Housing Auctions: Doubtful Charges (Risks for Awardees)

In the field of judicial auctions, a crucial aspect that often goes unnoticed is that of registration charges of doubtful cancellation. These elements, although less obvious, can pose serious risks to successful bidders. In this article, we will explore these risks and how they impact buyers at judicial auctions, offering a clear vision for investors and professionals in the sector.

When we participate in a judicial auction of properties, we often believe that we are informed of all the charges or debts that weigh on a property. However, the reality can be much more complex, especially when we enter the realm of "charges of cancellation uncertainty".

What happens if the Registry Encumbrances Expire?

Registry charges such as liens have a shelf life. Typically, they expire after four years, unless renewed. If this period passes without renewal, the charge automatically expires. This situation can get complicated if, for example, the property changes hands through an auction after a certificate of lien has been issued, but before the lien expires. This is where things get interesting (and a bit complicated).

Problems with Expiry of Encumbrances.

If you buy a property at auction and the registered charge has expired, you may face a dilemma: can debts or charges that were registered after that now-expired charge be cancelled? Traditionally, there have been two positions on this. One view holds that, once the certificate of charges has been issued, subsequent charges should be cancelled even if the preventive annotation lapses. But another view, supported by the Dirección General de los Registros y del Notariado (DGRN/DGSJFP), is that these subsequent charges cannot be cancelled if the preventive annotation has expired.

The Supreme Court Decision.

To add clarity, the Supreme Court has intervened. Its position is a balancing one: the issuance of the certificate of charges implies a four-year extension of the annotación preventiva de embargo. This means that, during those four years, if the adjudication decree and the order of cancellation of encumbrances are presented, the registration will be accepted and subsequent encumbrances will be cancelled. It is a solution that protects the buyer from the auction, allowing the cancellation of subsequent charges while the extended period is in force.

What about the Prohibitions to Dispose?

Another key aspect is the prohibitions of disposition imposed by criminal or administrative proceedings. These do not prevent forced sales such as auctions. So if you buy a property at auction that has a prohibition of disposition, this charge can be cancelled if it is subsequent to the annotación preventiva de embargo. This is good news for buyers, as it removes a potential legal obstacle.

Conclusion.

In the world of judicial auctions, what seems clear at first glance can hide complications. It is crucial to understand how registration charges work and how they can affect your investment. With the right knowledge and expert advice, you can navigate these waters more safely and avoid unpleasant surprises.

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