The judicial auction can be a great bargains estate to spot with expertise and competence thanks to the assistance of experts.
Buying a property can be very advantageous, but to avoid unpleasant surprises or pitfalls, a certain foresight and a little patience are required.
All the information necessary to evaluate the convenience of the purchase in a judicial auction is available in a transparent way in the appraisal and in the notice of sale published in the relevant courts.
Those interested in buying properties at auction are able to identify all the flaws and pending issues and can evaluate the convenience of the purchase. asset Advisory Services publishes free of charge, on its portal, all information, and documents that allow you to identify real estate deals in a clear and transparent way.
Buying a property at judicial auction with the assistance and help of ITAsset Advisory Services is transparent and safe. Our goal is to guarantee tailored and highly specialized service, offering a simple and innovative management model for judicial sales .
To get to know the world of judicial auctions better , here is a short and simple guide to judicial sales procedures.
What is the judicial auction
The judicial auction is one of the typologies with which a real estate auction
can occur, that is the purchase and sale process that is carried out through offers
and is declared concluded with the sale of the property to those who offer the highest amount. During an auction, the forced sale of the property owned by the natural or legal person takes place. The executor is the one who is deprived of the property due to debts that he cannot honor.
The real estate auction is a transparent and safe way to purchase because the documentation is always available for free. To evaluate whether the purchase of the property at auction is advantageous,
it is necessary to have a certain foresight and expertise in the selection.
Certainly availing of the assistance of experts in the sector guarantees
a certain safety that can reassure and avoid unpleasant surprises.
Who participates in the auction
Anyone, with the exception of the debtor, can participate in the judicial auction by submitting an offer. Buying a property through auction is the way chosen by those looking for the dream home
and does not want nasty surprises in the acquisition process and is looking for a great deal .
If once the world of auctions was considered accessible only to professionals, today the economic crisis has changed the scenario. On the one hand, auction properties have increased a lot due to the reduced ability of individuals
and companies to pay off debts.
On the other hand, many private individuals are looking for real estate deals,
trying to buy at a much lower price than the market price for similar properties in the area. The auctioning takes place in court or in professional offices delegated by the judge. According to the recent legislation on the subject,
the execution/bankruptcy judge can delegate the sales operations to chartered accountants, lawyers or notaries.
Find the property at auction
In a judicial auction you will find everything that is mortgaged and therefore seizable. The auction properties can be homes such as apartments
and villas but also garages, warehouses and laboratories, shops, small industrial buildings, land, etc. Each property is identifiable by a court procedure number.
The decree law 83/2015 entered into force on June 27 last and converted into law 6/8/2015 n.132
introduced the public sales portal in which the notice of sale must be inserted. This form of advertising will replace the posting on the notice board of the judicial office of the court concerned. Failure to enter the notice on the portal will result in the termination of the enforcement procedure.
Anyone wishing to spend some of their time looking for a real estate
the deal could certainly start from the court site of the district closest to the area
where you are looking for the property. The sites of the courts have a section
dedicated to judicial sales that allow you to filter the search according to the criteria
you prefer: procedure number, type of property, the municipality of reference,
the requested price range.
On the sites of the courts it is also possible to download the technical
documentation such as the CTU which transparently reports
all the essential data of the property for sale including the pending constraints. Reading the CTU requires a certain skill in order to identify any flaws and pending issues. For this reason, it is often quite difficult to read the property listings presented on the websites of the courts.
Judicial sales institutes also have websites dedicated to judicial sales.
The aforementioned institutes are private entities that by ministerial order are authorized to the judicial administration of a real estate in accordance with article 592 of the code of civil procedure. Also, in this case, the published properties can be searched by procedure, municipality, or court number. The aforementioned institutions are joined by a series of subjects (called specialized subjects pursuant to art. 107 of) who assist the bankruptcy trustees in the liquidation of assets.
The alternative are the websites authorized by the Ministry of Justice,
which have contracts with individual courts and provide them with the mandatory advertising services provided for by art. 490 cpc at the expense of the proceeding creditor. Even some notarial associations
and from which it is possible to obtain information on both the property and participation in the auction. Even in this case, however, the properties in the auction published have not been selected or evaluated. In order to find the real estate deal
or simply to correctly interpret the appraisal, a certain technical expertise is required.
Real estate auctions are also published in print. With the recent amendment of art. 490, an attempt was made to limit its use, given the considerable cost borne
by the creditor, leaving the judge the discretion on the choice. Furthermore, apart from some newspapers that periodically publish auctions (limited, however, to certain local courts),
the rest of the printed advertising refers either to free press or to brochures
that collect thousands of listings of properties in auction. The choice of the online mode demonstrates the desire to go in a more transparent direction,
to avoid nasty surprises and offer the customer all the complete information to juggle the pitfalls of the market.
