Legal Definitions - hammer

In legal slang, the term "hammer" refers to a sale that is not entirely voluntary, often taking place at a public auction. This type of sale is typically compelled by a legal obligation, a court order, or financial distress, where assets are sold to satisfy debts or judgments.

• Example 1: Foreclosure of Property

  Imagine a homeowner who has fallen significantly behind on their mortgage payments. After exhausting other options, the bank initiates foreclosure proceedings. Eventually, the property is put up for public auction to recover the outstanding loan amount.

  This situation illustrates a "hammer" sale because the homeowner did not willingly choose to sell their home; the sale was forced by the bank due to their default on the mortgage, making it an involuntary disposition of property.

• Example 2: Seizure of Business Assets

  Consider a small manufacturing company that owes a substantial sum to a supplier. Despite a court judgment ordering payment, the company fails to settle the debt. Consequently, the court orders the seizure and sale of some of the company's machinery and inventory.

  This is a "hammer" sale because the business owner did not consent to sell their valuable equipment; the sale was compelled by a court order to satisfy a legal judgment, forcing the liquidation of assets.

• Example 3: Bankruptcy Liquidation

  Suppose an individual or a business declares bankruptcy. As part of the bankruptcy process, a trustee is appointed to gather and sell the non-exempt assets of the bankrupt entity.

  The subsequent auction of these assets—such as a second vehicle, investment properties, or valuable collections—to generate funds for creditors is considered a "hammer" sale. The sale is not driven by the owner's personal choice but is a legal requirement of the bankruptcy proceedings to settle financial obligations.