Buying Real Estate at Auction: What the Buyer Must Know
Purchasing immovable property at a forced or public auction in Georgia is often cheaper than an ordinary market deal, but it runs under a legal regime that differs substantially from a standard sale. Under the Law on Enforcement Proceedings, the National Bureau of Enforcement sells seized property publicly at auction, and the amounts received, after deduction of the fee and enforcement costs, are transferred to the creditor. These forms of realization are fixed by Article 49 of the law, and they mark the starting point of the buyer's journey: who sells, at what starting price, within which deadlines, and what remains attached to the property after the deal closes.
This page gathers the complete legal package for the bidder: how the starting price is formed, the conditions and timing of the forced auction, the winning bidder's payment obligations, and the mechanism by which ownership passes to you. Separate pages of this site cover the seller's and the creditor's positions — pre-emptive auctions, the description and seizure of assets, and valuation for auction purposes — while here the focus rests squarely on the buyer's risks and on how to choose a safe lot on the basis of the registry extract.
The Starting Price: Valuation Rules and Expert Conclusions
The foundation of the auction's starting price is the valuation of the seized property, regulated by Article 47. Where the market value can be determined at the time the property is described, that value is recorded in the act of description and seizure; where it cannot, the National Bureau of Enforcement — or another competent person commissioned by it — values the property after registration of the seizure. For the buyer the reliability of this figure matters directly, because the dynamics of the auction and of any repeat auctions are anchored to it.
The law adds two further rules. First, in the enforcement of tax debts, a repeated valuation of the property is not mandatory if the property was already valued within 1 year before the enforcement proceedings began. Second, a party to the proceedings may submit an expert conclusion under which the property was valued within 6 months before the proceedings started, and the Bureau may rely on it — if both parties submit conclusions, the Bureau may rest on one of them. A separate rule covers low-value property: where the market value of the property is less than 5000 GEL, only one auction is held, and its starting price is set by an order of the Minister of Justice of Georgia. In other words, the concrete tariff details live in a subordinate act, and you should re-check them in their current wording.
Conduct of the Forced Auction: Deadlines and Conditions
A forced auction is conducted, in the manner established by the law, by the National Bureau of Enforcement or by another person under contract with it. Where the debtor is registered in the public registry as the owner of the property, the forced auction must be held within 1 month of the seizure, and in the tax-related case contemplated by the law — within 2 weeks of the start of the enforcement proceedings. Similar deadlines apply to auctions of movable property: the auction is announced within 1 month of the seizure, or within 2 weeks of the start of the proceedings in the tax-related case.
For the buyer, the rule on unregistered debtors deserves particular attention. If the debtor is not registered in the public registry as the owner of the immovable, the Bureau obtains, through the public registry, information from the technical inventory archive about property recorded in the debtor's name, attaches it and enforces against it. Upon realization of such property the purchaser becomes its owner, while a third person who believes the sale violated his rights must direct a claim against the debtor — not against you as the buyer. This gives the purchaser added protection, yet such lots remain riskier and call for closer scrutiny. Remember also that where several bailiffs have attached the same property, the auction is conducted by the bailiff who registered the seizure earliest.
Payment and Acquisition of Ownership
The winner of the auction must pay the full price of the property within 10 calendar days of the close of the auction — a rule set by Article 75 — and a failure to pay ends in a repeat auction. After the price is paid in full, the National Bureau of Enforcement issues an order on the right of ownership over the property purchased at auction, which becomes the basis for registering your right. Where the proceedings run in favour of the state or municipal budget and no winner emerged, or the winner failed to pay the price within the term set by the law, the Bureau may, within 15 days of the close of the auction, issue an order transferring the property in kind to the state or municipality; failing that, it holds a repeat or renewed auction.
From the moment ownership passes, the new owner takes the place of the former owner and becomes party to the legal relationships connected with the possession or use of the property, while the former owner loses any right to it. In practical terms this means that occupants of the apartment retain no right to stay, and their fate is decided precisely by these provisions. If an auction held in the manner established by the law — a first auction and two repeat auctions — proves unsuccessful and the property is not sold, it is released from the lien and returned to the debtor, except where enforcement is continued by the bailiff holding the next-ranked registered seizure.
Which Rights Survive and Which Are Extinguished
The decisive question for any bidder is what happens to the mortgages, pledges and other rights registered over the property. Article 75 distinguishes three scenarios. If enforcement is carried out by a creditor whose claim is unsecured, the rights registered in the public registry — including privatization obligations and the rights and duties flowing from the underlying contract — remain unchanged. If enforcement is carried out by a pledgee or mortgagee, the transfer of ownership extinguishes every property right registered after the enforcing creditor's mortgage, except the tax pledge. The law treats financial institutions — banks, microbanks, microfinance and insurance organizations, or securitization special-purpose entities — separately: where such an institution enforces, the tax pledge registered after its pledge is extinguished as well. Rights registered earlier survive in every scenario, which is exactly why checking the sequence of registrations in the extract before the auction is indispensable.
For movable property the rule is stricter: upon the transfer of the seized movable into the purchaser's ownership, every seizure and every property and obligatory right over it terminates, unless the purchaser chooses to become party to the obligatory relationship. The distribution of the proceeds is also settled by the law: the fee and enforcement costs are covered first, then the claims of pledgees are satisfied according to their ranking and the claims submitted; where a tax pledge exists, the tax authority's claim is satisfied first regardless of its rank, while a pledge of a financial institution registered before the tax pledge is satisfied ahead of it. Pledgees must submit their monetary claims within 10 calendar days of receiving notice, and the consequences of failing to do so are defined by the law.
Frequently Asked Questions
Within what term must the auction winner pay the price?
Under Article 75 of the Law on Enforcement Proceedings, the winning bidder must pay the full price within 10 calendar days of the close of the auction. After full payment the National Bureau of Enforcement issues the order on the right of ownership. If the deadline is missed, the property is sold again.
Will the mortgage survive on an apartment bought at auction?
It depends on who enforces and when the mortgage was registered. Where a pledgee or mortgagee enforces, every property right registered after that creditor's mortgage is extinguished, while earlier-registered rights survive in all cases. Where the enforcing creditor's claim is unsecured, all registered rights remain unchanged.
What happens if the auction fails?
An auction held as the law prescribes consists of a first auction and two repeat auctions. If all prove unsuccessful and the property is not sold, it is released from the lien and returned to the debtor. Where the market value is less than 5000 GEL, only one auction is held, with the starting price set by an order of the Minister of Justice.
What should I check as a bidder before the auction?
The public-registry extract must establish the identity of the holder, the registration date of the enforcing creditor's mortgage, the rights registered after it, and the debtor's status: a lot whose debtor is not registered as owner in the registry is risky. Advance verification is essential because rights registered before the pledgee's mortgage will survive together with your purchase.
How We Help on Legal.ge
The Legal.ge team accompanies every stage of buying real estate at auction: we examine the lot's title history and the ranking of registrations, prepare the payment and registration paperwork after your winning bid at the official auction, and, where necessary, defend your interests through repeat auctions and contested transactions. Contact us and we will turn an auction purchase into a transparent and calculated decision.