Kept the client's collateral on commercial real estate

In the course of the litigation, the court recognized our client's lien on the defendant's commercial real estate.

However, the mortgagor did not want to part with his real estate.

Some time after the dispute was adjudicated, a citizen came to court claiming that he had purchased the property from the mortgagor even before the judgment was rendered. The purchaser requested a review of the judicial acts and pointed out that at the time of purchase he was not aware of our client's lien claims. Consequently, under the law, he was a bona fide purchaser and the lien should be terminated.

It turned out that during the year and a half of court proceedings, the previous owner, who had allegedly already sold the property, did not inform anyone about the sale.

We were able to prove that there was no actual transaction between the seller and the buyer. Having concluded an agreement, the parties did not register it with the Federal Registration Service, which means that formally the seller continued to be the owner.

The buyer claimed to have paid for the property, but the seller allegedly evaded registration. At the same time, the buyer did not take any action to register his ownership right in court, which we pointed out to the court. If the buyer had really been interested in the property, he would have been much more active.

In addition, under the terms of the contract the payment was made in cash. Consequently, the buyer must prove that on the date of the transaction he had accumulated or withdrawn from the account a sufficient amount of cash. In our case there was no such evidence.

The practice on such issues is not uniform. As a rule, the courts limit themselves to checking the amount of the buyer's income. However, we were able to prove that for the resolution of the dispute it is important whether the buyer has accumulated the necessary amount in cash.

The courts agreed that the seller and the buyer created only the appearance of a transaction whose sole purpose was to release the property from the lien.