Can you buy a flat under attachment (seizure) or at auction? What are the risks?

Question

José Manuel Alburquerque · Accepted Answer

Yes, in both cases, but with more risks than in a normal purchase. A flat under attachment can be bought from its owner, although the attachment stays with the flat and, if the debt is not paid, the creditor can have it auctioned even though it already belongs to you. That is why the seller has to pay the debt out of the price and obtain the order discharging the attachment. Until it comes through, it is advisable to withhold that part of the price or deposit it with a notary. At an auction, the biggest risks are earlier charges (encumbrances) that are not discharged, occupants who are entitled to stay and having to buy without having seen the inside of the flat. If you buy a flat under attachment from its owner An attachment noted at the “Registro de la Propiedad”, the Land Registry, does not prevent the sale, but the creditor keeps its rights over the flat. To buy safely, make sure that: The debt is paid out of the price to whoever it is owed to, whether a private individual, a company, the “Agencia Tributaria” (Spain's tax authority), the “Seguridad Social” (the Spanish social security system) or the town council. The court or body that ordered the attachment issues the order discharging it, which is submitted to the Land Registry. Until that order comes through, the necessary part of the price is withheld or deposited with the notary. Unlike a mortgage, an attachment is not discharged at the notary's office on the same day and it can take time. If you buy at an auction Court auctions and those held by the tax authority are advertised on the “Portal de Subastas”, the auction portal of the “BOE”, Spain's Official State Gazette. In court auctions, the “Ley de Enjuiciamiento Civil”, Spain's Civil Procedure Act, requires bidders to lodge a deposit of 5 % of the value given to the flat for the auction. The winning bidder must pay the balance within the time limit set, which for properties is generally forty days. If they do not pay, they lose the deposit. Auctions held by the tax authority have their own rules. In Catalonia, the Generalitat de Catalunya (the Catalan government) also has a pre-emption right (“tanteo y retracto”) over homes awarded at auction, meaning it can take them for the same price instead of the winning bidder, with some exceptions. That is another matter, but it should be borne in mind before bidding. What to check before bidding Charges. Charges registered before that of the creditor auctioning the flat are not discharged and you take them on. Later ones are discharged. Read the certificate of charges (“certificación de cargas”) in the auction file, the Land Registry document stating what charges the flat has. Then add the ones that will remain to the price. Occupants. Check the auction notice to see whether the flat is occupied. Anyone with no right to be there can be evicted in the same proceedings. But if they have a right that may be valid, such as a tenancy agreement, the court will not evict them and you will have to respect it or challenge it in separate proceedings. Nor will you be able to see the inside of the flat. Debts. Service charges owed to the owners' association (the “comunidad de propietarios”) for recent years and any unpaid “IBI”, the municipal tax on the property, stay with the flat. At an auction there is no certificate from the seller to warn you of them. Paperwork and tax. You will not be required to have the certificate of habitability (“cédula de habitabilidad”), the document showing that the home is fit to live in, in order to be awarded the flat. But you will need it afterwards to live in it, let it or set up the utilities. You will also pay the tax on the purchase of a used flat. It is advisable to have a lawyer read the auction notice and the certificate of charges before bidding. An earlier mortgage that remains in place or an occupant with a contract can make the flat far more expensive than it seemed.