Pitfalls of buying property at public auctions
Electronic public auctions in enforcement proceedings have become very popular. Auctions are also attended by individuals – laymen in the real estate business – who would never have thought of buying a property at a public auction. Most of them attend auctions in the hope of getting a property at a low price. This is rarely the case; the prices achieved in electronic public auctions are more often close to market prices, and in the heat of the auction, bidders are sometimes willing to bid even more for interesting properties than they would in a normal sale.
Auctioneers often only see the low price and neglect the risks involved in such a property purchase. A seemingly favorable purchase can turn into a multi-year court battle to vacate the property and obtain possession. It has happened that after winning a public auction, the buyer received a letter from the court enclosing a lease agreement concluded years earlier by the owner of the property with a third party for an indefinite period, free of charge, with a high penalty for termination of the lease. For advice on what to do in such cases and how to properly prepare for a public auction, please contact Jadek & Pensa d.o.o.
The pitfalls of buying property at public auctions are presented in detail in Pravna praksa no. 37/2021, pp. 6-9 at: