Forced Sale Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Forced Sale, written in plain English, along with examples of how it is used.

What is Forced Sale?

(n) Forced sale is the selling of goods, property or article other than by a normal transaction in which the seller takes the market advantages.

History and Meaning of Forced Sale

Forced sale refers to selling assets under compulsion in situations where the seller has no option than to sell the assets, often due to financial liabilities. The sale is made to discharge a debt or liability that the owner owes to the buyer. The seller usually does not receive the market value for the asset, and the buyer can purchase it at a discount, resulting in a net loss to the seller. Forced sales are either ordered by a court or carried out voluntarily by the seller to avoid a court order.

Examples of Forced Sale

  1. A person is unable to pay off their mortgage debt, resulting in a lender forcing a sale of their property, known as foreclosure.
  2. A business owner is forced to sell their business due to bankruptcy, and the assets of the business are sold at a lower price to satisfy outstanding debts.
  3. An individual may need to sell their car or other assets to pay off a loan.
  4. An estate sale may result in a forced sale of inherited assets to settle any debts or liabilities of the deceased.

Legal Terms Similar to Forced Sale

  1. Forced liquidation: the sale of an asset to cover outstanding debts in a business or investment account.
  2. Foreclosure: the forced sale of property by a lender to recover outstanding debts owed by the property owner.
  3. Repossession: the process of reclaiming an asset, often a vehicle, after a borrower defaults on a loan or lease.