Legal Definitions - compulsory sale

Compulsory sale refers to a transaction where an owner is legally required to sell their property or assets, often against their will, due to a court order, government action, or other legal obligation.

Unlike a voluntary sale, where an owner freely chooses to sell, a compulsory sale is mandated by an external authority to satisfy a debt, resolve a dispute, or serve a public purpose.

• Example 1: Property Foreclosure

  A homeowner falls behind on their mortgage payments for an extended period. After exhausting other options, the bank initiates foreclosure proceedings, leading to a court order for the property to be sold at auction. The proceeds from this sale are then used to repay the outstanding mortgage debt.

  This is a compulsory sale because the homeowner did not willingly choose to sell their home; the sale was forced by the lender and the legal system to recover the debt.

• Example 2: Eminent Domain

  A local government plans to build a new public hospital and determines that a specific plot of privately owned land is essential for the project. Despite the landowner's desire to keep their property, the government exercises its power of eminent domain (also known as expropriation), legally compelling the owner to sell the land at fair market value.

  This illustrates a compulsory sale because the government, acting under its legal authority, forces the sale of the property for a public purpose, overriding the owner's preference.

• Example 3: Court-Ordered Partition

  Two siblings jointly inherit a commercial building, but they cannot agree on how to manage it or divide its use. One sibling wants to sell, while the other wants to retain it. Unable to reach a consensus, one sibling petitions the court for a "partition by sale." The court, finding that the property cannot be fairly divided physically, orders the building to be sold and the proceeds to be split between the siblings.

  This is a compulsory sale because the court mandates the sale of the property to resolve a co-ownership dispute, even if one or both owners would have preferred a different outcome.