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Practical guide to auctions

Real estate auctions take place periodically during so-called “auction” sessions or hearings, within the confines of the Courts of First Instance or at the Chamber of Notaries. They are aimed at both individuals and professionals.

These sales, called “by the candle”, take place according to an immutable scenario for each good put up for auction. After the announcement by the Chairman of the session or hearing of the starting price and the number of ancillary costs payable by the successful bidder, a small wick is lit which marks the start of the auction. During these auctions, each fuse (or fire) that goes out is replaced by a new one, and so on. After the extinction of two successive fires, materialized by the smoke which escapes from them, and without any new bidding occurring during their combustion, the adjudication is pronounced in favor of the last bidder.

How to find out Auctions?

Each insertion indicates the precise location of the property for sale, a brief description, the amount of the initial price, the dates of the visits organized on the site as well as the contact details of the Lawyer or Notary in charge of the sale. This interlocutor, for his part, has complete specifications relating to the sale (cadastre, town planning, charges, costs, easements, etc.). These specifications are available to the public at the Law Office or at the Notary Office.

How is the price set?

To attract bidders, the starting prices are generally intentionally low. In the case of a judicial sale to the Court, the initial price is often set by the Judge at the amount of the residual mortgage debt. In the case of a voluntary sale, the starting price is free. However, the Chambre des Notaires advises prices that do not exceed two-thirds of the appraised values.

How to participate in the auctions ?

Auctions property are public and anyone has the right to attend as a spectator. To be a bidder, however, it is necessary to respect a few rules.

you must give the Notary in charge of the sale a deposit check, the amount of which is set by the latter. It is returned after the sale to the bidder if it is not declared successful. By depositing this check, you can freely carry the bids you want.

At the Court, one can only bid by the ministry of a lawyer. It is, therefore, necessary to choose one that is registered with the Order of the jurisdiction concerned. A power indicating the maximum amount of authorized bids will then be drawn up to the order of this Lawyer.

How do you become a successful bidder?

Whoever has carried or has had the highest bidding is declared successful at the end of the sale. However, the sale is only final after a period of 10 days reserved for higher bids.

How to bid?

During the bidding period, which runs from the date of the sale, the law allows anyone to bid up by offering ten percent more than the amount of the auction. In this case, the good is put back on sale for the new starting price.

What is a crazy auctions ?

If the successful bidder proves unable to pay the amount of the auction and the costs, the property is put back on sale for its initial starting price. The defaulting successful bidder is then required to settle the possible difference between the price at which he was declared successful and the resale price on crazy auction. The deposit check that he has previously deposited is debited for this purpose, if applicable.

How to pay the hammer price?

In the case of a sale to the Court, the amount of the award must be paid within two months of the sale (three months for sales for which the specifications were filed before January 1, 2007). After this period (45 days previously) the sale price is increased according to an interest specified in the specifications of the sales conditions (ex specifications). If payment is still not made, the good is then put up for sale again according to the so-called “reiteration of auction” procedure (eg crazy auction), to the detriment of the defaulting purchaser.

In the case of a sale to the Chamber of Notaries, the time allowed to settle the acquisition is shorter since it is only 45 days. As for the legal interest, it begins to run from the eleventh day following the sale.

How is the title deed transferred?

In the case of a judicial sale to the Court, the Lawyer is solely responsible for carrying out all the formalities of publication of the title deed at the Mortgage Office. The entry into official enjoyment of the property can then take place within the fifteen days following the auction. There is no need to draw up a notarial deed.

In the case of a sale to the Chamber of Notaries, the property transfer process is similar to that of over-the-counter transactions.

What is the amount of ancillary costs?

In the case of a judicial sale to the Court, the successful tenderer must bear the preliminary costs of the sale (bailiff and advertising costs) which may vary according to the location and the size of the property (they are verified by the Magistrate and announced before the sale), as well as transfer rights. To these costs are added costs and collection rights which depend on the amount of the auction.

In the case of a sale to the Chamber of Notaries, the contribution to the costs of advertising and organizing the auctions payable by the purchaser is generally one percent excluding tax of the sale price, to which s ‘add the fees and disbursements of the Notary, as well as transfer duties.

In total, the costs payable by the successful tenderer represent in both cases between 10 and 15 percent of the amount of the auction.

See also: 10 Reasons To Invest In Real Estate Funds
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