There are different reasons why a property is sold through an auction. If that property went through foreclosure and returned to the bank, the bank sells it through auction to effectively dispose of the property. There are also auctions administered by local governments, which occur when the owner does not pay his property taxes or in the bankruptcy of companies due to bankruptcy. In both cases, one can buy a property for much less than its value, which is one of the main advantages that these properties offer us:
- Better prices than in the market: The starting prices in an auction are usually below the properties sold by individuals / agencies, so it can be a good way to get a flat for buyers who have a tighter budget.
- More options in houses, premises, apartments, etc .: We are faced with a wide portfolio of properties to choose from. Both the real estate boom and the economic crisis that our country has gone through in recent years, have increased the supply of all types of real estate.
- Authentic negotiation: The auction sale allows us to participate in an authentic negotiation with the rest of the interested parties in a transparent and clean way, since at all times we know the bids that the auctioned good receives and the value of it.
- Fair Price: Buying our apartment or making our real estate investment through an auction, we make sure to get the property for the right price, since it ends up being awarded to the highest bidder after a transparent negotiation.
- From anywhere : If the auction is done online, the biggest advantage is that you do not have to be located at a specific time and place to be able to bid, but you can do it from anywhere in the world. All you need is a computer and even a mobile phone for these auctions to be within your reach.
And this is the only problem that this purchase format may pose us:
- No guarantees. When we buy a property at auction we buy it as is. That is, if when we get there we find some kind of problem such as humidity or reforms, the cost of this will be our responsibility. Therefore, you should consider the possibility that the house needs repairs and take this cost into account when making your offer.
Some tips that we always give to people who call us to participate in a real estate auction:
- The first thing to keep in mind is that, to participate in an auction, you have to leave a reserve that you have to have already saved and know how you are going to finance the rest if you are awarded, so get ahead of these procedures.
- You also have to know the “language” and vocabulary quite well to be able to bid : starting price, reserve price, award price, charges, administrative debts, maximum creditor, etc. They are not many, but they are necessary to know how this medium works and to take firm steps.
- Ask for all the necessary information to ensure that you bid for the correct thing : photographs of the current state, appraisals, simple note, IBI, current and pending community expenses, deed model, plans, etc. The description of the property must be read carefully.
- If possible, it is advisable to visit the property that is going to be auctioned and check that its status is the one that has been sent to us, that there are no people living in it, etc.
In general, it is a good opportunity for everyone and knowing a minimum of this market and asking for all the information we need we can start in the exciting world of real estate auctions.
Auction of the property without any bidder
If there is no bidder in the auction, the creditor may, within 20 days after the auction close, request the award of the property.
If it is not the debtor’s habitual residence, the creditor may request the award for 50 percent of the value for which the property would have gone up for auction or for the amount owed to him for all concepts.
In case of a habitual residence auction
If it is the debtor’s habitual residence, the award will be made for an amount equal to 70 percent of the value for which the property would have gone up for auction or if the amount owed to him for all concepts is less than that percentage, by 60 percent.
When the creditor, within a period of 20 days, does not make use of that power, the Court Clerk, at the request of the executed, will proceed to lift the seizure.
Destination of the sums obtained in the real estate auction
The court clerk will give the auction price the destination provided for in section 1 of article 654, but the remainder, if any, will be retained for the payment of those who have their right registered or noted after that of the performer. If these creditors are satisfied, there is still a surplus, it will be delivered to the executed or the third holder.
The provisions of this article are understood without prejudice to the destination that should be given to the remainder when its retention has been ordered in some other singular execution or in any bankruptcy process.
The judicial secretary in charge of the execution will require the holders of subsequent credits so that, within thirty days, they prove the subsistence and enforceability of their credits and present their liquidation.
The settlements presented will be forwarded by the court clerk to the parties so that they can claim what is appropriate to their right and provide the documentary evidence available to them within ten days.
After this period has elapsed, the Court Clerk will resolve by means of an actionable decree as appropriate, for the sole purpose of distributing the sums collected in the execution and leaving safe the actions that may correspond to subsequent creditors to enforce their rights as and against whom it may concern.
The decree will be appealable only in replacement and the third creditors who have presented liquidation will be legitimized for its filing.
The testimony, issued by the Judicial Secretary, of the award decree, comprising the resolution approving the auction, the award to the creditor or the transfer by agreement of realization or by specialized person or entity, and in which it is stated, where appropriate, that the price has been entered, as well as the other circumstances necessary for registration in accordance with mortgage legislation.
The testimony will state, where appropriate, that the auctioneer has obtained credit to pay the auction price and, where appropriate, the prior deposit, indicating the amounts financed and the entity that granted the loan, for the purposes provided in Article 134 of the Mortgage Law.
Judicial possession and occupants of the property.
In case of unoccupied properties
If the purchaser requests it, he will be given the property that is not occupied.
In the case of occupied properties
If the property is occupied, the Court Clerk will immediately agree to launch it when the Court has decided, in accordance with the provisions of section 2 of article 661, that the occupant or occupants do not have the right to remain there. The evicted occupants may exercise the rights they believe to assist them in the corresponding trial.
