What it means
Winning a court case does not automatically put money in the creditor's pocket. If the debtor still does not pay, the creditor needs a way to force payment, and a writ of seizure and sale is one of the main tools.
The writ is issued by the court and given to a sheriff or other enforcement officer. Once the writ is in place, it is filed in a public register, and the officer can seize property that belongs to the debtor.
This may include equipment, vehicles, inventory and sometimes real estate, although certain essential items are usually protected by law. The goods are then sold, often at auction, and the proceeds are used to pay the creditor.
The writ can have effects before anything is sold. Because it is registered, banks, buyers and other creditors can find it, so a debtor with a writ against it may struggle to borrow, sell property or obtain trade credit.
Many debtors therefore pay or arrange a settlement soon after the writ is filed. Finance teams need to understand the order of payment.
Proceeds are first used to pay the costs of the sale and enforcement, and secured creditors with earlier claims over specific assets usually come before an ordinary judgment creditor. What is left goes towards the judgment, and any shortfall remains as debt.
The nuance is that a writ is time-limited and needs to be renewed in many systems, and the details differ by region. Creditors should check local rules on registration, renewal and exempt property, and debtors should seek advice on how to dispute or settle the debt.
Practical results depend on what the debtor actually owns. If the debtor's assets are already pledged to a bank or are worth little at auction, the writ may bring in very little.
Creditors often search public registers first, to see which assets are free of other claims, before deciding how hard to press.
In practice
Real-world examples.
Example
A landscaping business wins a judgment of $25,000 against a client. When the client does not pay, the owner files a writ of seizure and sale, and the client pays in full within two weeks to clear the registration. The registration costs little compared with the debt and often leads to a quick settlement.
Example
A lender has a judgment against a restaurant that has closed. The enforcement officer seizes kitchen equipment and sells it at auction, which recovers part of the debt. Auction prices are typically well below normal market value.
Example
A company applying for a new bank facility discovers a writ registered against it by a former supplier. The finance director settles the claim before the bank will finish its credit review. The settlement is documented and the writ is withdrawn.
Formula
Calculation
Net amount to creditor = sale proceeds - enforcement and sale costs - prior secured claims
Suppose a creditor holds a $60,000 judgment, and the sheriff sells the debtor's equipment for $45,000. Enforcement and sale costs are $4,000, and a bank with an earlier security interest is owed $10,000 from these proceeds. Net amount to creditor = 45,000 - 4,000 - 10,000 = $31,000. The unpaid balance of the judgment is 60,000 - 31,000 = $29,000, which remains owing.Case study
Seen in the real world.
Lakeview Tooling is an illustrative, fictional machine shop that obtained a judgment for $72,000 against a customer for unpaid work. The customer's owner promised payment several times but nothing arrived.
Lakeview's solicitor filed a writ of seizure and sale and instructed an enforcement officer. The officer identified a delivery van and some machinery. Before any sale took place, the customer asked for a meeting because the registered writ had stopped a refinancing of its building.
The two sides agreed on payment of $65,000 immediately, with the writ withdrawn in return. The illustrative lesson is that the writ's power came as much from its effect on the debtor's ability to borrow as from the threat of a sale, and Lakeview accepted a small discount for speed and certainty.
Watch out
Common mistakes.
- Assuming the writ will recover the full judgment, when sale proceeds are often lower than expected after costs and earlier claims.
- Letting the writ expire because the renewal date was missed.
- Debtors treating the writ as a bluff, when it can be registered, seen by lenders and enforced by an officer.
Questions
People also ask.
Who carries out the seizure?
An enforcement officer, such as a sheriff, acts under the court's authority, and the creditor does not seize goods personally. Their fees are normally added to the debt the debtor owes.
Can all property be seized?
No, certain items such as basic household goods and tools of a trade are often protected, and the list varies by region. Debtors should ask their adviser which of their assets are exempt.
Is this the same everywhere?
No, the term is mainly Canadian, and other countries have comparable orders such as writs of execution or warrants of control.
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