Judicial Auction. Characteristics and Procedure.

What is judicial auction?
It's about a procedure for the disposal of seized assets which is regulated by the Civil Procedure Law (LEC) and should not be confused with other types of procedures, such as administrative auctions.

There are two types of judicial auction regulated by the LEC, depending on whether it is movable or immovable property.

Characteristics of the judicial auction
The judicial auction is contemplated within the Civil prosecution law, expressly in the article 636:
  1. The assets or rights not included in the previous articles will be carried out in the manner agreed upon between the parties and interested parties and approved by the Lawyer of the Administration of Justice in charge of execution, in accordance with the provisions of this law.
  2.  In the absence of a realization agreement, the disposal of the seized assets will be carried out through one of the following procedures:
  3.  1. Disposal through a specialized person or entity, in the cases and in the manner provided for in this Law.
  4. 2nd judicial auction.
  5.  Without prejudice to the provisions of the previous sections, once the assets have been seized by the Attorney of the Administration of Justice, the necessary actions will be carried out for the judicial auction of the same, which will occur within the indicated period if it is not previously requested and It is ordered, in accordance with the provisions of this Law, that the forced realization be carried out differently.

Furthermore, articles 643 to 654 refer to the judicial auction of movable property, and articles 655 to 675 to that of real estate. In this sense, we must also mention Law 19/2015, which in its sixth final provision regulates electronic consignments in judicial auctions.

The judicial auction is the procedure considered ordinary by Law, In fact, it is the most common in the execution of money judgments. It applies especially to the execution of mortgage loans and registrable personal property.

For a judicial auction to be possible, the following conditions must be met:

  • That there is a “enforcement procedure”, that is, a firm judicial resolution for the execution of the debt.
  • That the assets to be auctioned have been previously evaluated and seized.
  • Said assets are sufficient to cover the amount claimed.
  • The sale is established in a single auction and not in successive auctions.
  • There is a specific regulation for the auction of real estate or personal property.
Judicial auction procedure
Since the entry into force of Law 19/2015, all judicial auctions are carried out electronically. This procedure allows for greater transparency and better sales results among many other advantages over the in-person auction. The entire process is carried out through the BOE auction portal.

However, this model is only applicable to processes initiated after the date of entry into force of the law, and to those announced but not initiated on that date.

The portal reports all the auction data:

  • Start date.
  • Finish date. It lasts 20 business days from its opening.
  • Claimed amount.
  • Lots.
  • Auction value.
  • Appraised value.
  • Minimum bid.
  • Sections between bids.
  • Deposit amount.
  • Bidders must register on the portal and, if interested in a specific auction, deposit 5% of the starting value.
The procedure consists of the following:
  1.  The auction is published on the BOE Auction Portal.
  2. During the 20 days of the auction, offers or positions are received from interested parties.
  3. If the last bid published is higher than the best bid until closing, the auction is extended for one more hour to allow for an improvement in the bid.
  4. The auction can be suspended by the Administration of Justice for many reasons, for example, if the debtor can make a promise to pay.
  5. Once the auction is over, the highest bidder is noted and the security deposits are returned.

Additionally, there are special situations, such as an auction without bidders.

  1. If the bids reach 70% of the starting price for real estate or 50% for movable property, the property is awarded to the highest bidder.
  2. The performer can participate in bidding only after some bidder has placed a bid.
  3. If the postures are lower than the percentages already mentioned, the executed person can present a third party to improve the postures.
  4. Once the deadline for this option has expired, the improvement can be made by the performer.
  5. In the case of mortgage debts, if the best position is between 50% and 70% of the value, a period of time is given to the executed party to present a third party to improve the offer.
  6. Once this period has expired, it can be acquired by the performer for 70% of the auction value. However, the acquisition value cannot be less than 60%.
  7. In the case of a rented property, the tenant has a preferential right to acquire the property.
  8. If none of the bids meet the conditions, the Court may declare the auction without a bidder. In the case of a home, in auctions without a bidder, the creditor can request the award of the property for 50% of the auction value if said home is not the debtor's habitual residence, or 70% if it is. It has a period of 20 business days.
  9. If the auction is void and the creditor does not make use of the option mentioned in the previous paragraph, the debtor may request the lifting of the embargo.
  10. Beyond this, the interest of individuals in participating in an auction is encouraged by the ease of participating through a platform.

The reasons may be:

Acquire a desired good at a price lower than the market price.
Acquire a mortgage as a form of investment.
Differences between judicial auction and other types of auctions.
Although the judicial auction appears to be the most used mechanism to resolve non-payment problems, it is not the only one.

First of all, It should not be confused with the auction. Unlike the auction, in which the aim is to obtain enough money to pay off the debt, The auction is the judicial approval of an auction in which the best of the bids made is admitted.

Other forms of debt satisfaction They may be:

  • Direct delivery to the performer.
  • Realization agreement between the executor, the executed party and a third party that certifies direct interest in the sale.
  • Disposal through a specialized person or entity.
  • Administrative auction. Its purpose is the execution of an administrative embargo, due to debts with the State, whether Social Security, city councils or the Treasury, among other cases. The procedure is different from the judicial auction.
  • Private auctions. They are carried out between individuals according to the conditions established between the parties.

If you need legal advice on this matter, do not hesitate to contact us. We will offer you all the information you need, in a personalized way, backed by experience and effectiveness.






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