Buying real estate at a compulsory auction often means an attractive offer, but this transaction is unlike an ordinary sale: the winner faces strict deadlines, the guarantee deposit is at risk, and the fate of the rights registered over the property depends on who conducts the enforcement. A dedicated legal check before purchasing seized property is essential — we perform that audit and the buyer’s representation on Legal.ge.
How a Compulsory Auction of Real Estate Works
Enforcement against real estate is regulated uniformly: it covers land plots, buildings and a share in common ownership entered in the public registry. Enforcement is carried out by the enforcement bureau in whose territory the property is located; where interests conflict, the decision is taken by the chairperson of the Bureau. The forms of enforcement are registration of a compulsory mortgage, a compulsory auction and sequestration — the creditor chooses one of them and may change the form several times until the claim is fully satisfied. Where the debtor is registered in the public registry as the owner, the compulsory auction is held within 1 month of the imposition of the seizure, and in a separate case provided by law — within 2 weeks of the start of the enforcement proceedings. The forms and procedure of the auction are determined by an order of the Minister of Justice.
The Stability of the Auction After Announcement
From the day the compulsory auction is publicly announced, termination, suspension or postponement of the auction or of the enforcement proceedings, and release of the property from seizure, are not allowed — except in the exceptional cases established by law. This means that the chance of winning an announced auction is real, and the purchase plan must be ready before the announcement. The debtor, or another person acting in the debtor’s interests, may deposit with the Bureau’s account, before the announcement, the amount needed to cover the fee, the enforcement costs and the creditor’s claim; an amount deposited after the announcement is distributed after the auction ends, and the surplus is returned to the debtor if no other proceedings are pending.
The Winner’s Obligations and the Guarantee
The winner of the auction must pay the full price of the property within 10 calendar days of the end of the auction. After full payment the National Bureau of Enforcement issues an order on the right of ownership of the property purchased at the auction. If the price is not paid within the established period, the winner loses the amount submitted as a guarantee on the day of the auction, which passes into the Bureau’s ownership; the Bureau issues an order annulling the result of the auction and, within 3 days of its issuance, announces a new auction, which is not counted as a repeat auction.