Supreme Court of Justice standardizes case-law in the sense that the judicial sale of a mortgaged property with subsequent lease does not expire the rights of the tenant

The Supreme Court of Justice (STJ) has issued a Standardizing Court Ruling (STJ Ruling no. 2/2021, of 5.08.2021) which addresses the issue of whether the judicial sale, in the course of insolvency proceedings, causes the lease agreement of the property, with mortgage entered into on a previous date, to expire, pursuant to Article 824 no. 2 of the Civil Code.  The STJ ruled as follows: “The sale, in the course of insolvency proceedings, of a mortgaged property, with a lease entered into subsequently to the mortgage, does not cause the tenants’ rights to expire as provided for in Article 109 no. 3 of the Insolvency and Company Restructuring Code (CIRE), in combination with Article 1057 of the Civil Code (CC), being the provision in Article 824 no. 2 of the CC inapplicable“.

he STJ considered that “as the regime of transferability of the lease is perfectly framed by the provisions of Article 1057 of the Civil Code, to which, furthermore, the provisions of Article 109, no. 3 of the CIRE refer to, there is no doubt that the regime provided for in Article 824, no. 2 of the Civil Code is strange to these provisions, and, for this reason, there is no omission to be integrated by analogy“.

Nevertheless, the standardizing position was not voted unanimously and nine STJ Judges voted against it.

Click HERE to access the STJ Standardizing Court Ruling.

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[Photo by: Harmen Jelle Van Mourik, available at unsplash.com]