When, while the property is occupied, it has not previously proceeded in accordance with the provisions of section 2 of article 661, the purchaser may request the execution court to launch those who, taking into account the provisions of article 661, may considered occupants of mere fact or without sufficient title.
The request must be made within one year from the acquisition of the property by the auctioneer or successful tenderer, after which the eviction claim may only be enforced in the corresponding trial.
Request for release of the occupant of the awarded property
The request for release referred to in the previous section will be notified to the occupants indicated by the purchaser, with a summons to a hearing that will be indicated by the Court Clerk within a period of ten days, in which they will be able to allege and prove what they consider appropriate regarding of your situation.
The Court, by means of an order, without further recourse, will decide on the launch, which will decree in any case if the aforementioned occupant or occupants do not appear without just cause.
The order that decides on the launching of the occupants of a property will save, whatever its content, the rights of the interested parties, which may be exercised in the corresponding trial.
The notarial auction
The auctions that are made before a Notary Public in compliance with a legal provision will be governed by the regulations that respectively establish them and, failing that, by those established in the Voluntary Jurisdiction Law 2015.
In any case, the rules that for electronic auctions are established in procedural legislation will be applied on a supplementary basis, provided that they are compatible.
The appointment of a notary at the auction
If there is nothing arranged, and the auction is held in compliance with a judicial or administrative resolution, it will be competent, in the absence of designation by agreement of all the interested parties among the Notaries with residence in the area of competence of the judicial or administrative authority, The one designated by the owner of the auctioned asset or right or of most of it, if there were several, from among the competent.
If the various owners were owners in equal parts, the election of the Notary will correspond to the one who was previously so.
If it is not possible to determine who is responsible for the appointment of the Notary, or if it is not communicated to the judicial or administrative authority by whoever corresponds within a period of five days from the request to make it, it will proceed to designate according to what is established by regulation between those who are competent.
In the remaining cases, the competent Notary Public shall be the one freely designated by all interested parties.
Failing that, and in the absence of any foresight in this regard, the one freely designated by the applicant shall be competent, if he were a holder of the auctioned property or right.
If it is not, the competent notary will be competent at the domicile or habitual residence of the owner or of any of the owners, if there are several, or that of the situation of the property or most of the property, at the request of the applicant.
You can also choose a Notary from a district adjacent to the above.
Announcement of the auction by the Notary
The Notary, at the request of a person entitled to urge the sale of a property, furniture or real estate, or a specific right, will proceed to call the auction, after examining the request, attesting to the identity and capacity of its promoter and the legitimacy to install it.
The auction will be electronic and will be carried out on the Auction Portal of the State Agency Official State.
In any case, the Notary will be authorized to authorize the act that reflects the essential circumstances and the result of the auction and, where appropriate, the authorization of the corresponding public deed of sale.
The justification of ownership of the good
The applicant will accredit to the Notary the ownership of the property or the right to auctions of real estate or its legitimacy to dispose of it, the freedom or state of charges of the property or right, the tenancy and possession situation, the physical state in which it is located, pending obligations , valuation for the auction and how many circumstances have an influence on its value, as well as, where appropriate, the representation with which it acts.
The Notary, after verifying compliance with the foregoing points and after consulting the Public Bankruptcy Registry for the purposes provided for in the special legislation, will accept, where appropriate, the requirement.
If it agrees its origin, the Notary will inform the Bankruptcy Public Registry of the existence of the file with express specification of the tax identification number of the natural or legal person whose property is going to be the subject of the auction.
The Public Insolvency Registry will notify the Notary who is hearing from the file the practice of any entry that is carried out associated with the notified tax identification number for the purposes provided in the bankruptcy legislation.
The Notary Public will inform the Bankruptcy Public Registry of the completion of the file when it occurs.
Once its celebration has been agreed, if it is a property or real right registered in the Property Registry or movable property subject to a registry publicity regime similar to that of the former, the Notary will request by electronic procedures registration certification of domain and charges.
The Registrar will issue the certification with continued information by the same means and will record this circumstance by note to the margin of the property or right.
This note will have the effect of indicating the situation of sale in real estate auctions of the asset or right and will expire six months from its date unless the Notary previously notifies the Registrar of the closure of the file or its suspension, in which case the term It will be calculated from the moment the Notary notifies its resumption.
Can an auction be stopped?
There are no general rules in our Procedural Laws on the possibility of attacking the auction of a seized asset within an execution process.
An option that the mortgage debtor has before reaching the compulsory realization of the mortgaged asset is the one provided by article 693.3 LEC (endangering the foreclosure and releasing the asset).
Another possibility within the reach of the mortgage debtor is to arrive at a dation in payment agreed upon within a bankruptcy.
a) Nullity of proceedings
The art. 238 LOPJ lists the reasons or assumptions that may give rise to the nullity of actions, specifying that procedural acts will be null and void when they occur with a manifest lack of jurisdiction or objective or functional competence, when they are carried out under well-founded rational violence or intimidation of an imminent and serious evil and when the essential rules of procedure established by law are totally and absolutely disregarded or with infringement of the principles of hearing, assistance and defense, provided that there has actually been defenselessness. The latter being the most frequent cause of nullity of proceedings in the judicial auction.