Our law office provides legal assistance and representation before the bailiff regarding the acquisition of the property on public sale. For more information about public sale procedure, services provided by our law office and the possible problems that you may encounter please read the article below.
Purchase of a real estate
on public sale from the bailiff
Our legal office has huge experience in assistance and representation of our clients who have decided to purchase real estate that were sold on public sale. The present article will briefly describe what steps should be made in regards with such purchase, what should be paid attention to and what are the possible risks connected with purchase of such property. Usually our clients already know that the real estate they are interested in will be or is already selling on a public sale by a private or state bailiff or a syndic. What should be done after that is the following:
1. Arranging of inspection of the real estate. Our law office will contact the relevant bailiff and we will arrange the date and exact hour for the inspection. After that our client will confirm his desire and intention to purchase the real estate.
2. We will check and examine all the documents in regards with the purchase. We will check the announcement about the sale in order to find out a number of important information such as: description of the property; the name of the owner/s; the starting price; what is the deadline for submitting of the bids; where and when the envelopes with the bids will be opened; whether the real estate has any mortgages, injunctions and other limitation property rights, for example the right of use or the right of passage. Not always шhis entire information can be found in the announcement that is why we will make checks regarding the case and the real estate in the relevant registry agency. The buyer should be aware that purchase of the mortgaged or distrained property from a public sale is not a problem because after the sale those encumbrances will be automatically deleted and the buyer will receive his property without them. This rule does not apply to such property encumbrances as the right to build, the right of passage, the right to build additional levels and areas, registered rental contracts and the right of use IF the later were registered by the owner before registration of the mortgage or putting of injunction. I.e. the purchase of the property from the public sale does not mean that all the encumbrances will be deleted, what will be deleted are mortgages and injunctions. When we will have this entire information and will be sure that there are no obstacles for our client to go on with the public sale we will pass to the next step.
3. Preparing and submitting of the bid. Our client will have to deposit the amount of 10 % of the selling price into the bank account specified by the bailiff. The buyer must offer his price in written as the amount should be specified in numbers and letters; the bid must be submitted in a sealed envelope. The offer price can not be lower than the starting price specified in the announcement.
4. The envelopes with the bids will be opened at the date and at the place specified in the announcement. The bailiff will announce the bidder with the highest price. After that those bidders who will attend the public sale personally will have the right verbally to make their offer (for higher price) according to the art. 492 p. 2 ofCPC The person who will offer the highest price will be announced as the buyer.
5. The buyer will be obliged to pay the price offered by him within one week after opening of the envelopes after deducting of the already paid deposit. In case our client will refuse to pay the purchase price the deposit will be lost. When other bidder is announced as the buyer we usually advice our client to wait and to check whether this other bidder will actually pay the price and in case he won’t the bidder with the second offer will be announced as the buyer. Those bidders who will not be announced as buyers will receive back the deposits paid by them.
6. Once everything will be paid and after expiring of the terms for court objections against the bailiff’s actions or in case those objections will not be approved by the court the bailiff will issue a decree of awarding the property which document will be registered in the relevant registry agency and this document will mean that the property has a new owner. Except the purchase price the buyer must also pay local tax for the acquisition of property, bailiff’s fee and registration fee of the Registry Agency. In case the decree of awarding will not be appealed and when it will enter into force the process of purchase of a real estate on public sale from the bailiff will be finished.
- Past of the encumbrances will remain valid after the public sale even after the change of the ownership /see p. 2 above/;
- Third party’s claims regarding the property will remain valid and will not be automatically redeemed;
- Debtors – previous owners of the real estate sometimes still live in it, and due to that reason coming into possession is frustrated. In this case the buyer should require entry into possession from the bailiff as in this case the buyer must pay the bailiff’ fee to the amount of 1% of the cost of the real estate;
- There may be third persons’ claims related with the real estate or the public sale itself. The word ‘objections’ several times mentioned above in the p. 6 was not used accidentally. Despite the fact that the legislator has tried to reduce the time and grounds for objection, our office has faced cases when objections regarding public sale have taken several years. The problem in this case is the fact that the buyer has paid the price of the real estate,but did not become the owner because of the objections.
- It can be claimed that the property represents an inaccessible object/something that is not a subject to the sale/according to the conditions of the CPC. The previous owner’s right to claim this will extinguish upon issuing of the decree of awarding the property. The problem is that once again the buyer has paid the purchase price,but has not yet become the owner because of the objections.
We, from ID Law office, can assist you to go through all the steps described above by protecting your interests to the maximum and helping to avoid the potential risks, which as it was described above are quite a few.
The present article is not a legal consultation but presents a summarized theoretical development of a certain legal sphere. ID Law Office is not liable in the event of a misunderstanding of the information contained in this article.
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