Tatiane Bagagí Faria
Lawyer at Marcos Martins Advogados
In a recent decision, the Third Panel of the Superior Court of Justice (STJ) established an understanding on the limits of the exercise of the right of the co-owner of an indivisible property, in the event that another co-owner is being executed for a personal debt, resulting in a seizure of the common property.
The Court’s understanding is that the seizure cannot fall on the percentage of the co-owner who is not a debtor in the process, ensuring the right to property under the terms of the Federal Constitution. Although this limitation on seizure has been established, the STJ has held that it is permissible to sell the property in its entirety at any judicial auction, guaranteeing the non-debtor co-owner the protections provided for in the Code of Civil Procedure, consisting of the right of preference in the auction of the property and the total preservation of their assets, if converted into cash when the property is awarded by the creditor or a third party.
This understanding was launched in the judgment of Special Appeal No. 1.818.926 – DF (2019/0154861-7), when it reformed the judgment of the Court of Justice of the Federal District and Territories (TJDFT), which rejected the creditor’s request for a judicial auction of the seized property, on the grounds that the property was indivisible. In this case, the seizure fell on half of the property, corresponding only to the debtor’s share of the original lawsuit.
In her opinion, Justice Nancy Andrighi stressed the need to make the enforcement process effective and, at the same time, preserve the rights of the co-owner of the indivisible property:
“(…) The co-owner of the indivisible asset may even be required to terminate the condominium and convert his real property right into the equivalent in cash – as we have seen, out of a need to make the enforcement process more efficient – but until this happens, when the judicial sale is finalized, his share of the asset must remain free and clear.”
Thus, there is clear protection for the assets of the co-owner who is a stranger to the enforcement process, while at the same time allowing the creditor to seek satisfaction through the sale of the asset, expropriating the debtor’s share, as provided for in the Code of Civil Procedure:
Art. 843 In the case of seizure of an indivisible asset, the equivalent of the share of the co-owner or of the spouse unrelated to the execution shall fall on the proceeds of the sale of the asset.
§ Paragraph 1: The co-owner or the non-executed spouse shall have preference in the auction of the asset on equal terms.
Although the seizure will only be on the percentage corresponding to the debtor, the co-owner of the property will not be able to prevent the sale of the property as a whole, but will be able to exercise their right of first refusal and purchase the entire property, becoming the sole owner of the property. If he doesn’t, he will be reimbursed for the value attributed to the property in the judicial evaluation, in the ideal proportion of his share.
Marcos Martins Advogados closely follows the evolution of case law, seeking to offer the most appropriate legal solutions to its clients.
