LEGAL GUIDE TO REAL ESTATE AUCTIONS.

 

You are interested in buying real estate at real estate auctions, this guide explains the different stages of the judicial adjudication procedure.

1. Before the auction.

Prior to the judicial auction hearing, known as the “  adjudication hearing  ”, any interested person can visit the property for auction and take note of the conditions of the sale book.

The date and time of the visit, the conditions of sale, and the date of the adjudication hearing are communicated to you, free of charge, by the registry of the Judicial Court in which the building is located and/or by the lawyer in charge of the sale of the property, called ”  prosecuting lawyer  “.

The visit of the property.

The visit will allow you to learn about the condition of the property, the place in which it is located, and possibly the occupant of the property if it is occupied.

The conditions of sale book.

The conditions of sale booklet will provide a complete overview of the property since it specifies the description of the property, the origin of the property, the obligatory diagnoses, the descriptive state of the division, the co-ownership regulations, etc. as the contact details of the prosecuting lawyer for any necessary information.

2. The conditions for participating in the auction.

Auctions are free and open to everyone. Thus, professional, institutional, private investors or simply curious will be able to attend the sales.

However, to place a bid, certain conditions must be met. Otherwise, it is not possible to participate in the auction.

• The bidder must, therefore, participate in the auction:
  Be legally capable. Thus, minors, persons placed under guardianship or under guardianship, persons subject to judicial liquidation or a personal re-establishment procedure, cannot carry out auctions alone;
  Be represented by a lawyer registered with the bar of the Judicial Court in whose jurisdiction the building is located;
• Give power to his lawyer to carry out the auctions in his name and on his behalf;
• To Give his lawyer, against receipt, a cashier’s check made out to the sequestrator of the Bar of the place of the building, representing 10% of the amount of the initial price, without the amount of this guarantee is less than 3,000 euros;Give his lawyer a second cashier’s check corresponding to the preliminary costs, the amount of which is communicated before the adjudication hearing, as well as 10% of the maximum amount of the bid that the bidder wishes to carry;
• lawyer a sworn statement indicating whether or not he is the subject of a conviction to one of the penalties prohibiting the purchase of real estate and, whether it is a person’s physical, whether the property is intended for personal use or not.

 

3. The conduct of the auction.

Place and time.

The auctions are held before the execution judge of the Judicial Court of the place where the building is located during the adjudication hearing.

Amount of the starting price.

The judge begins by recalling the number of the sale, the address of the property, the amount of the preliminary costs as well as the amount of the set price.

Only the debtor who is the subject of the seizure can contest this amount.

The auction process.

They are pure and simple: they commit their author, without the latter being able to retract.

Each auction must be higher than the one preceding it with no minimum required.

In practice, a screen broadcasts the elapsed time and an audible signal marks the completion of an auction and the end of an auction.

The last auction wins.

In the event that no bidding is made, the prosecuting creditor is automatically declared successful, for the amount of the initial price set.
These rules being of public order, their violation entails the nullity of the auction and the property is immediately put up for sale.

4. The result of the auction.

 In the event that the bidder is not declared successful

The cashier’s checks are returned to him at the end of the adjudication hearing.

 In the event that the bidder is declared successful

The successful tenderer immediately becomes the owner of the property.

5. Payment of the price and sales charges within two months.

The consignment of the price and the selling costs.

The bidder declared successful must pay the auctioned price.

To do so, he must record (ie deposit) the selling price and the selling costs in an escrow account, generally the account of the President of the Bar or at the CARPA.

Selling costs include preliminary costs, transfer duties, sales fees, advertising costs at the Land Advertising Department, and lawyer’s fees.

In general, these fees represent 15% of the sale price. This amount is not negligible, it is important to be aware of it since in the end, the selling price will be increased.

The two-month deadline.

This deposit must take place within two months of the auction.

Payment of part of the price.

In the event that the successful tenderer consigns only part of the price within two months, the sale price will be increased by interest at the legal rate until full consignment of the price.

Failure of the successful bidder.

In the event that the successful bidder does not deposit, the sale will be automatically terminated.

Warning! The auction is pure and simple, the successful bidder has the obligation to pay the sale price without being able to oppose, for example, the refusal of the bank to benefit from a loan. It is therefore important, upstream of the auction, to obtain the agreement in principle of your bank on the granting of a loan.

6. The so-called “ tenth  ” bidding.

Although the adjudication hearing is in principle over and the successful bidder is declared the owner of the property, it is still possible for anyone to raise the bid.

The higher bid allows anyone who was not a bidder during the adjudication hearing, to formulate a bid and to become the purchaser of the property.

The bidding is specific in two respects.

On the one hand, the amount of the bid formulated, unlike the auction hearing, is not free:

the amount of the overbid must be at least 10% higher than the hammer price.

In order to avoid interminable auctions, no new overbidding may be formed on the second auction.

Like the auction, the overbid is pure and simple and therefore cannot be retracted.

This bidding hearing proceeds in the same way as the adjudication hearing.

The overbid auction produces the same effects as the initial auction,

namely transfer of ownership to the higher bidder and automatic resolution of the sale on the initial auction.

7. The adjudication on the reiteration of auctions – known as “  crazy bidding  ”.

In the event that the successful tenderer fails to pay the sale price within two months of the auction,

the sale is automatically terminated.

We then speak of ”  crazy auction  ” or ”  reiteration of auctions  “.

The form and effects of the re-auction auction are the same as the original auction.

8. The problem of occupying the acquired property.

The property acquired at auction may be occupied.

The property is occupied by the owner who is the subject of the foreclosure.

The adjudication judgment is equivalent to expulsion. The owner must vacate the premises from the date of the award. Otherwise, and unless the book of conditions of sale provides for the owner to stay in the premises

The property is occupied by a tenant.

If the tenant has a valid lease enforceable against the successful bidder, the latter cannot, in principle, evict it. The successful tenderer will have to wait until the end of the lease to give notice to the tenant.

The property is occupied by an occupant without rights or title.

The successful tenderer may take legal action to order his eviction.

9. Conclusion.

 Real estate auctions are open to everyone;
It is compulsory to be represented by a lawyer to carry out auctions and it is strongly recommended to be accompanied by this one throughout the procedure.
 It is also advisable to visit the property and consult the conditions of sale book beforehand, in order to obtain a detailed description of the property and avoid ”  bad surprises  “;
Finally, it is essential to hold, prior to the sale, the funds necessary to acquire the property covering 15% of the selling costs, often forgotten.

See also: Why Real Estate Agents Are Used When Valuing a Property