The reform that came into force on October 15, 2015, and which has introduced electronic or telematic judicial auctions, is producing a tsunami in that it has aroused great interest among citizens who, until now, were completely indifferent and were unaware of the basic notions of judicial auctions. Now everyone is wondering how electronic court auctions work.
How do I know?
Very easy. I publish the only two blogs whose theme focuses exclusively on judicial auctions and, in the end, after several rounds, all the new ones interested in them end up stopping here and sending me emails to advise them on this or that, or on the best way to learn the business.
I can hardly tell you anything: first, because my time is not dedicated to sponsoring newbies or showing them how judicial auctions work (logical, right?), But I focus it on my own affairs, and, second, because the only course that existed before mine and that he calls himself “Course of Expert in Judicial Auctions” is garbage stuffed with straw and nonsense that is useless and about which I have received a multitude of criticisms from people indignant with the creators of that scam.
A kind reader has sent it to me and I am still hallucinating that they have been able to charge 1,500 euros for such a trifle that does not even mention how electronic judicial auctions work.
A scam that I have already related in Rankia how it was designed and from what sources they drank to find out about the operation of judicial auctions because the truth is that the creators of the course know as much about auctions as I do about biology.
In addition, all the courses that can be found on the internet about this, in reality, are the same but presented in different ways and through different companies/brands so that they appear different and thus not be harmed by the bad press of the original.
In short, the newbies in this business have it very raw to survive.
Unless until I am the one to undertake the task of taking a real auction course to invest like a pro: something that I do not feel like at all, because I am too meticulous and I know that, if I get to it, I will not stop until I do the best course possible (naturally, on- line) full of lessons videotaped and videos of real situations we face in judicial auctions.
In a very summarized way, for beginners, it is necessary to know the following basic notions about how judicial auctions work:
1. The courts
1- The deadlines: Any investment in judicial auctions necessarily goes through a court and, believe me, that is very bad news because the courts are NOT, precisely, world champions of productivity. The novice must, therefore, get used to the idea that the passage of time is very different within a court than outside of it.
2- The people: we must count on the officials, who take care of the judicial affairs, that is, our investments. We must know very well the psychology of judicial officials and try never to confront them: their privileged position with respect to our investments allows them to do us a lot of harm. In addition, in general, they do what they can consider that the courts are increasingly stuck.
By the way, stuck because they don’t actually do everything they could do, for example, stick to their work hours. How can we expect the courts to function reasonably well if the court clerks, now called LAJs, do not arrive at their jobs when they should arrive? They are in charge of organizing the work and the ones who should take the whip to motivate their officials and, obviously, if they are the first to fail to comply, it is difficult for the court to meet the deadlines.
3- The sheriff: The head of the court is the Lawyer of the Administration of Justice, who was previously known as the court clerk. It’s not that you have to get along with him, it’s that he’s the master of the shed; the one in charge by law to carry out the executions. He makes all the decisions, and his whims and eccentricities will surely torture us.
The LAJ is responsible in the court for the judicial auction of real estate and it decides from how to act in a judicial auction to the valid causes of suspension of the judicial auction; going through the judicial auction in the process of urgency.
Now, buying a flat at judicial auction is not a joke, so that when we feel that your decisions are not in accordance with the law or when we are facing a true ignorant of the Law, we must not hesitate to stand up to it, appear in the procedure with lawyer and attorney and appeal their decisions so that, finally, the court judge has the last word. Or the penultimate, because if the damage is great we can always appeal, and let the Provincial Court decision, but the latter increases costs and it will be necessary to study very well if this solution is worth it.
2. Legislation on judicial auctions
4- In the current Civil Procedure Law, chapter VI is the one that deals with the enforcement procedure and, within that chapter, section 5 deals with the auction of movable property (and it is also supplementary for everything that is included in that of real estate) and section 6 deals with the judicial auction of real estate.
