Usually not directly. When deciding on registration, the district office checks whether the right to deal with the property is restricted. If it is, registration proceedings are suspended. Possible routes include paying the debt and ending enforcement, agreeing a solution with the enforcing creditor, or a sale through enforcement of security by the first-ranking secured creditor. Each has different consequences for the buyer and the encumbrances that remain.
A company needs to sell a property to pay its debts, but those same debts are blocking the sale. This is common and not hopeless. It cannot, however, be solved by signing a purchase agreement and seeing what happens.
Why an ordinary sale will not go through
The district office does not examine the agreement in isolation. It must also assess whether the transferor is entitled to deal with the property and whether contractual freedom or the right to deal with it is restricted (Section 31(1) of the Cadastral Act). An enforcement order prohibiting the debtor from transferring or encumbering the property is such a restriction.
Where the right to deal with property is restricted under special legislation, registration proceedings are suspended (Section 31a(f)). The same applies where an interim or preliminary injunction prohibits dealings with the property (point (e)).
In practice, the agreement is signed, the fee paid and a pending-entry marker recorded, but the proceedings then freeze. The buyer has paid the price or placed it in escrow, the seller has no money, and no one knows when matters will move forward.
What appears on the title sheet
The cadastre also records facts relating to property rights, including a declaration of the owner’s bankruptcy, the opening of proceedings to enforce a judgment by selling the property, the start of expropriation proceedings and the commencement of enforcement by sale of the property (Section 6(1)(f)).
It is essential to distinguish what is recorded on the title sheet from the actual legal position. An enforcement lien, a note about the start of enforcement and a prohibition on dealings in an enforcement order are three different things with different consequences. Reading the title sheet accurately is therefore the first step, not a formality. We also discuss this in what a title sheet tells you.
Routes that work
Settle the debt and have enforcement discontinued. This is the cleanest solution if funds are available. The end of the underlying reason does not itself produce a clean title sheet: notes and encumbrances must be removed separately, often requiring another round of administration.
Agree a procedure with the enforcing creditor and enforcement officer. A sale at market value is usually better for the creditor than an auction too. This route depends on the legal terms of the agreement and the sequence of payment, discontinuance and registration.
Enforcement of security by the first-ranking secured creditor. The Civil Code makes a distinction that determines the value of the entire transaction:
When security is enforced by a secured creditor whose security is registered first in the order determining satisfaction of secured claims […] the secured asset is transferred free of the security rights of other secured creditors.
— Section 151ma(3) of the Civil Code, unofficial translation
If, however, security is enforced by a creditor who is not first-ranking, the asset is transferred subject to the security of the first-ranking creditor and all creditors ranking ahead of the enforcing creditor (Section 151ma(6)). That creditor must also inform the buyer that the asset is being transferred subject to those encumbrances (subsection (7)).
When enforcing security, the secured creditor acts in the security provider’s name (Section 151m(6)), so the seller is the security provider, on whose behalf the secured creditor acts. The notice and timing requirements must also be observed. Under Section 151m(1), the applicable period is generally 30 days from notice of the commencement of enforcement to the security provider and, if different, the debtor; the Act also provides for subsequent registration in the register of security rights and the possibility of an agreement under subsection (2). If higher-ranking creditors hold security over the asset, separate notice and a 30-day period apply in relation to them under Section 151ma(1) and (2). Compliance with one period does not replace the other conditions for enforcing security.
If you are buying such a property
The first question is not whether enforcement exists, but who is acting in the sale and the ranking of the security being enforced. The answer determines whether you receive the property free of encumbrances or with someone else’s security still attached.
Also check whether restrictive notes from other proceedings appear on the title sheet, whether the owner is in bankruptcy, and whether the proceeds will cover claims ranking ahead of the creditor enforcing the security. The purchase agreement must reflect this, including escrow and release conditions.
What you can expect from us
In these transactions, the value of the work lies in taking the steps in the correct order. We begin with property legal due diligence, examining encumbrances, notes and enforcement files. We explain which route is feasible in your case and what the buyer will be left with. We then structure the purchase agreement so that payments depend on results, rather than promises. If registration proceedings are already underway and have been suspended, we handle suspended and refused cadastral proceedings, where deadlines are short and missing them cannot be remedied.
If the sale is being prepared, contact us before signing. Afterwards, the work becomes damage control, at greater cost and with fewer options.
This answer provides general information on the law as at 10 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
