If you have never participated in a public auction and are not sure what they are, in these lines you will find a brief summary of the steps you should take and the most important things you should know to minimize the risks.
What is a public auction?
There are two basic types:
- The sale of assets seized by a Public Body (Court, Treasury, Social Security, Town Halls, etc ...)
- The sale of property owned by the Administration, that is, what is called a sale of equity.
Who can participate
- Any person who does not have any legal impediment.
- People directly related to this procedure cannot participate, that is, Administration officials, appraisers, depositaries, debtors, etc ...
- Yes, the executor or creditor can participate.
What to find out before going to auction.
Before going to an auction, you always have to find out a number of things:
1. Locate the property and check its condition.
- If it is a property, it will be very difficult for you to see it from the inside, because the owners usually do not allow it, but you can always see it from the outside and get an idea.
- If it is a vehicle, machinery, or any personal property, you must still locate it first. Depending on the Administration, they may have it deposited in their warehouses or in those of a certain depositary, but if the depositary were the garnishee himself, it is important to try to locate the property before going to buy it, because the Administration will not be responsible if the property does not appear or is in poor condition.
2. In addition to physically viewing the asset, it is VERY IMPORTANT that you check other important data.
- If it is a vehicle, you must go to the Provincial Traffic Headquarters to check if there are fines, taxes or any pending charges. Also if it is any other movable property, you should find out if you have any other type of precious cargo, since all the pre-seizure and preferential charges, must be paid by the buyer, so it is extremely important to know if there are any and if there are any. there are, know the exact amount of them to decide if you really want to buy. If the charges are after the embargo, they are canceled with the purchase, that is, you would not have to pay them.
- Preferential charges, even later, must also be borne by the buyer. Preferential charges are those contracted with the Treasury, Social Security, workers' wages, community debts, or those contracted with the local administration (ibi, etc). These charges are not normally on the record, so you have to find out.
- In the case of real estate, in addition to consulting the original file in the Administration, you must ALWAYS request a simple note in the Property Registry, to check the current charges of the property.
- In addition to the charges, the possession status of the same must also be verified, that is, if it has tenants, if there are usufructs, etc ...
3. Consider what you will be buying if you buy one:
- Undivided part: a part of something that cannot be divided, that is, that property belongs to more people and you are buying only a part.
- Usufruct: it is the right to enjoy the property, but not its property, that is, you will be able to live in the apartment for the duration of the usufruct, but you will not be able to sell it because it is not yours.
- Nuda property: it is the opposite of usufruct, that is, you would be the owner of the apartment, but you could not live in it because there will be a person who has the usufruct and who will be the one who has the right to live in it.
- Full domain: The complete right, that is, the property title and the right to enjoy it.
Sometimes what goes up for auction can be a bit complicated, for example: "full ownership of ¼ undivided part" would be buying a quarter of the property and on that quarter, would have the full right.
Make sure, consulting the original file in the administration and the information in the Property Registry, of what exactly you would be buying.
What is the auction price?
The administration always sets a starting price, which is called “Type of auction”. This price is calculated as follows:
- The valuation of the good is made
- Check for loads
- In case there are charges, they are subtracted from the valuation and the resulting amount is the price for which it goes up for auction.
- When the charges exceed the valuation, the auction rate will be the debt plus the costs.
What you must take into account to know if the price interests you
- Remember that the previous or preferential charges must be paid by the buyer, therefore, you must add them to the starting price that is marked. That is, if a good go to auction for 6,500 euros and has charges of 10,000, calculate that the good can cost you 16,500 euros.
- The charges must be paid in full, however, on the starting price, that is, 6,500 euros, there is the possibility of obtaining a lower price. Logically, you will always try to buy as cheaply as possible, it will depend on the bidders that there are and what others offer.
- Each administration has rules for bidding. These rules are explained in a simpler and more complete way in the sections WHAT IS AN AUCTION, STEPS TO CELEBRATION, and REGULATION, which you can see in this same drop-down menu.
- Depending on the administration, the good can be achieved for the value of the debt. Always remember to take into account the charges, if any, to add them to the final price.
- Bearing this in mind, think that what is really interesting when calculating the price of a good is that the charges are very low or that there are not, even if that means that the starting price is higher since the starting price can lower it. and the charges do not.
- Also calculate that in addition to what you pay for the property, you will have to pay the corresponding taxes and expenses derived from the auction, which you should consult with the administration.
- When an auction is "No Type" it means that there is no minimum price and you can start bidding for whatever amount you want.
- To be able to participate in an auction, you always have to leave a deposit, which usually ranges between 5 and 30 percent of the auction price. Making the deposit is mandatory and without it, you cannot participate.
- This deposit, depending on the Administration, will be deposited into a bank account that will be indicated or will be delivered at the Secretariat or at the auction table itself until a few moments before the act.
- In any case, they will give you proof of the deposit.
- If you take the auction, you will have to pay the difference up to the final price and if you do not take it, the deposit will be returned with the receipt.
How can you bid
There are three ways to bid or bid in an auction:
- A sealed envelope may be presented with the offer. This envelope will be delivered to the Secretariat before the auction. The deadline to deliver it varies depending on the Administration. The offering envelope must always accompany it with the deposit receipt.
- It can be tendered in person. The day and time of the auction must be presented at the place where it is held, must be identified with the necessary documentation (ID or equivalent), and present proof of deposit. Once everything is correct and the auction begins, the participants will make their offers out loud; you can increase them whenever you are interested. Logically the auction will be the highest bid.
- You can also bid in both ways, that is, by presenting an envelope and also by going to the auction in person. We recommend this option, since you can submit an envelope with a low bid, and then, depending on what the other bidders offer in person, you can raise the bid if you are interested. In case you participate in both ways, you do not have to make two deposits. The deposit that you have presented with the envelope also serves to participate personally.
- There are administrations that hold auctions electronically. In some the only option to participate is online and in others, the face-to-face auction is held simultaneously with the electronics.
Other matters to consider
- We advise, before participating in an auction, that you go to one or several simply as an observer, to see how they develop and become familiar with that environment. Remember that if you have not made the deposit, you can be a spectator, but you will not be able to participate. Entrance as a spectator is free.
- When participating in an auction, it means that the participant accepts the conditions of said auction. Likewise, all property titles are accepted, if there are no titles or any other circumstance, that is why we insist that it is very important that before buying an auction, you check all the data in the original file and in the Property Registry.
- Another alternative option to the auction is to reach an agreement with the owners. Remember that the garnishee does not know what is going to be taken out at the auction. It is possible that the property can be sold for a very low price and in view of that, many times it is preferable to agree on an advantageous price for both parties and perhaps you can buy the apartment before it goes up for auction. The auction will be suspended at the time the garnishee pays the debt.
Remember that what you have just read is simply a guide with a few basic points, the answers to the questions most frequently asked by our clients.
There are many other things you should know such as:
- The specific conditions of the bids in each Administration, such as buying through another person, how to finance an auction, which is a direct award, the taxes to be paid after the auction, etc.
- All these points and other important ones, you will find in the sections WHAT IS AN AUCTION, STEPS OF CELEBRATION and REGULATION, which you can see in this same drop-down menu.