3. Deposit to participate in the auction
5- To participate in the judicial auction it is necessary to have deposited a guarantee of 5% (percent) of the Type of Auction (article 647.1 of the LEC). This deposit is made electronically through the Auction Portal, by withholding the current account balance, using the telematic services that the State Tax Administration Agency makes available to them, who in turn will receive the income through their collaborating entities (article 647.1.3 of the LEC).
In telematic auctions, participation by bank guarantee is no longer allowed.
4. Previous or preferential registration charges
6- The charges or encumbrances prior to the actor’s credit (if any) continue to exist and without canceling and, by the mere fact of participating in the auction, the bidder admits them and is subrogated in the responsibility derived from those, if the auction it is awarded in their favor ( art. 642 of the LEC ).
In addition, it is understood that the bidders accept the existing qualification as enough or that there are no titles. In other words, nothing to get ready and pretend that the price paid at the auction is used to pay off previous debts or charges.
What is paid in the auction is used to settle the debt of the executing creditor and, if there is excess, this will be used only to pay or reduce the debts of subsequent creditors. And if there is still a surplus, whatever is left will be delivered to the debtor (ex-owner). And this is so even if there are previous registration charges and even if there are community and IBI debts.
7- The Registration Certification may be consulted through the BOE Auction Portal, leaving the corresponding Property Registry responsible for facilitating it through the portal, as well as the updated registry information referred to in article 667 of the LEC and the cadastral reference, if it is incorporated into the property.
8- If this is so, that is, if it is finally true (for now it is not) that each Property Registry is responsible for providing the Auction Portal with updated information on each auctioned property, in that case, the court will NOT provide interested parties with access to the Registration Certification, except for the parties mentioned in the proceedings. No more going to court to show you the judicial file. We’ll see. For now, I continue to see files, although yes, it is true that there are fewer and fewer courts that show them.
5. The possessory situation
9- Everything that is mentioned in articles 646.3, 661.1, and 668.2 of the LEC about informing the bidders about the possession situation is a deception that is of hardly any use. The vast majority of courts usually introduce the formula in the auction decree that they are unaware of the possession situation.
Bidders must make pertinent inquiries regarding the possession status of the auctioned property on their own if they know what is convenient for them.
6. How electronic judicial auctions work
Electronic judicial auctions are regulated in accordance with articles 648, 649, 652, and 653 of the LEC, from which the following rules can be extracted that show us how electronic judicial auctions work:
10- The auctions take place on the Auction Portal of the Official State Gazette. Each auction is endowed with a unique identification number assigned to the file in which it has been agreed, whatever the number of lots it is made of.
11- The electronic judicial auction opens from the twenty-four hours following the moment in which its announcement has been published in the Official State Gazette. This announcement contains exclusively the date of this, the judicial office before which the execution procedure is followed, its identification number and class, and the electronic address that corresponds to the auction in the Auction Portal. Here you have an example of an announcement in the BOE.
12- In order to participate in the electronic judicial auction, the interested parties must be registered as users of the system, for which it is essential to have an electronic signature certificate installed in the browser, although later on, the username and password may suffice.
13- The Law mentions all the information that the court, the executor, the executed or the third holder can post on the Auction Portal, but that no one expects such a thing to occur because, in Hispanistan, the laws are not complied with and never nothing happens.
In fact, many courts are not even providing Cargo Certification and they are not embarrassed. The registrar does not do it either so that a very high percentage of auctions are being held without the bidders having the registration information.
14- Bids are sent electronically to the BOE Auction Portal, which returns a technical acknowledgment, including a timestamp, of the exact moment of receipt of the bid and its amount. At that moment the bid is published electronically.
15- The bidder must also indicate whether or not he consents to the reservation of position referred to in the second paragraph of section 1 of article 652 of the LEC . and if you bid on your own behalf or on behalf of a third party.
16- Bids for an amount greater than, equal to, or less than the highest amount already made are admissible, understanding, in the last two cases,
that the reserve of position mentioned in the previous point consents from that moment,
which will be taken into account for the assuming that the bidder
who has made the same or higher bid does not finally consign the rest of the acquisition price
and breaks the auction. However, when placing a bid equal to or less than the current highest bid,
the BOE Auction Portal platform will ask us if we consent to the bid being reserved.