To find judicial auctions of properties selected and valued with competence, it is possible to consult ITAsset free of charge .
The ITAsset portal allows you to measure the attractiveness of real estate based
on a series of parameters including the basic auction price,
the reference area, the occupancy status of the property,
the prices of the free real estate market, etc.
Furthermore, an “auction sheet” is available free of charge for users,
which collects at a glance all the most salient information about the procedure
and the property for sale, providing an approximate calculation of the taxation
that could apply to the transfer.
ITAsset Advisory Services also allows you to book a visit to the property or request assistance with the purchase.
Get information and visit the property
The appraisal is certainly the document that gives more information
about the property at auction and is a document that is always available
and can be consulted transparently both on the sites of the courts
and in those dedicated to legal advertising.
The appraisal establishes the basic auction price and is drawn up by an experienced
and competent professional appointed by the judge.
This document also contains the descriptive data of the property such as the state of maintenance, the cadastral category, the existence of constraints on the property or debts (for example condominium expenses not paid by the debtor).
The appraisal also allows you to:
- check if the property is in compliance with the building regulations
- if there are abuses and if they can be cured
- if the property is occupied and to what title (immediate release is ordered for properties occupied by debtors or without title)
- what are the prejudicial formalities and how much is the cost for the cancellation
- what is the current and real state of conservation of the property
An inspection of the area could also be useful, with an external visit to the building of interest, a chat with the condominium administrator (you can often find the nameplates with the contact details outside the entrance door). In fact, the condominium administrator can make any overdue condominium expenses transparent to the new buyer. Whoever buys is obliged to pay the condominium expenses for the current year and for the previous one.
In order to visit the auction property, the advice is to immediately note the references of the sales delegate and the judicial custodian to request all information in a clear and transparent way.
If, on the other hand, you prefer to be assisted right from the visit of the property, the asset can organize the visit to the property and accompany the person concerned on site.
How to buy a property at auction
After having identified the asset of interest through the number of the court procedure, and having made all the necessary checks on the real convenience to participate, we are ready to buy. The evaluation of the actual economic convenience to purchase must take into consideration all aspects related to the overall costs of awarding the property and possibly also to the defects and remedies necessary to regularize the property.
For this reason, it is often advisable to seek the assistance of competent experts in the sector. Since these are important investments, it is advisable not to exceed in speculative intentions and to face the tender in a rational way by setting a maximum price beyond which to not go.
It is purchased by presenting the sales professional (notary, lawyer or accountant) with an irrevocable purchase offer in a sealed envelope. This offer will compete with all the offers that will be submitted for that property. The judge, or his own delegated professional, will award the good to the highest bid received. The process is more transparent than ever and the competence of the delegate will help you to face each phase with absolute serenity. Sales (judicial auctions) can also be carried out electronically .
Phase with enchantment and without enchantment
In reality, following Law 132/2015, the “without enchantment” phase has now been abolished, limited to exceptional cases decided by the judge who, however, must motivate them with the conviction that a higher price can be obtained by resorting to sale “with charm”. However, it is fair to define both auction methods.
By real estate auction “without enchantment” we mean the phase in which the bidder submits his offer in a sealed envelope and whose offer cannot be lower than the base price indicated in the auction notice. When the envelopes are opened, if the offer is at least one fifth of the value of the property, it is accepted. In the event of multiple bids accepted, a tender is opened between the bidders which takes the value of the highest bid as the basic auction price.
By auction “with enchantment”, we mean a public tender between bidders, generally arranged after a sale without auction gone deserted. The judge of the execution establishes the base price of the auction and the minimum increase to be offered at the base auction price. Bids not accepted if they do not exceed the basic auction price or the previous bid plus the minimum increase.
The presentation of the offer
To purchase a property in a judicial auction, a written offer must be submitted in a sealed envelope by the deadline, which normally coincides with the day before the opening of the envelopes (or through the electronic procedure through the authorized sales managers).
The text of the offer must contain all the requested information, which is indicated transparently on the court website (knowing the number of the procedure), in the notice of sale or can be provided by the custodian. It is important to know that the person placing the offer can be anyone, it does not need to be the bidder himself. In any case, it is always good to ask the delegate or the caretaker for detailed information, which will surely help you not to make mistakes that could invalidate the offers.
