Let's go to auction

Parliament is currently considering a new law that will change our executive judicial warrants, a course of action that has been mooted for at least 30 years. The system we have in our statute books dates back to over 100 years. It worked in the past, but it is clear to all it cannot meet today's socio-economic requirements. The truth is that what had been an effective remedy is no longer so today. Daily practice has shown that it has itself become a stumbling block. A cause for further delayed justice. A cause of ineffectualness.

In view of this fundamental difficulty, the Ministry of Justice and Home Affairs has spent months developing a new system. One which, at the end of the day, ensures, as much as humanly possible, that creditors in possession of a court judgment or an executive title utilise effective legal instruments that are enforceable.

One of the principal complications in this sector knows its roots to the Byzantine method through which immovable property, that is, houses, garages, hotels, etc., are sold. The raison d'être had been to grant the debtor the opportunity to pay back and the creditors the right to resort to sale by auction only as the last course of action. What in the past seemed to have run smoothly, today is having a diametrically opposite effect. Debtors now face the prospect where their property is being sold for far less than its real value and, instead of protecting them; this procedure is in fact causing them damage. Data reveals that when property goes under the hammer a pitiful 20 per cent to 30 per cent of the real value is raised. Often creditors acquire the property on sale as only a few bidders attend the sale. Thus, what seems to have been a just system is today giving warped results.

The new law, while attempting to establish a quicker system, which represents today's socio-economic milieu, seeks to remove as many archaic obstacles as possible. This will be done through the introduction of completely different guarantees, which run diametrically counter to the former.

Thus, it will now be mandatory that at no time can the property be sold in a court public auction unless it fetches 60 per cent of its value.

Secondly, the elimination of the delay mechanism known as "kwindena" (a 15-day period running after the first auction wherein a third party can offer a higher price and so re-opening the calls at another future public sale). This will result in one final judicial sale where the highest bidder acquires the property.

Thirdly, the introduction of a public auctioneer for all judicial sales will provide a better, professional and transparent procedure. Furthermore, court sales by auction will be better advertised in newspapers. This will hopefully attract more potential bidders.

Lastly, granting the person who bought the property the automatic right to issue an executive warrant to evict illegal occupants without the need to file a separate lawsuit.

Hopefully these measures will bring change for the better. Primarily they should ensure there will be far more bidders interested in buying these properties. Therefore, a higher price would be realised. Secondly, and most importantly, is the fact that the system ensures the effective payment due to the creditor without detracting, decreasing from the real value of the property to the debtor's detriment.

This is part of the reform the ministry has successfully piloted over the last three years. The beneficiary is Malta's society. It is principle of good governance to have a simpler and efficient judicial system. So let's go to public auction knowing that the system protects!

Dr Mifsud Bonnici is Parliamentary Secretary at the Ministry of Justice and Home Affairs.