If we do not expressly consent to the bid, it will not be taken into account.
17- The auction lasts twenty calendar days, in which bids can be sent. However, at midnight on the last day, the auction will not close until one hour after the last published bid was made, provided that it is higher than the best bid up to that time, even if this entails the extension of the bid. the initial period of twenty days referred to in this article for up to a maximum of 24 hours. In other words, newbies, you will have to prepare for long sleepless nights if you intend to buy.
18- Temporary suspension of the auction: in the event that the attorney for the Administration of Justice is aware of the debtor’s declaration of insolvency, he will suspend the execution by decree and proceed to annul the auction, even if it has already started. : the suspension for a period exceeding fifteen days entails the return of the bonds.
Causes of suspension of the judicial auction.
Any reason is good to suspend an auction, from the promise of payment by the debtor until someone has discovered that the type of auction is wrongly calculated or that there is any defect in the auction edict. I repeat, there are a thousand reasons why an auction can be suspended.
19- Once the auction is over and the information has been received,
the attorney for the Administration of Justice leaves a record of it, stating the name of the highest bidder
(or so the Law says) and the position he made. At that time,
the bonds posted by the bidders will be returned, except that corresponding to the highest bidder, which will be reserved as a deposit as a guarantee of the fulfillment of their obligation and,
where appropriate, as part of the sale price. Likewise, the bonds of those who have reserved their position will be retained.
20- The return of said consignments (bonds) corresponds in any case to the Electronic Auction Portal of the Official State Gazette and, in no case, to the court.
21- Refunds will always be made to the person who made the deposit regardless of whether he or she has acted as a bidder or on behalf of another.
22- At any time prior to the approval of the auction or the award to the creditor,
the debtor may pay in full what he owes to the executor for principal, interest,
and costs and release the seized or mortgaged assets.
The third owner can also release the property by satisfying what is owed for principal, interest, and costs, within the limits of the responsibility to which the property is subject.
This has always been the case, only now, as the BOE Auction Portal takes between three
and fifteen days to send the information with the auction result to the court,
it turns out that this results in the court taking longer to issue the approval of the auction
and thus the defendant has more time to settle his debt and suspend the auction.
7. Approval of the auction (the dreaded article 670 of the LEC)
If you are wondering what is the auction in an auction, you should know that the auction is the best price offered in the judicial auction.
23- Approval of the auction: If the best bid is equal to or greater than 70% (percent) of the auction rate, the lawyer of the Administration of Justice responsible for the execution, by decree,
on the same day or the next day, will approve the auction in favor of the highest bidder.
Within a period of forty days from the notification of the decree,
the bidder will have to consign in the Deposit and Consignment Account the difference between the amount deposited and the total auction price
24- Transfer for posture improvement: When the best bid offered in the auction
is less than 70% of the auction-rate,
the executed may, within ten business days,
present a third party that improves the position by offering an amount greater than
70% of the value of the asset for auction purposes or that, even though it is less than the said amount,
is at least sufficient to achieve complete satisfaction of the performer’s right.
Dear newbie, this means that just by offering a figure that serves to fully cover the debt,
the improver can snatch that award that had made you so happy. Yes, newbie, this is valid, even if that figure is lower than the bid you had made.
25- And if the 10 business days that the defendant has to present a higher bidder without having done so elapse, the plaintiff may be awarded the home within 5 days with the following conditions:
- If the auctioned property is the debtor’s family home, the executor may request the adjudication of the property for 70% of the Auction Type or for the amount owed to him for all concepts, provided that this amount is greater than 60% of its appraised value and to the best position.
- If the auctioned property is NOT the debtor’s family home, the executor may request the adjudication of the property for 70 percent or for the amount that is owed to him for all concepts (this time without other limitations), provided that this amount is superior to the best posture.
