Hypothec terms against a third party run from filing

The First Hall of the Civil Court, Judge Audrey Demicoli, gave a decree in chambers on 23 July 2026 in A.B. vs F.A., an application within judicial sale 8/2025. A third-party possessor who had bought a flat in Msida at an earlier court auction asked the court to revoke its own decree ordering the flat sold to satisfy a special hypothec, or to suspend the sale pending his action to annul the deed that created the debt.

The court refused revocation, because the hypothecary creditor had acted within every term in article 356 of the Code of Organization and Civil Procedure, but suspended the sale because the pending action attacks the executive title itself.

The facts

By a deed of 10 January 2017 the original debtors constituted a debt in favour of A.B. and gave him a special hypothec over an apartment in a block in Msida. The flat was then sold in judicial sale 21/2018 and bought by the present possessor animo compensandi; the act of liberation in his favour is dated 20 October 2022 and was registered in the Public Registry on 30 March 2023.

Relying on the hypothec's right of pursuit, A.B. filed judicial protests under article 2072 of the Civil Code on 16 January 2024 and 21 November 2024, calling on the possessor to pay or surrender the flat, and on 6 February 2025 applied for its sale. The application was directed at deputy curators appointed to represent the possessor, and the sale was ordered by decree of 28 March 2025.

On 18 March 2026 the mandatary applied for revocation contrario imperio or for suspension, having the same day filed an action for the nullity and rescission of the 2017 deed and its hypothec under articles 974 et seq. of the Civil Code.

What the court held

Revocation. Article 2072 of the Civil Code lets the hypothecary creditor seek the sale of the hypothecated property after a protest calling on the debtor to pay and on the third-party possessor to pay or surrender.

Article 356 of Chapter 12 then imposes terms of its own: where the property passed to the third party by a court-ordered sale, the protest must be filed within two years of the registration of the act of liberation, and the application for sale within six months of the protest; article 356(5) allows the application any time after sixty days from the protest.

Following a First Hall judgment of 5 November 2009, the court treated article 2072 as subordinate to article 356, and held that they run from filing, not service: "it-termini għal azzjoni mill-kreditur ipotekarju huma marbuta biss mal-preżentata tal-protest ġudizzjarju, u mhux man-notifika tal-istess" (the terms for action by the hypothecary creditor are tied only to the filing of the judicial protest, and not to its notification).

Here the two years from 30 March 2023 ran to 30 March 2025; both protests fell inside it; the application of 6 February 2025 came within six months of the second protest and after the sixty days. Non-service on the possessor was irrelevant. The request to revoke was refused.

Suspension. Article 326(1) of Chapter 12 requires the sale to be stayed at the debtor's request with the creditor's consent, or vice versa, or for "impediment leġittimu ieħor" (other legitimate impediment). The court recalled the distinction drawn in HSBC Bank Malta plc vs V.K. Construction Limited, First Hall, 12 July 2013: article 281 attacks the executive act itself and annuls the whole sale, article 326 only pauses it pending proceedings that may touch the merits.

The court checked eCourts itself: application 252/2026, filed 18 March 2026, seeks the annulment of the 2017 deed, which is the very title on which the sale rests. If the sale proceeded the possessor risked serious prejudice; the creditor faced only the inconvenience of waiting. The sale was suspended pending the final outcome of that action.

The request to release the keys deposited in court was refused, because the deed is presumed valid until the contrary is decided. Costs were reserved to the outcome of application 252/2026.

Why it matters

For the creditor pursuing property in a third party's hands after a court auction: two years from registration of the liberation to file the protest, six months from the protest to apply for the sale, never before sixty days, and every date counted from filing. For the possessor: a genuine action against the executive title is a legitimate impediment under article 326 and will pause the sale, but it will not unlock the keys.

Where it sits

The decree sits at the meeting point of the actio ipotecaria (articles 2069 and 2072 of the Civil Code, the right of pursuit against a third-party possessor) and the procedural terms of article 356 of Chapter 12, read as forfeiture terms since a Court of Appeal judgment of 28 April 2000 and Bank of Valletta Ltd vs Da Vinci Ltd et, First Hall, 25 February 2002.

On stays of judicial sales the court applied HSBC Bank Malta plc vs V.K. Construction Limited, First Hall, 12 July 2013; a First Hall decree of 30 January 2024; and an earlier decree that the 2024 decree itself cites.

Source

Civil Court, First Hall, application 245/2026 in judicial sale 8/2025, 23 July 2026: 245/2026