Our Forced Sale Guide explains the procedure and provides the basic knowledge required for a forced sale auction. It was produced in collaboration with the legal firm Breiholdt & Breiholdt, which also boasts many years experience in forced sales processes.
We hope that this provides anyone who has not participated in a forced sale auction and for whom the procedure is unknown with a means of support with which they can successfully acquire their ideal property at auction.
By clicking the underlined terminology, a window will open with an explanation. Further information on technical terminology can be found in our forced sale auction encyclopaedia.
Market Value
In order to carry out a forced sale auction [Zwangsversteigerung], the market value of the property will be determined by the court. For this, the court obtains the professional opinion of a legally appointed valuation surveyor.
Note
Bidders must confirm their identity on the day of the auction by presenting a personal identity card or passport. If it is intended to bid on someone else’s behalf (this also applies to spouses), a power of attorney for the bid [Bietungsvollmacht], witnessed by a notary, must be presented. The power of attorney is to be granted for the submission of bids. The signature of the Principal must be witnessed by a notary. Company representatives must present an up-to-date, witnessed excerpt of the trade register.
Minimum Bid
The market value named in the court announcement is not the minimum bid. The minimum which can be bid, is the so-called minimum bid announced by the court on the day of the forced sale auction.
Security Deposit
As a potential bidder, you must be prepared to provide a security deposit for your bid. This security deposit normally amounts to 10% of the market value and must be provided on the day of the auction. A security deposit can be presented as follows:
- Authorised Landeszentralbank cheque (period allowed for presentation of 4 (four) days from the day of the auction);
- Crossed cheque from an authorised credit institute (period allowed for presentation of 4 (four) days from the day of the auction);
- Indefinite, unconditional and directly enforceable guarantee from an authorised credit institute; or
- Bank transfer or payment into an account held by the court cashier. The amount must be credited before commencement of the forced sale auction.
A letter of confirmation from a bank that you, as potential bidder, have adequate funds will not be sufficient. Savings account books, Euro-cheques and bonds are not suitable securities.
Highest offer [Meistgebot] + acceptance of the bid [Zuschlag]
The bidding period ends with the determination of the highest offer. Thereafter, it is thereafter discussed whether the bid will be accepted. If you receive the acceptance of the bid [Zuschlag] during the forced sale auction or on the day of a later pronouncement date still to be arranged, you immediately become owner of the property. As highest bidder, you then assume all rights and obligations without registration in the land register.
Date for the distribution of assets available [Verteilungstermin]
The registration in the land register can only happen when the date for the distribution of assets available is held approx. 6 to 8 weeks later and the so-called clearance certificate [Unbedenklichkeitsbescheinigung] has been presented by the Finance Department, as the accepted bid in a forced sale auction is also subject to stamp duty [Grunderwerbssteuer]. With the exception of the security deposit, the monetary bid plus 4% interest is payable to the court, by the latest on the date for the distribution of assets available.
Costs
The highest bidder must also expect to incur the following costs:
- The highest bid plus 4% interest from the date of acceptance of the bid [Zuschlag] until the date for the distribution of assets available [Verteilungstermin]. If part of the bid is paid through the security deposit, then the obligation to pay interest lapses;
- 3.5% stamp duty [Grunderwerbssteuer]. Stamp duty is calculated on the highest bid including continuing rights;
- Court fee [Zuschlagsgebühr] calculated according to the value of the highest bid;
- Registration costs to the land registry office according to the market value or any higher bid; and
Any associated notary and land registry fees related to the registration of land charges due to financing.
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