Rules in a Spanish Court’s Auction for bank repossession of mortgaged properties

25 Apr Rules in a Spanish Court’s Auction for bank repossession of mortgaged properties

The rules for the auction are:

1. In case there are bidders, they have to previously deposit the 5 % of the  property’s appraised value in cash in order to be able to participate.

2. Within the indicated term any registered bidder can offer any amount. If the amount equals or exceeds 70% of the value the bidder has a term to complete of 40 days after the closure of the auction.

3. If there are only positions exceeding 70 per 100 of the value but offering to pay in installments with sufficient guarantees, (Bank guaranty or mortgage), of the deferred price, such positions will be made known to the bank who, within twenty days, may request the award of the property by 70 by 100 of the value. If the bank does not make use of this right, the auction in favour of the best of those positions, with the conditions of payment and guarantees offered in the same will be approved.

4. If there is only positions for less than 70 per 100 of the value of the property  the debtor has 10 days after the closure of the auction to introduce a third party who pays any amount bigger than 70% of the value  if it exceeds the higher existing bid.

5. After that 10 days term indicated above and if the debtor introduces no third party, the bank, as creditor, has 5 days to ask for the adjudication of the property for a value of 70 per 100 of the indicated appraised value.

6. When the bank does not make use of this faculty, the court will approve the bid of the highest bidder, provided that the amount that has been offered exceeds 50 per cent of the appraised value. If the best position does not fulfil these requirements, the court clerk responsible for the execution, after hearing the parties, shall decide on the approval of the sale in view of the circumstances of the case and taking into account in particular the conduct of the debtor in relation to the fulfilment of the obligation that has caused the claim, the possibilities of achieving the satisfaction of the creditor by adjudicating other property/s , the economic sacrifice  that the approval of the auction supposes for the debtor and the benefit from it that is got by the creditor.  In case the clerk denies the approval of the sale, the outcome shall be in accordance with the provisions of the following point.

7. If there is no any bidder in the auction, the bank, within the period of twenty days from the auction closing, may request the award of the property. If the property is not the residence of the debtor, the bank may request the adjudication by the 50 per cent of the value at which the good had come to auction or the amount owed for all items. In case of the property being the residence of the debtor, the award will be for amount equal to 70 per cent of the value at which the property had come to auction.  When the bank, within twenty days, does not make use of that power, the clerk of the Court, at the request of the debtor, will proceed to the hoist of the embargo

7. At any time prior to the approval of the auction or the bank is awarded the debtor can release the property by entirely paying what is due to the bank. In this case, the clerk must agree by Decree the suspension of the auction or rescind it.

8. If the mortgaged property is the family home the debtor can, only once, even without the consent of the creditor, free the property through the deposit of the exact amount that, for principal and interest, (arrears) is pending. If the debtor is paying the indicated sum, the legal costs will then be calculated in proportion to the amount of the arrears paid – with the limit of 5% of the amount claimed in the Executive demand plus the overdue interest. Once satisfied these, the clerk of the administration of Justice will issue a Decree freeing the property and declaring the procedure completed. The same shall be ruled when a third party with the consent of the bank makes the payment.