BOE Housing Auctions: How do they work?

Electronic judicial auctions have transformed the auction market in Spain since their implementation in 2015, allowing anyone, from home, to participate in the purchase of real estate and other assets auctioned by the courts. This process, now digital, has simplified and democratized access, eliminating geographical barriers and improving transparency.

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If you are interested in participating in a judicial housing auction, this guide will help you understand how electronic auctions work and what steps and precautions you should take into account.

1. What is an electronic judicial auction?

An electronic judicial auction is a process by which foreclosed assets, such as bank-owned homes or properties with debts, are sold through an online platform. In Spain, this process is managed through the Auction Portal of the Official State Gazette (BOE), a platform accessible to anyone wishing to bid for an asset at auction. Digitalization has allowed users to participate from anywhere, as long as they are registered on the platform.

2. How the auction process works

The procedure to participate in a housing auction, or any other asset, follows a series of essential steps. Each step is explained in detail below:

2.1. Registration in the Auction Portal of the BOE.

To participate in an electronic judicial auction, it is necessary to register in the Auction Portal. There are two methods:

Access key: By means of username and password, after completing a basic verification process.

Digital certificate: Requires obtaining a certificate issued by a recognized authority, which provides greater security in transactions.
Both methods allow accessing the portal and bidding securely and anonymously.

2.2. Deposit of earnest money

To participate in a housing auction, it is necessary to make a deposit of 5% of the initial auction value. This amount ensures the seriousness of the bidder and is returned if you are not successful (unless you choose to participate with a reserve bid). The deposit is made through the portal itself by bank transfer.

2.3. Placing bids

Once you have registered and deposited the deposit, you can start bidding for the property you are interested in. The bids are anonymous and are registered in real time. Auctions have a duration of 20 days, but in case of receiving a bid at the last moment, the deadline can be extended up to one more hour.

It is important to note that you can place bids above, equal to or even slightly below the best existing bid. If your bid is not the highest, you will be given the option to hold it in reserve in case the main award fails.

3. Key Considerations Before Participating in an Auction

Although the process seems simple, participating in electronic judicial auctions involves risks and important aspects that you should be aware of to avoid costly mistakes.

3.1. Verification of registration charges

One of the most critical steps before placing a bid is to check the registry charges affecting the property. These charges can be mortgages, debts or liens that the successful bidder will have to assume in case of winning the auction. The information on the encumbrances can be found in the Certification of Encumbrances that the court posts on the website.

In our blog you can find a lot of information on this subject:

• Subrogation in registered charges
• When you assume more burdens than the registered ones
• Charges of doubtful cancellation

3.2. Possessory situation

Knowing who occupies the auctioned property is vital. There are several possible situations:

• Unoccupied property: This is the ideal scenario, since you will be able to take possession of the property without any problems.
• Owner-occupier: The successful bidder will have to initiate legal proceedings to evict the former owner.
• Tenants or lessees: If there is a legal lease, you will have to respect it until it expires.
• Squatters: Although the court may order eviction, this process may take time.

3.3. Court deadlines and bureaucracy

The time within the judicial system is different than you might imagine. The approval of the auction, which is the final price of the auction, can take several months, or even more than a year. In addition, the intervention of judicial officials can slow down the process, so it is important to be patient.

4. End of the auction: Auction and adjudication

When the auction period ends, and the due dates have passed without the highest bidder being declared the successful bidder. The court approves the award and the process of formalizing the award begins:

Approval of the auction: the court validates the final price offered by the highest bidder. Unless otherwise.

Payment of the auction price: The difference between the initial deposit and the total price of the property must be paid. You have a maximum period of 40 days to pay the difference between the maximum bid resulting from the auction and the deposit.

Decree of adjudication: Once paid, the court issues a decree that officially makes you the owner of the property. This should happen within a maximum period of time, but the reality is that it could take months, or even more than a year.

5. Final tips for success in judicial auctions

• Always check the documentation: Before bidding, study thoroughly the judicial file and the Certification of Charges (AND THEIR POSSESSORY SITUATION!).
• Value the property correctly: Make an accurate evaluation to avoid paying more than it is worth.
• Make sure you have funds: The initial deposit and the auction price must be available in your account to avoid losing the auction.
• Don't rush: If you have doubts about the auction or the property, it is better to wait. Auctions are frequent, and there will always be new opportunities.
• Consult experts: If it is your first time, having a lawyer specialized in auctions can save you a lot of trouble.

Don't gamble.

If you don't have the necessary knowledge and experience, don't gamble. Auctions are procedures plagued with pitfalls. A bad investigation of the charges, lack of relevant information, ignorance of the process and legal consequences, etc, can be fatal to your finances; and even ruin you .

In this article we briefly explain the risks of auctions.

Conclusion

Acquiring a property through an auction can be a successful way to get a great discount on your purchase compared to its real market value, but if you do not have enough knowledge it could be more expensive, you could end up suffering a legal ordeal or even end up ruined. It is essential to be advised at all times. If you are planning to participate in a real estate auction, don't be discouraged, just do it safely. Find out how.

If you want more information about how to buy a house through auctions in Spain, click here.

*Warning: participating in an auction involves a series of economic, civil and criminal risks that you should be aware of before starting the process. If you are not sure about the operation and responsibility about it, we strongly recommend that you put yourself in the hands of professionals.