Purchase of a flat with a bailiff auction may be an opportunity to get real estate below the market price. However, this form of purchase of the premises is associated with specific formalities, risk and not always obvious principles. How is the bailiff auction? What is worth knowing before you decide to take part in it? Below you will find a step -by -step practical guide, prepared by experts of the Gethome.pl portal.
What is a bailiff auction?
The bailiff auction is a public auction, in which the debtor's property is sold to satisfy the claims of creditors. The court bailiff, acting on the basis of an enforceable title, occupies the property, applies to the expert appraiser and announces the date of the auction. Auctions are public and everyone – meets certain conditions – can take part in them.
Where to look for bidding advertisements?
Information about upcoming bailiff auctions can be found:
- On the website of the National Bailiff Council (https://licitacji.komornik.pl) – this is the main source of official ads,
- On the parties of the district courts and bailiffs,
- In local press or in official newsletters.
In the announcement you will find, among others: a description of the property, its area, location, date and place of the auction, the price of the estimation and the starting price.
Starting price – up to 25% cheaper
The starting price in the first auction is 3/4 of the estimation value. If the property is not sold within the first time, the second auction takes place, in which the starting price drops to 2/3 of the estimated value. This means that an apartment worth PLN 600,000 can be bought in theory for PLN 400,000.
Note: Despite the lower starting price, if more willing appears, the price may increase during auction.
Conditions for participation in the auction
To start bailiff auction, several conditions must be met:
1. Bidder
This is a compulsory fee of 10% of the estimation value. The bid bond must be paid in advance (usually by transfer) or cash in the bailiff's office. If you do not win the auction, the bid bond will be returned to you. However, it should be remembered that if you win the auction and then you do not regulate the remaining purchase amount within the prescribed period, the bid bond is forfeited – it will not be returned and will be included in the costs of enforcement or losses. Therefore, the decision to join the auction should be well thought out and based on real financial possibilities.
2. Presence at the auction
Auctions usually take place in a court building or bailiff's office. You must appear in person (or by the proxy), show an identity document and confirmation of the deposit.
3. The ability to purchase real estate
You must have full legal capacity. If you buy on credit, the bank may require prior confirmation of creditworthiness, although the loan can also be taken out after winning the auction.
The course of the auction – what does it look like in practice?
- The bailiff reads the announcement about the auction and description of the property.
- Participants proceed to the auction, reporting subsequent proceedings (most often within 1% of the starting price).
- Whoever proposes the highest amount and will not be outbcked – wins.
- After the bidding, the court must approve its result (this is done at a separate meeting).
- After the court's decision becomes final, the buyer must pay the remaining amount (without a bid bond) – usually within 14 days.
Risks and traps – what to watch out for?
One of the main problems may be the fact that the property is inhabited. Even after purchasing the premises in the auction, it may require eviction proceedings by tenants – which can be long and expensive.
Earlier local vision is not always possible, but it is possible to see the property before the auction. For this purpose, an application should be submitted to the bailiff. The bailiff may set a date for entering the premises – unless the owner hinders access. In practice, however, if the debtor refuses to cooperate or avoids contact, seeing the apartment may be difficult or even impossible. It is worth trying, because the information obtained can significantly affect the purchase decision.
Purchase from auction does not provide protection under warranty, as in the case of purchase from a developer or a private person. You cannot advertise the flaws of the apartment or demand a price reduction. After buying from auction, you usually do not take over the debtor's obligations, but … there are exceptions. You need to check, for example, arrears in the housing community, media fees, as well as the legal status of real estate in the land and mortgage register.
Opportunity, but with caution
Purchase of a flat from bailiff auction may undoubtedly be an opportunity to purchase real estate at a price much lower than market. Lack of need to negotiate with the owner, clearly defined rules for participating in the auction and court approval of transactions mean that for many people it is an attractive form of purchase – especially at times when housing prices are growing regularly. For a well -prepared buyer who has the right funds or financing certainty, the auction may prove to be an effective way to get a dream apartment or an interesting investment. Importantly, although access to the interior of the premises can be difficult, it is possible to apply to the bailiff to see the apartment before the auction – however, it should be remembered that the decision in this case depends on the specific case and the consent of the owner of the property.
However, it should not be forgotten that bailiff auction is also a big challenge and risk. Buyers do not always guarantee that it will be possible to access the premises before its purchase, which raises uncertainty as to the actual technical condition. In addition, apartments put up for auction are seized by existing owners or tenants, which may result in the need to carry out a difficult and long -lasting eviction process.
The transaction also does not provide protection under the warranty, and the deadline for payment of the full amount – usually very short – does not allow flexibility. A bid bond is also an important element. Although, as a rule, it is refundable in the case of not bidding, it may be irretrievably lost if the winner does not pay the rest of the purchase price within the time. Therefore, although auction can be a real chance for a favorable transaction, it requires the buyer caution, good insight and, above all, stable financing.
Marcin Moneta
