Meaning
Judicial decisions issued to secure the future enforcement of a judgment by restricting the disposal of the defendant’s assets constitute this formal court action. A property preservation ruling is typically issued at the request of the plaintiff and covers bank accounts or real estate. This action preserves the status quo and ensures that a future win in court will not be empty.
Preservation Decision
Evaluation of the necessity of the request involves a review of the risk that the defendant might transfer their wealth. A property preservation ruling requires the judge to balance the interests of both parties to avoid causing unnecessary hardship to a functioning business.
Preemptive Measure
Applicants usually seek this measure before the defendant is even served with the lawsuit to avoid tipping them off. To obtain a property preservation ruling, the plaintiff must provide a counter-guarantee in the form of cash or a bond to compensate the defendant if the freeze is later found to be wrongful.
Bond Requirement
Financial requirements for the security bond often equal the value of the assets being frozen. This hurdle ensures that a property preservation ruling is only sought when the plaintiff is confident in their legal position.