There is an important novelty that concerns all sales arranged after the entry into force of the recent Law 132/2015 (the date of the sales order is valid). The novelty consists in the possibility of submitting bids lower than the auction base (called “minimum bids”), even if within a certain limit. Let’s take an example: if the auction base indicated in the notice is equal to 100,000 euros, it means that an interested party can offer even less, up to 75,000, which represents 25% of the auction base.
Offers below 25% of the starting price will not be considered valid. This option is especially useful when the property is not particularly attractive. In these cases, our offer could most likely be the only one. In case of multiple offers,
The security deposit
Deposit must always be accompanied by the offer presented when participating in the auction to purchase a property. The deposit is usually deposited in the form of a cashier’s check made out to the procedure, which is given to guarantee the correct fulfillment of the purchase. deposit in the sale without enchantment is equal to 10% of the sum to be offered, while in the sale with enchantment it is established by the execution judge in the sale order to an extent not exceeding 10% of the basic auction price of the immobile.
The new legislation has abolished the obligation to deposit also the approximate amount of sales expenses such as awarding, transcription, and transfer costs and charges.
The deposit presented by the person who wins the auction is retained by the delegate, while it is immediately returned to all the other participants. The deposit will also be withheld if the successful bidder fails to pay the balance within the established deadline. The offer is binding for 120 days. In case of sale without auction, therefore it is not necessary to show up at the opening of the envelopes since if the offer were the only or the highest, the award would be the same even in the absence of the bidder. case of a phase with enchantment, if the bidder does not show up, the deposit is returned only to the extent of nine-tenths. In the case of sale of the property without enchantment in the presence of several accepted offers, if there is a tender between the bidders, the absence at the time of
The opening of the envelopes
The auction procedure is regulated and transparent. Anyone can participate in the real estate auction even if the management of the dynamics of bidding and relaunching often require expertise and experience.
The situations that may arise when opening the envelopes are different:
- No bids (or one or more bids considered invalid), the auction is declared empty, the minutes are drawn up, and the deposits are returned to all participants
- Only one offer received:
- if this is equal to or greater than the price set at the base of the auction (in the previous example, at least 100,000 euros), the offer is certainly accepted and the auction awarded
- offer is lower than the basic auction price but within the limit of 25% , it will be accepted unless the delegate believes that it is possible to obtain a better price with a new sale or unless an application has been submitted of assignment
- it is more than 25% lower than the basic auction price (i.e. less than 75,000 euros in the previous example) the offer is considered invalid and therefore the auction is considered deserted
- More valid offers:
- We proceed with the tender on the highest bid:
- If the bidders adhere, and raise, the property will be awarded to whoever has made the highest bid (in the presence, however, of instances for assignment of the asset, these will prevail over the highest bid if this does not reach the auction base price indicated. in the notice)
- If no one agrees, and no assignment requests have been submitted, the property is awarded the best bid or, in the case of two or more bids of the same amount, the auction will be awarded to the one who submitted the bid first.
- We proceed with the tender on the highest bid:
In the case of auction sales, it is possible to make further purchase offers in the 10 days following the award. However, to be effective, these offers must exceed the price reached with the auction by one fifth. Also in this case it will be necessary to deposit the offer at the registry and integrate the deposit which must be double that required for participation in the first auction of the property. Having verified the regularity of these further offers, the execution judge announces the tender, of which public notice and communication is given to the successful bidder.
Once the successful bidder has been identified, the delegate keeps his security deposit, returns the deposit to all the other participants, draws up the auction report; from this moment the deadline, indicated in the notice, begins, but usually not less than 90/120 days, for the payment of the balance of the final price.
The purchase costs of a property at the judicial auction are established in a transparent way by the legislation and whoever decides to participate must take into consideration the sum of all the cost items to avoid unpleasant surprises. The cost of participating in the real estate auction is equal to the stamp duty (16 euros) that is applied to the purchase offer to be deposited at the registered office of the delegated professional.
This is the only real cost to participate. However, the offer is not valid if it is not accompanied by a security deposit (more often in the form of a cashier’s check, but also a bank transfer) equal to 10% of the amount offered. But this amount is immediately returned in case of non-award.
Only the successful bidder will have the amount deposited as a deposit withheld.
At the expense of the successful bidder there are some costs and obligations subsequent to the award. In fact, within the deadline set by the notice of sale (now more and more often the maximum foreseen, that is 120 days) the successful bidder will have to pay the remaining price. Shortly before payment of the price, or often at the same time, the successful bidder will also be required to pay a sum,
equal to approximately 15% of the final award price, as an “advance” fund for expenses, which will cover both the amount due to the tax authorities for the taxation of the transfer of ownership (registration tax, mortgage, and land registry tax) and the cancellation costs of the prejudicial ones (mortgages and foreclosure). To these expenses are also added the expenses related to the remuneration for the specialized subject (if present),
In case of recourse to financing (mortgage loan), the successful bidder will also have to bear the notary fees of stipulating the loan deed for the purchase of the property. In this specific case, the notary could be the same delegate who will in any case be paid a fee for signing the deed.
