lease concluded before the mortgage was registered is assessed separately.
What to Do as Soon as the First Notice Arrives
- Ask the bank in writing for a full breakdown of the debt (principal, interest and penalties separately), the agreement with annexes and the statement of payments.
- Keep every notice with its envelope and date of delivery - the notice procedure is the weakest link in the enforcement chain.
- Check the penalties against the caps: 0.27% per day and 1.5 times the outstanding principal in total - an excess is a ground to demand recalculation.
- An independent valuation of the flat - to set against the Bureau's valuation and to know the real price for a voluntary sale.
- Test the possibility of selling on the market: a real buyer and a timeframe - the main argument in negotiations with the bank.
- Show any document the bank offers you to sign (a new schedule, an acknowledgement, a statement) to the lawyer before signing.
Three Enforcement Cases
A penalty that inflated the writ
A bank obtained a writ for a sum in which the penalty equalled the principal. The lawyer requested the statement and recalculated the whole period: the penalty exceeded the cap twofold. A demand to the bank, then a challenge to the writ and a motion to suspend enforcement. The bank voluntarily reduced the sum to the cap; on the reduced debt restructuring became possible and the flat was kept.
A voluntary sale instead of the auction
A family flat was scheduled for a second auction at a starting price 35% below market. The lawyer: a motion to suspend with a challenge to the valuation, in parallel a buyer found and a written proposal to the bank - a sale within 45 days at market price, part of the penalties written off and the debt fully discharged. The bank agreed; the family cleared the debt in full and kept the balance of the sale price.
A residual debt "revived" after five years
After the auction nobody claimed the residual debt for five years; then a collection company offered the debtor a new schedule "on favourable terms". The lawyer: signing would revive a time-barred debt; the limitation period was checked and the residual debt recalculated (the penalty exceeded the cap). The agreement was not signed and the company's claim was dismissed as time-barred.
Questions About Mortgage Enforcement
The bank never sued me, but a notice came from the Bureau. How?
A mortgage agreement is usually notarised and contains an enforcement clause - which lets the bank obtain a writ of execution from a notary without a court. That is lawful, but not beyond scrutiny: the sum in the writ, the notice procedure and the basis for calling in the loan are all checked, and a defect is a ground to challenge the writ.
It is our only home and we have children. Will they still take the flat?
A flat encumbered by a mortgage is not protected from enforcement by "sole home" status - the mortgage is precisely on that property and its purpose is security. The presence of minors slows eviction and requires social services to be involved, but does not stop the sale. Real protection works on three fronts: recalculating the debt, restructuring, and a voluntary sale at a price that makes buying another home possible.
The flat is let to a tenant. Will they stay?
It depends on when the lease was made and whether it was registered: a lease made after the mortgage and unregistered as a rule does not bind the new owner; a lease made before the mortgage and registered is assessed separately. A tenant who paid in advance retains a claim against the debtor. The lawyer advises both sides to check this clause - the landlord before letting, the tenant before signing.
The flat sold at auction for less than the debt. Will they still come after me?
Yes, unless there is another agreement: the residual obligation remains and is collected from other property, wages or accounts. That is exactly why the lawyer insists on the clause "the obligation is deemed fully performed" in a voluntary sale. Where a residual debt already exists - recalculation (penalty caps) and negotiation on a write-off or instalments; the limitation period is checked separately.
The bank is offering me a new schedule to sign. Should I?
Only after the text has been checked. A new schedule or acknowledgement often does three things: confirms the amount of the debt with your own signature (including unlawful penalties), restarts the limitation period and sometimes adds further security. Where the terms are genuinely useful, the lawyer corrects the text - with the debt recalculated and a clause stating that the agreement closes all earlier claims.
Lawyers for Mortgage Enforcement
Two things decide an enforcement case: the correct figure for the debt and the time left before the auction. Within 15 minutes the coordinator connects you with a lawyer who works regularly with the Enforcement Bureau and banks' legal departments.
No published lawyers in this category yet
That does not mean we cannot help. Call us - we will match you with a specialist for a remote consultation or from a nearby city.
Call: 568 330 318An Auction Date Set or a Notice From the Bureau?
At a free consultation the lawyer recalculates your debt under the caps, tells you whether there are grounds to suspend enforcement and how much time you have for a voluntary sale. The coordinator calls in 15 minutes - before you sign anything for the bank.