“No one will charge for one apartment in a residential area”

The view of creditors on the prospects for collecting the debtor’s only housing, the criteria for luxury and the use of the replacement mechanism “Kommersant” was presented by the vice president, director of the department for working with distressed assets of Sberbank Maxim Degtyarev.

– How do you feel about the position of the Constitutional Court of the Russian Federation (CC) dated April 26, 2021 on the possibility of collecting the only luxury housing in the bankruptcy of citizens?

— As creditors, we certainly believe this position is correct and fair. The COP has already spoken twice on this issue, in 2012 and in 2021. On the one hand, the Constitution of the Russian Federation guarantees citizens the right to housing and says that it is impossible to deprive property without a court decision. But, on the other hand, the Constitutional Court rightly noted that the right to housing is not absolutely unconditional. And if the housing is excessive in terms of size or value, and the citizen has debts, creditors should be able to foreclose on the housing.

– Should the criteria for luxury housing be enshrined in law, or should it be left entirely to the discretion of the judges?

– The Constitutional Court indicates only the direction in which to act, this should be fixed both legislatively and in judicial practice. In my opinion, we lack regulation at the legislative level, since it is desirable for the court to have clear guidelines. For the mechanism to really work, it is necessary to outline the criteria in the law and provide that housing above them is already luxurious.

On the other hand, it is hardly possible to mechanically follow quantitative parameters in each specific case. For example, a 150 sq. m in a premium house in the center of Moscow, in which one debtor lives, clearly refers to luxury housing. But it is hardly possible to call such a typical apartment of the same area on the outskirts, if a family of five lives in it. So the court should still have fairly broad powers to determine the nature of luxury.

— Do you have any ideas of criteria?

— In the professional community there is no unequivocal opinion on this matter. The Ministry of Justice in 2021 prepared a bill on the sale of luxury housing, which, unfortunately, has not yet received much development. It proposes to establish as a criterion in terms of area a threefold excess of the social standard, and in terms of price – a twofold excess of the average market value of housing in this region. It seems to me that these are quite adequate proposals.

If the housing falls outside the criteria, then it can be considered as luxurious, which will deprive debtors of an incentive to abuse the discretion of the court and put pressure on pity. But if the living space fits into the criteria, this does not mean that it cannot be taken away. It is possible to enshrine in the law the right of creditors to prove to the court that housing is still luxurious.

And one more important point. If the debtor himself sold the apartment, and then the creditors succeeded in returning it to the bankruptcy estate, executive immunity should not apply to this housing. We had such a case – it was a four-story apartment with an area of ​​​​500 square meters. m in the very center of Moscow, on the “golden mile”, also with a swimming pool, that is, clearly luxurious housing by any estimate. And after challenging the transaction and returning the apartment to the bankruptcy estate, the debtor stated that this was his only home. Of course, there is no reason to consider housing as the only one and protect it after the debtor has parted with it voluntarily.

– The Ministry of Economy, in its response to the bill, put forward the idea of ​​allowing foreclosure on the bankrupt’s only luxurious housing only at the request of individual creditors, but not banks and MFIs. According to the ministry, the latter are professional players enough to assess their risks when issuing a loan. Do you agree with this?

– There are hardly any statistics on the number and size of loans between citizens, but I don’t think that their volume is in any way significant. Nevertheless, the bulk of bad debts falls on professional creditors, and they just want to deprive them of the right to collect luxury housing. I think this is unjustified discrimination based on a strange and selective logic.

The question, in principle, is what rights of citizens should be protected and guaranteed by the state. It should provide people with a decent standard of living, but it should not give them the right to take loans and not repay them. Why should a person be able to live in luxury and not pay the creditor? The state should definitely not support and encourage such behavior.

– Does the bank often face the fact that an expensive apartment or house is found in a citizen who does not pay on a loan?

“So far, we have little practice on this issue. The bank has launched hundreds of thousands of enforcement proceedings (collections through bailiffs) against citizens for various debts. And about 65 thousand bankruptcy proceedings of individuals in which we participate. Of these, there are only 17 lawsuits where we are trying to recognize housing as luxurious. At the moment, there are two cases where we have already succeeded in foreclosure on apartments, in one of them the replacement housing was allocated to the debtor.

– Do you support the proposals of the Constitutional Court on what should be the housing provided to replace the luxurious one?

– As a minimum bar from which you can start, the social norm is a completely normal criterion. The CC had a recommendation to provide replacement housing in the same locality where the luxury housing was located. For large cities, it seems to me, you can go for a more detailed positioning: give an apartment in the same area, especially if the debtor has children who go to a certain school or kindergarten. However, in any case, the final decision on the replacement of housing will be made by the court.

Realize that it is not the lender’s job to select the most modest replacement housing possible. On the contrary, there is an incentive to offer the debtor adequate housing so that the court does not reject it, does not postpone the meeting, does not conduct an examination, but rather approves the proposal as soon as possible. The lender is interested in speeding up the replacement procedure, because the sale of luxury housing and the receipt of money depend on it.

Such large creditors as banks have the opportunity to find alternative housing for the debtor quite quickly – in many regions we already own housing objects that came from collections for other debts. Sberbank, for example, sells about 3 thousand apartments on the DA portal in 400 settlements in 73 regions – there are plenty to choose from. It would be possible to enshrine in the law that the creditor has the right to provide the debtor with his existing housing to replace a luxurious one.

– There is an opinion that creditors should be given the opportunity to take luxury apartments from debtors without starting bankruptcy proceedings. What do you think of it?

— I believe that such a mechanism is possible. It can be implemented in enforcement proceedings through bailiffs, who could well deal with the procedure for selling luxury housing and replacing it with a more modest option. This globally does not infringe on the rights and freedoms of a citizen, since in any case the collection of debts by bailiffs is carried out on the basis of a court decision and a writ of execution issued by the court. If a citizen is afraid and believes that his rights will be infringed as part of the enforcement proceedings, then he can file for bankruptcy, and then everything will go on within the framework of this procedure.

– Citizens’ fears are mainly related to the fact that ordinary, non-luxury apartments will be taken away from them for small debts.

– In general, in my opinion, the discussion of the issue of luxury housing is being promoted to a greater extent by rich debtors in order to “rock this topic” and scare ordinary citizens, although this story does not threaten the latter: no one will recover a single apartment in a residential area.

The bank will not require the sale of the debtor’s apartment if his debts amount to 100 thousand rubles. After all, this procedure is an expensive and troublesome business, a lengthy litigation. On average, proceedings in the first instance take four to six months, but sometimes there are very sophisticated debtors, litigation with which lasts for years. Therefore, the cost of an apartment and the amount of debt should be at least somehow comparable, and the sale of housing should make economic sense.

But if the debt is huge, for example, several billion rubles, then, in my opinion, any luxurious housing worth several tens of millions of rubles must be sold in order to get at least something, regardless of the percentage of repayment of creditors’ claims.

Interviewed by Anna Zanina