What are judicial property auctions?
Judicial auctions are a process by which goods or property are sold to satisfy a debt or legal obligation under the supervision of a judge or competent authority. This process is often used in cases of default, foreclosure, bankruptcy, etc.
Judicial auctions are an important mechanism for ensuring that debts are settled in a fair and equitable manner. The process allows creditors to recover at least some of what they are owed, while protecting the interests of debtors by obtaining the best possible price for the assets being sold.
One of the most important aspects of judicial auctions is transparency and a level playing field for all participants. Anyone interested in acquiring the assets can participate in the auction, subject to the rules set by the relevant authority. This open procedure encourages competition between bidders and sometimes offers the possibility of acquiring goods at a lower price than the market price.
1.- Conditions For Bidding At Auction
Article 647 of the Code of Civil Procedure stipulates that in order to bid at an auction you must:
1.º Sufficiently identify yourself (whether you are acting on your own behalf or on behalf of a company or a third party).
2.º Declare that you are aware of the general and specific conditions of the auction.
To be in possession of the appropriate accreditation, for which it is necessary to have deposited 5% of the value of the goods. The deposit is made electronically through the auction portal, which uses the telematic services provided by the State Tax Administration, which receives the deposits through its collaborating entities.
2.- Valuation Of The Goods To Be Auctioned
Article 666 of the Code of Civil Procedure stipulates that:
1. The property is sold at auction at the value obtained by deducting from its valuation the amount of all the charges and rights prior to the encumbrance for which the execution has been ordered and the priority of which is established by the certificate of ownership and encumbrances.
This operation shall be carried out by the judicial counselor by deducting from the value of the property the total amount of the guarantee resulting from the certification of the charges or, as the case may be, the amount recorded in the register.
2. If the value of the charges or encumbrances is equal to or higher than the value of the property, the Legal Adviser for the Administration of Justice will suspend the execution on the property.
3.- Notice And Publicity Of The Auction
Notice of the auction will be published in the Official State Gazette, in its electronic version and on the portal of the Administration of Justice.
The notice of auction shall be published on the auction portal and shall contain the general and specific conditions of the auction and of the goods to be auctioned, as well as all the data and circumstances relevant to the auction and, necessarily, the estimate or valuation of the good or goods to be auctioned, which shall serve as the standard for the auction.
4.- Course Of The Auction
The auction is open to bids for a period of 20 calendar days from the opening of the auction, which may be extended by up to 24 hours in the event of an increase in bids.
At the end of the auction and thereafter, the Auction Portal will send the Counsel for the Administration of Justice certified information on the winning electronic bid, including the name, surname and e-mail address of the bidder.
5.- Approval Of The Auction
If the highest bid is equal to or higher than 50% of the estimate, the auction will be accepted in favour of the highest bidder. The holder of the highest bid must deposit the amount of the bid, less the deposit, within ten days of being notified, and will be granted possession of the goods once this deposit has been made.
If the highest bid at the auction is less than 50% of the estimated value, the foreclosed party may, within ten days, present a third party to improve the bid by offering an amount greater than 50% of the estimated value or, even if less than 50%, sufficient to achieve full satisfaction of the foreclosing party’s right.
If the conditions of the previous paragraphs are not met, the auction shall be approved in favour of the highest bidder, provided that the amount offered is greater than 30% of the estimated value or, if lower, covers at least the amount for which enforcement was ordered, including the provision for interest and costs.
6.- Electronic Auction
The electronic auction is regulated by Law 19/2015, of 13 July on administrative reform measures in the field of the administration of justice and the civil registry.
Article 648 of the Civil Procedure Code stipulates that electronic auctions shall
1.- They will take place in the portal dependent on the State Agency Official State Gazette for the electronic holding of auctions. Each auction shall have a unique identification number. The auction is opened at least twenty-four hours after the publication of the announcement in the Official State Gazette.
Once the auction is opened, only electronic bids may be submitted, subject to the provisions of Law 19/2015 on auction prices, consignments and other applicable rules. During the auction, the auction portal will inform about the existence and the amount of the bids.
In order to participate in the electronic auction, interested parties must be registered as users of the system through secure electronic identification and signature mechanisms.
Bids shall be sent telematically through secure communication systems to the auction portal, which shall return a technical acknowledgement, including a time stamp, of the exact time of receipt of the bid and its amount.
The Bidder shall also indicate whether or not he agrees to the reservation and whether he is bidding on his own behalf or on behalf of a third party. Bids higher than, equal to or lower than the highest bid already placed are admissible, it being understood that in the latter two cases the bidder agrees to the reservation of the lot from that moment on and that they will be taken into account if the bidder who placed the highest or equal bid does not finally knock down the remainder of the purchase price. In the event that there are bids for the same amount, the bid that was made earlier will be given priority. The auction site will only publish the highest bid among those made up to that moment.
7.- Inspection Of The Property
A fundamental aspect of participating in a property auction is to know all the charges on the property, its ownership situation and any other aspect that may affect the property once ownership has been acquired.
Here it is essential to have a property lawyer who is an expert in auctions, who can check all the charges on the property in order to avoid any unpleasant surprises after the property has been sold at auction.
Judicial auctions offer an opportunity for those interested in acquiring property at attractive prices. Many people see these auctions as a form of investment or a way of acquiring property at below market prices. However, it is important to bear in mind that buying at a judicial auction involves accepting certain risks, such as the condition of the property being sold or any encumbrances or outstanding debts.
In conclusion, judicial auctions are a legal and transparent procedure that allows the sale of assets to meet financial obligations. The process ensures fairness for both creditors and debtors, while providing opportunities for investors and individuals interested in acquiring assets at competitive prices. It is important to be informed and understand the rules and risks associated with judicial auctions before participating.
At Quikprokuo, we will take care of the entire process of selling property by auction for you, or guide you through the process if you are doing it yourself, analysing everything related to the property and advising you at each stage of the auction process.
Do not hesitate to contact us to start the property auction process.
