Don't do this if you want to survive an Auction Assignment.
The assignment of auctions is a powerful and little known tool in the legal and real estate world. It is a procedural figure that allows the original successful bidder of an auction, usually a creditor, to transfer his rights over the auctioned property to a third party. This third party, called assignee, becomes for all legal purposes the new successful bidder, with the same rights and obligations as the original successful bidder.
Imagine that we are in front of an auction of a house coming from a foreclosure where the creditor has been several years without paying the mortgage and, between the judicial deadlines, the "wonderful" laws that we suffer in this country and the moratoriums (or even suspensions) of foreclosures by the COVID, the bank of turn has managed that this property in question goes out to public auction, generally by means of a judicial auction of constraint.
Good.
The amount claimed is 250,000 euros, plus legal costs and interest for late payment. For example.
The auction value is set at €225,000. But the market value of that property, today, is 300.000€.
The auction begins, but no bids are received. It is 6:00 p.m. and the auction has been deserted.
The bank can request, within 20 days, to be recognized as the successful bidder of the property.
And here comes the smart guy of the class, who was following the auction and, seeing that it had been deserted said:
"now I only have to negotiate an assignment of auction and I keep the house".
He gets in touch, offers a figure, the bank accepts and this real estate investor becomes the assignee.
By "buying it" directly from the bank, he thinks he is safe from all the problems and fears he had if he had been awarded the property through the auction process.
WRONG.
An assignment of auction must be studied as if it were an auction.
- Investigate the registry charges. What charges does it have? Are they preferential?....
- To make sure of the possessory state of the property. Is it occupied? with right? without right? occupied?...?
- Identify the property correctly. Lest it doesn't exist... (you would not be the first to lose your savings for this).
- Find out possible debts of community and IBI.
And a long etcetera that, if you do not know how to manage it, could turn your investment into your ruin.
That is why professional investors surround themselves with a team of experts in every subject they touch.
That is why professionals succeed in their investments.
That's why you won't make the mistake of investing without being sure of what you are doing.
That's why we provide you with an expert team in real estate law, so you can buy like a professional.
But if you think you can do it alone, if you are not afraid of acquiring a hidden debt, go ahead. You don't need us.
Miguel S. Moreira
Miguel is a trained architect and building engineer with a ample experience in the real estate sector. He is the co-founder of Valido Home and loves to inform about the risks involved in purchasing property in Spain.
