Innovations in the auctioning of real estate

In 2015, the divisional auction was reorganised by law and an electronic compulsory auction procedure for real estate was introduced. The forced sale procedure is carried out electronically through the Portal de Subastas de la Agencia Estatal Boletín Oficial del Estado (Portal of the Subastas de la Agencia Estatal Boletín Oficial del Estado) and has the declared aim of enabling a wider public to participate in auctions without personal presence.

To this end, a number of provisions of the Spanish Code of Civil Procedure (Ley de Enjuiciamiento Civil) have been amended. Bidders can now, under certain conditions, actively participate in a forced sale via the portal. All bidders must register in advance and be able to identify themselves by digital signature. Further details on the conditions of participation can be found under: https://subastas.boe.es/infoRegistro.php.

The bidder is obliged to deposit a bidding security of 5% at the auction. The bidder can obtain additional information such as the valuation report via the portal. 24 hours after the publication of the compulsory auction on the portal, the electronic auction begins. Bids are now accepted within a period of 20 calendar days. After the end of the auction, the electronic portal will send a notification to the competent court, in which the highest bidder will be announced; but all other bidders will also be listed. Bidders may reserve the right to retain their bids even after the auction has been won, if the highest bidder does not pay the full amount of their bids on time.

The law on voluntary jurisdiction (Ley de la Jurisdicción Voluntaria) also offers co-owners who are in dispute the possibility of applying for a so-called division auction. The Spanish Civil Code (Art. 400 of the Codigo Civil) stipulates that no co-owner can be forced to remain in a community of co-owners. Each co-owner can request the division of the common property at any time.

The court in which the property is located is responsible for the application for a division auction. In the procedure, the real estate must be precisely designated and the application must be accompanied by a certificate of the land register ( certificación), from which the co-owner status of the applicant is derived. In the application, the general conditions of the auction are defined; the applicant can specify here, for example, that a certain minimum price is to be achieved. Likewise, a value appraisal must be submitted, whereby this appraisal plays a subordinate role in the division auction procedure, since the parties themselves have the power to determine the value of the property.

After the application has been submitted, the court will set a date for the auction. In a regular electronic forced sale procedure, 50% of the minimum bid must be reached in order to be accepted. This provision of the Spanish Code of Civil Procedure does not apply here, however, because the interests of any creditors do not have to be protected. Usually it will be so that one of the co-owners takes over the sole ownership of the property at the end.

The division auction offers co-owners whose partnership has broken down a solution to avoid endless arguments about who should bear the running costs and who can use the house. The electronic foreclosure procedure and the division auction are without question important innovations and it can be said that the interest in foreclosure auctions has increased noticeably as a result.