26- But when neither the defendant has presented a higher bidder nor the plaintiff has requested
the award in his name, then the ball will return to the roof of the provisional highest bidder,
in whose favor the auction will be approved provided that the amount he has offered
exceeds 50% of the auction-rate or that, being less, covers, at least,
the amount for which the execution has been dispatched,
including the provision for interest and costs.
27- If the best bid offered in the auction does not cover 50% of the auction-rate nor is it sufficient to cover, at least, the amount for which the execution would have been dispatched, including the provision for interest and costs, in such case The lawyer of the Administration of Justice, responsible for the execution, after hearing the parties, will decide in favor or against the award depending on the circumstances.
28- If the award is finally denied, in this case, the auction will be considered to have been deserted and article 671 of the LEC will come into play, which should not be of interest to newbies in judicial auctions since it only interests the creditor and newbies have enough to understand what concerns them.
8. Transfer of auction
29- Only the executor or subsequent creditors can make a bid, reserving the power to assign the auction to a third party.
The assignment will be verified by appearance before the attorney of the Administration of Justice
responsible for the execution, with the assistance of the assignee, who must accept it,
and, all this, prior or simultaneously to the payment or consignment of the auction price,
which must be documented in documentation. (Article 647.3 of the LEC)
30- It is very important to know in advance what name you want to put the house under
since it is absolutely impossible to change the owner after the auction is held.
31- Award decree: the auction has been approved and the difference between the bond
and the award price (before the 40 calendar days period has elapsed ) in the court’s deposit
and consignment account, the Adjudication Decree will be issued. it is, for all intents and purposes,
the property title of the auctioned farm.
And please! stop asking me about the deadline for the court to issue the Adjudication Decree: that depends on each court, its particular situation, how stuck it is, the motivation of the secretary or the officials. There are courts that take a month, and there are also courts that take more than a year.
10. Delivery of the property
32- If the property is occupied and the successful tenderer requests it within one year,
the attorney for the Administration of Justice will immediately agree to release the occupant
when the Court has resolved that said occupant or occupants do not have the right to remain in him.
The evicted occupants may exercise the rights they believe to assist them in the corresponding trial.
33- And this is where the research that in point six I recommended that bidders do at their own risk
and expense comes into play.
If the apartment is legally leased, it will be necessary to analyze the lease and say in what situation it is.
34- When the procedure for debt secured by a mortgage on a commercial establishment is followed,
the purchaser will be subject to the provisions of the Urban Leasing Law, accepting,
where appropriate, the landlord’s right to raise the rent by assignment of the contract.
11. Five final tips
Once we know how court auctions work, to make sure you never screw up, just follow these five tips.
First advice: It is essential to thoroughly study the judicial file, while possible.
Second tip: likewise, you have to know deeply the status of registration charges. Cargo Certification is our best friend.
Third tip: You always have to check the existence of the property. It seems like a joke, but believe me, I mean it.
Fourth advice: you have to value the property accurately. Something that seems easy, but which, currently, is almost the most difficult of everything I have written so far today.
Fifth tip: and one last tip, almost the most important. If you have any questions, DO NOT participate. Let the auction run. There are many auctions, but your money is finite.
If at the beginning of having entered this business you spend it in the wrong auction you will not be able to recover.
12. Electronic judicial auctions have come to stay
That is to say, you either adapt to them and swallow with the changes to come or to come,
or you leave this business and go to the Retreat to throw crumbs to the birds.
In fact, currently, the Treasury auctions and also those of other bodies of the Administration
are already carried out in the BOE’s Auction Portal And soon the Social Security auctions will also be held there.
I said electronic auctions have come to stay.
and 13. Do you really want to be successful at auctions? sign up for the online course Succeed With The Auctions
In February 2017, I launched my online auction course.
Today, Succeed with Auctions is the best online auction school,
with a large community behind it and dozens of professionals who already invest
and have achieved the financial freedom they so much desired thanks to real estate investments.
If you are interested in knowing more about my way of living
and generating passive income through real estate investments,
I invite you to visit the auction school (following the link above)
and sign up for the only course that will teach you to invest and to achieve
the highest profitability in your business.