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Protect your primary residence against seizure by professional creditors

Elise Strauven – September 2021 – If you are a self-employed natural person (freelancer, company director, independent professional or a single-person business e.g.), your personal and business assets are mixed. There is no (automatic) asset-partitioning. You have unlimited liability. Your personal assets therefore also serve as collateral for your professional creditors, who can for example recover from your primary residence.

Filing a declaration of non-seizability can, however, protect such primary residence against seizure by your professional creditors. This declaration installs a kind of asset-partitioning regarding the primary residence and ensures as of its date of registration that potential future creditors of your business activity will not be able to seize your primary residence.

For whom?

By the Act of 25 April 2007 , the Belgian legislator allowed the protection of the primary residence of a self-employed person against seizure by commercial creditors.

This applies to natural persons who exercise a self-employed activity in Belgium as main or secondary occupation or after retirement, including not only self-employed entrepreneurs, but also practitioners of a liberal profession and company managers (e.g. director, managing director or daily manager).

For which property?

The protection extends to the immovable property where the self-employed person has his primary residence, that is where he and his family habitually live (e.g. their home).

It only concerns a residence that is owned in full property, usufruct or leasehold. A primary residence which is rented, cannot benefit from this protection.

Immovable property used both as a primary residence and for business purposes may receive (certain) protection as well. If the surface used for business purposes is less than 30 % of the total surface of the property, the entire property may be protected and declared exempt from seizure.

For lower rates, only the area serving as actual residence may be declared non-seizable, on condition that the areas are officially allocated in articles (of co-ownership) .

The non-seizability of the property covers its entire living area, calculated over all the floors, and the surface of the land on which it is build.

How?

The declaration must be made by notarial deed and it should be registered at the mortgage office (of the district where the property is located). The deed with the declaration, the mortgage registration and administrative costs amount to approximately 1.000,00 EUR.

When?

From the moment of its registration in the mortgage, the declaration takes effect: the professional creditors can no longer seize the protected property for enforcement purposes. The residence can no longer be sold to obtain payment from the proceeds. However, a protective seizure always remains possible.

Protection against?

The non-seizability protects against purely professional creditors for debts incurred after the declaration of non-seizability.

In other words, the protection does not apply to:
– The debts resulting from a crime, even if they are related to the business activity of the self- employed person;
– Debts of a mixed nature, relating to both personal and professional life;
– The liability of the self-employed director for obvious gross negligence that contributed to the company’s bankruptcy;
– Private debts.

If you are a director of a company, the protection will often arise in the context of director’s liability or an outstanding current account debt.

Until?

In case of bankruptcy, change or cessation of the self-employed activity, the declaration of non-seizability shall continue to have effect.

The same applies when the residence is sold to acquire another one, but only if certain conditions are met (which transcend the scope of this article).

The declaration shall be revoked when the self-employed person passes away. However, professional creditors at the time of the declaration can still not claim their debts from the heirs.

In case I move?

Be aware that the protection ceases if the property is no longer used – even temporarily – as the ‘primary residence’. If the self-employed person moves out from the protected property to later return to it, the initial protection is not automatically restored. A new declaration of non-seizability shall be needed.

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