What is preservation? Simply put, after a plaintiff files a lawsuit, to prevent the defendant from transferring assets, the plaintiff applies to the court to freeze or seal up part of the defendant’s property.
A preservation fee must be paid to the court for property preservation. The amount of the fee is calculated based on the value of the property that the plaintiff applies to preserve, generally about 1% of the applied amount.
The plaintiff must also provide a guarantee to the court. In practice, the plaintiff usually purchases a guarantee letter from an insurance company and submits it to the court as security. The advantage of preservation is that it prevents the defendant from transferring assets to avoid enforcement.
There are also three disadvantages:
First, if the preservation application is not approved by the court, the previously paid preservation fee and guarantee letter cost will be wasted.
Second, even if the court approves the preservation, it may fail to seize the defendant’s assets. In such cases, the aforementioned fees cannot be refunded.
Third, if the plaintiff loses the case after preserving the defendant’s property, the defendant may sue the plaintiff for compensation for losses caused by wrongful preservation.
I am Qiang Lyu, a lawyer from Jinhua. If you like my video, please like, subscribe, and share.