Judicial auctions present themselves as an interesting option within the real estate market, allowing buyers to acquire assets at reduced prices. However, this type of investment also carries risks. Below we detail the key features of these processes, as well as the benefits and challenges they entail.
What are judicial auctions? Judicial auctions are public auctions ordered by a judge to liquidate the assets of debtors who have failed to meet their financial obligations. They can arise in various contexts: mortgage default, unpaid common expenses, personal debts, estate partitions or divorce proceedings.
The auction process: 1. Preliminary stage: an enforcement proceeding is initiated to attach the debtor's assets. 2. Identification and attachment: the court investigates the available assets and proceeds with the attachment. 3. Title search: the court clerk's office reviews the property documents, verifying their validity and any liens. 4. Actuarial report: a detailed report is prepared on the condition of the asset and the associated debts. 5. Public notice: the auction is announced in an official gazette and a local newspaper, detailing the case file, the date, the place of the auction and the percentage of the deposit to be paid.
Participating in the auction: on the day of the auction, interested parties compete in the bidding. To maximize the chances of success, it is advisable to: research beforehand (review the available reports on the asset and its possible liens); set a clear budget (avoid overbidding in the heat of the moment); and understand the bidding process (become familiar with the auction rules). Bidders must also attend with a deposit of 10% to 30% of the hammer price, plus the auctioneer's fees.
Execution of the deed: the successful bidder has twenty days to pay the remaining balance and begin the process of executing the deed. It is important to seek advice to verify that there are no hidden debts affecting the investment. Properties acquired at auction are exempt from certain procedures, such as requesting the BPS certificate, which simplifies the transfer process.
The judicial deed-execution process: this process allows the successful bidder to secure ownership rights over the acquired asset. To do so, the judge acts on behalf of the seller to formalize the sale. Our legal system protects the new owner through the "despacho saneador" (a "cleansing decree" clearing the property of prior claims): any attachment or debt linked to the asset cannot follow it, guaranteeing that the new owner receives the property free of encumbrances and with full legal certainty. The process generally takes between 12 and 18 months, and once the deed is granted, the right to take possession arises. A common challenge is acquiring occupied properties; in such cases, specific legal procedures exist to obtain possession, and the speed of recovering the property will depend on the circumstances of each case.
In conclusion, judicial auctions represent an attractive opportunity to diversify investments, but they require preparation and professional advice. At MECOL ESTUDIO we can provide comprehensive support throughout the entire process, to ensure your interests are protected and to maximize your results.
