International Property News

Courts order 428,000 property seizures in 2007

17th April 2008

A total of 427,800 distraints were ordered by court in the Czech Republic last year, nearly 40 percent more than in 2006 and the biggest growth in absolute figures since 2001 when distraints were introduced.

The main reason are unpaid loans, Chamber of Bailiffs president Juraj Podkonicky said at a press conference Thursday.

This was the first year when unpaid loans from banks and other financial institutions became an important reason for the growth in the number of new distraints, he said.

The cause of most distraints are still claims of creditors such as health insurance companies, public transport companies, energy distributors, water utilities and telecoms operators. The Czech TV is a new phenomenon among creditors. Owing to unpaid licence fees, 12,000 distraints were ordered last year, he added.

The volume of loans and mortgage loans and the ratio between the paid interest and available income grew at the same pace, Raiffeisenbank analyst Ales Michl noted.

The distraints concern mainly lower-income households by which banks should be very careful when granting them a loan.

"It should not be just a blind chase for distributing money and getting margin. We still see a growth around 40 percent on the year, and with such dynamics, low-income households are a risk factor," he added.

Podkonicky expects the number of distraints to grow further in the future.

"People often occur in a spiral when they take up a loan to pay a previous loan," he noted.

Roughly 70 - 75 percent of distraints were against individuals. The claims are mostly worth several hundreds of thousands of crowns at most, while millions worth claims are rather an exception.

The number of completed distraints grew by 14,000 to over 125,000 in 2007. The growth was two thirds slower than in 2006.

Source: Prague Monitor