Mortgage to buy at auction
To buy the house at the judicial auction it is possible to apply for a mortgage. Before carrying out the auction experiment, it is necessary to contact local or national banks to evaluate their offer for the granting of the loan. The ABI, in agreement with the courts and banks, has identified transparent procedures that provide for the disbursement of mortgages secured by mortgages written on the property being awarded. A list of banks participating in the initiative is available directly on the ABI website
In order to obtain a mortgage, it is, therefore, necessary to contact the bank in time to instruct the practice. Once approved, the bank will confirm in writing in maximum transparency, the willingness to grant the loan, and the economic conditions. The underwriting of the loan will take place in most cases, simultaneously with the transfer decree by the judge, and with the registration of the mortgage, as happens in a normal sale with a mortgage.
Pay in installments
A property purchased at auction can be paid in a deferred mannerthanks to the new law number 132/2015. The successful bidder of a real estate property has the possibility of deferring the payment of the balance price and of being placed in possession of the property during the installment payment. In order to do so, a surety must be provided as a guarantee which must be autonomous, irrevocable and on first demand.
The surety must be issued by banks, insurance companies or financial intermediaries, for an amount of at least thirty percent of the sale price.
This solution must be carefully evaluated, perhaps using competent experts able to clarify and make transparent any risks. In fact, failure to pay even just one installment within ten days of the expiry of the payment deadline set by the judge will result in the declaration of forfeiture of the successful bidder with the consequent loss of the deposit and the installments paid.
The successful bidder will be ordered to hand over the property to the bailiff with the same decree of forfeiture and at the same time the surety will be enforced. The transfer decree in the event of deferred payment will only be initiated upon completion of the installment payment.
Deserted auctions and suspended auction
The auction properties that remain unsold and end up being awarded after two or three auction sessions without bids and therefore at an excessively reduced price, turn into damage to debtors and creditors. In fact, the creditors are unable to collect all the credit and at the same time the debtors find themselves without the property and still with a part of the debt (precisely because the property was sold at too low a price).
The law does not provide for a minimum or maximum number of auctions within which the attached asset must be sold, however at the discretion of the judge or at the request of creditors, the proceedings may be suspended.
With the termination of the enforcement procedure, the availability of the property returns to the debtor. The court judge can also decide to suspend the auction and decide to postpone it to a ‘date to be decided’ or when the market will be able to accept the property and make it more attractive to purchase.
In the case of auctioning the property following the bankruptcy of the entrepreneur-owner of the property being auctioned, only the possibility of suspension is envisaged and not extinction.
When the property becomes available
Buying a property, especially if it is a first home, is the realization of a dream. The first desire of those who buy the house is to get hold of it as soon as possible. While in the case of the purchase on the free market the time required for the transfer of ownership is known, in the case of the purchase at auction the times are not easy to calculate. Certainly, by relying on the expertise of industry experts, it is possible to have a more precise idea.
To make the purchase at auction final, it is necessary to issue the transfer decree. After the award, the execution judge, if he deems the sale suitable, signs the transfer decree. In the case of bankruptcy procedures, statistically, the issuance of the decree could be faster as it is issued directly by the trustee.
In these cases, waiting times can be agreed with the bankruptcy trustee and can be quite quick (even 1 month from the payment of the price). The decree must be withdrawn in the competent court. If the property is vacant, it is often possible to get hold of the keys at the time of the award confirmation. Obviously this depends on the courts and the procedure.
If the property is not vacant, it is necessary to verify in the appraisal for which title it is occupied. In any case, we remind you that the transfer decree contains the injunction to the debtor or custodian / to release the property sold. This means that if it is occupied by the debtor, he will have to release him immediately.
The transfer decree allows for the cancellation of foreclosures and mortgages. The costs of these cancellations are borne by the successful bidder. The sale of the property must therefore be transcribed at this point. The transcription is usually carried out by the sales representative who followed the court procedure, but it is a good idea to always have a copy of the transcription delivered to avoid unpleasant surprises.
Transfer decree and deed
There are no differences between the deed and the transfer decree: only the subjects involved in the procedure change. In the transfer decree, we have a judge, a buyer, and the debtor; in the deed instead, we will have two private subjects who, before a notary, will draft and sign the legal deed.
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