Prepared by Cristian Sgaramella, Andrea Tomasicchio and Sara Plantone
The Italian Constitutional Court, with the verdict no. 128/2021 dated June 22nd, 2021, declared illegitimate the second extension of the term of suspension of all the activities concerning real estate executive procedures against the debtor’s main residence, according to the Law Decree no. 18 of March 17th, 2020 (art. 54 – ter) and effective from January 1st to June 30th, 2021.
More specifically, the article 54-ter of the Law Decree no. 18, dated March 17th 2020, – regarding “Strengthening measures of the National Health Service and economic support for families, workers and businesses connected to the epidemiological emergency from COVID-19”, introduced by conversion Law no. 27 dated April 24th 2020 and amended by article 4, paragraph 1 of the Law Decree no. 137 dated October 28th, 2020) – was submitted to the Consulta for examination with an ordinance dated January 13th, 2021 (reg. ord. no. 40/2021).
According to Article 54-ter of the Law Decree no. 18 dated March 17th, 2020 headed “Suspension of the real estate executive procedures on the main residence” and effective throughout the Country, all the real estate executive procedure on the debtor’s main residence have been suspended for a total duration of six months, starting from the effective date of the Conversion Law dated April 24th, 2020.
An initial suspension period has been set until December 31st, 2020, subsequently extended until June 30th, 2021.
A parliamentary dossier has dealt with the definition of “main residence”, identified as the place where an individual that owns or holds another real right on the asset, or his family members, habitually resides, pursuant to Article 10, paragraph 3-bis of the Presidential Decree no. 917/1986.
The Courts of Barcellona Pozzo di Grotto and Rovigo raised the matter of legitimacy of the second extension of the terms, as abovementioned, submitting their reasons according to article 3, paragraph 2, of the Constitution, which states the substantial equality principle, to article 24, first paragraph of the Constitution, which states the inviolability of the right of defence principle, to article 111, second paragraph, of the Constitution, which states the principle of fair trial, and to article 117, first paragraph, which defines the legislative powers exercised by the State and the Regions.
According to these Courts, the article 54-ter would be in conflict with the constitutional principles as above mentioned, resulting in a sort of limitation of the creditor’s rights, that would be “not justified either by the economic crisis or by the need to protect health, but aimed at an indiscriminate policy of favour” towards the right of the debtors to housing.
The Courts of Barcellona Pozzo di Grotto and Rovigo mentioned also Article 47, second paragraph, of the Constitution, which states the principle of the saving protection, rising doubts of its compatibility in this case, due to the difficulties encountered by creditors in recovering non-performing loans. This situation could also inevitably reverberate on the conditions of access of the general public to bank credit, making its criteria more rigorous.
Finally, the Courts mentioned also Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), signed in Rome on November 4th, 1950, ratified and made enforceable by Law no. 848 dated August 4th, 1955, and Article 1 of the Additional Protocol to the ECHR, signed in Paris on March 20th, 1952, which respectively state the right to a fair trial and the right and protection of the property of every individual and legal entity.
The Constitutional Court, with sentence no. 128 dated June 23rd, 2021, referring to the discipline of the suspension of the terms in the real estate executive procedures as above mentioned, considered the protection of the debtor and of the creditor inadequately balanced and proportionate, in particular if compared with ordinary civil proceedings, that continued although according to the regulations established to prevent the diffusion of the Covid-19 pandemic, even after the general suspension of terms.
According to the Constitutional Court, there isn’t a selective criterion such as to justify the prolonged suspension of all the activities connected to the sale of the real estate properties, identified as the debtor’s “main residence”, in the pending executive procedures.
The Constitutional Court, in its sentence, confirmed the nature of housing as a <social right> and established, in any case, the possibility of adopting the most suitable measures to achieve a different compromise, more reasonable and proportionate, between the debtor’s right to housing and the judicial protection of the creditors in the context of the executive procedures.
The Court’s the declaration of unconstitutionality provided, consequently, a sort of protection for the creditor, which remained paralysed for more than a year.
Given the previous considerations, this pronouncement intended to balance the opposing positions of debtor and creditor, since in a first phase the Legislator had granted more protection to the executed party, to the detriment of the interests and claims of the creditors, now back in force.
According to the Constitutional Court’s decision, the first matter to point out concerns the identification of the effective date for the six-month period given for filing the resumption of the suspended real estate executive procedure, pursuant to Article 627 of the Code of Civil Procedure, because, following the declaration of unconstitutionality as above mentioned, the legal suspension might already be considered ended on December 31st, 2020, which is the term provided in the first extension given.
It should be noted, on this issue, a first intervention by the Real Estate Execution Section of the Court of Rome (with Circular of June 24th, 2021), which established that “the suspension ex lege must be considered to have ceased on December 31st, 2020“.
According to the Judges of the Court of Rome, the resumption of the suspended real estate executive procedure must necessarily be filed by the deadline of June 30th, 2021, 6 months after the termination date of the first suspension.
However, the Judge of the Court of Cassazione, who are part of the scientific committee of the magazine “In Executivis” and were involved in the matter by the Council of the Bar Association of Rome, have expressed their opinion, pointing out that “the effect of the pronouncement of the Constitutional Court is not (even indirectly) to bring back the starting date of the reassumption to December 31st, 2020, but to prevent the application of art. 54-ter from June 23rd, 2021“.
According to them, June 23rd, 2021, that is the day following the filing of the sentence by the Constitutional Court, should be considered as the starting point from which the six-month period referred to in Article 627 of the Code of Civil Procedure should begin.
Certainly, the filing of the appeal for the resumption of the executive procedures concerning the debtor’s main residence, pursuant to art. 627 c.p.c., by June 30th, 2021, would allow any doubts to be dispelled.
For a deeper discussion please contact:
PwC TLS Avvocati e Commercialisti
PwC TLS Avvocati e Commercialisti