How a property auction works, from the notice to the keys

What is a property auction, in simple terms

A court auction arises from a property foreclosure. A creditor, usually a bank, asks the court to seize the home of someone who has not paid. The owner, who in technical language is called the debtor (debitore esecutato), loses control of the property, which is put up for sale to pay off the debts.

The enforcement judge directs the proceedings. In practice, the sale operations are almost always entrusted to a sale delegate (delegato alla vendita), who may be a notary, a lawyer or a chartered accountant. If you want to see how a case gets to auction, read how to get from seizure to auction, step by step.

Where to find the listing and what the notice says

Every court auction has a sale notice. By law, these notices must be published on the Public Sales Portal (Portale delle Vendite Pubbliche, PVP), the website of the Ministry of Justice. The notice must be published at least 45 days before the deadline for submitting offers.

In the notice you will find the information that really matters:

• the base price (prezzo base), i.e. the value from which the sale starts;
• the minimum offer (offerta minima), the lowest price at which you can take part;
• the deposit (cauzione), the sum you pay as a guarantee together with your offer;
• the minimum bid increment (rilancio minimo), i.e. by how much you must raise your offer if there is a bidding round;
• the deadline for submitting the offer and the date of the bidding round;
• the deadline for paying the balance;
• the description of the property and the reference to the appraisal report (perizia).

If you want to understand how to use the portal, read how to use the Public Sales Portal. An actual lot, with its details, can be found among the auctions in progress.

How does it work step by step?

1. Before the auction. Read the notice and the appraisal report (perizia), i.e. the report in which the appraiser describes the property. Book the viewing through the PVP: the court-appointed custodian (custode) arranges it.
2. Make your offer. You submit the offer by the deadline stated in the notice, online or on paper depending on the method you choose. Together with the offer, you pay the deposit (cauzione).
3. Bidding round or award (aggiudicazione). If only one valid offer arrives, the judge or the sale delegate decides whether to accept it. If more than one arrives, a bidding round opens. The highest bidder wins.
4. Payment of the balance. If you win, you must pay the rest of the price by the deadline in the notice, which cannot exceed 120 days from the award.
5. Transfer decree. After payment, the judge issues the decree that transfers ownership to you. It is the document that replaces the notarial deed (rogito).
6. Vacating and keys. If the property is still occupied, someone must leave it. Only then can you enter.

How much do I have to pay to take part?

To take part, you must pay the deposit (cauzione). To calculate it, you first need to understand two figures. The first is the minimum offer (offerta minima), which equals three quarters of the base price: the offer is ineffective if it is more than a quarter below the price set. The second is the deposit, which cannot be less than 10% of the amount you offer.

Let's take an invented example. Base price €100,000. Minimum offer €75,000. If you offer €80,000, the minimum deposit is €8,000. The 10% is calculated on the offer you make, not on the base price. The notice may require a higher percentage: in that case, the percentage written in the notice applies.

If you lose the auction, the deposit is refunded to you after the bidding round by bank transfer; you will find the timing in the notice. If you win, the deposit becomes a down payment on the price.

What happens during the bidding round?

If only one offer arrives, the general rule is this: if it is equal to or higher than the base price, it must be accepted. If it is below the base price but not below three quarters of it, the judge may award the property, but may also decide to rerun the sale if they think a higher price can be obtained. So an offer at the minimum does not guarantee that you will win.

If more offers arrive, the bidding starts from the highest. Each raise must be at least equal to the minimum bid increment (rilancio minimo) set in the notice. If nobody raises, the highest offer wins. In the event of a tie, the notice states which criterion applies, for example the highest deposit or the fastest payment.

In the sale without incanto (vendita senza incanto), i.e. the one used today in most cases, the award is final straight away. There is no period in which someone can raise the bid after the bidding round.

How long do I have to pay?

After the award, you have up to 120 days to pay the balance. The deadline cannot be extended, so it must be planned before the auction. The notice may set a shorter deadline, and a bidder who offers faster payment may have an advantage in the bidding.

If you need a mortgage, the law allows you to use one even for an auction purchase: the bank pays directly, and the mortgage is registered together with the transfer decree. However, the bank's timing must fit within the 120 days, so the application must be started before the bidding round. Find out more about how to pay the balance and what happens if you don't.

If you do not pay on time, you lose the deposit as a penalty and, if the new sale fetches less, you may have to pay the difference.

What happens after the award?

With the balance come the taxes and transfer costs. The delegate will tell you the exact amount in a expenses fund. For a second home, the registration tax (imposta di registro) is 9% of the award price. For a first home (prima casa), it is 2%, if you meet the requirements set by law. You will find the precise figure in the notice and in the delegate's instructions.

The transfer decree cancels mortgages and seizures that burdened the property. However, there is no warranty for defects: in a forced sale you cannot ask for a price reduction because the property has a fault. You buy it as you saw it in the appraisal report.

Be careful about condominiums too. Whoever takes over a property is jointly liable with the previous owner for the condominium (building owners' association) expenses of the current year and the previous year. For this reason, before making an offer, ask the administrator whether there are any arrears.

When do I get the keys?

Handover depends on who lives in the home. If the debtor still lives there with their family, they may stay until the transfer decree, provided they look after the property and cooperate with viewings. After the decree, the vacate order (ordine di liberazione) is carried out by the court-appointed custodian (custode), without the need for a separate lawsuit, except in special cases.

If the property is occupied by other people without a valid title, vacating may be ordered even earlier. The risk is real and must be checked in the appraisal report and in the notice. To understand how the process works, read what happens when the house being auctioned is occupied. Actual timescales depend on the court, so there is no number of days that applies to everyone.

Which mistakes should you avoid?

• Looking only at the base price. The figure that counts for taking part is the minimum offer, and the real cost includes the deposit, taxes and expenses.
• Forgetting deadlines. The offer, the payment of the balance and the viewing have different dates. Mark them all.
• Not reading the appraisal report. There you will find the condition of the property, building irregularities with the costs of regularisation (sanatoria), the occupancy status and the condominium expenses.
• Expecting a notarial deed. In a court auction there is no notarial sale deed: there is the transfer decree.

In practice

• Look in the sale notice for the line «minimum offer» (offerta minima): that is the figure that counts for taking part.
• Calculate the deposit on the offer you intend to make, and check the percentage required in the notice.
• Add taxes and expenses to your offer: the award price is not everything you will pay.
• Note the deadline for paying the balance and, if you need a mortgage, ask the bank for its timescales before the bidding round.
• Read the appraisal report under the section on occupancy and any condominium expenses.

Frequently asked questions

Can I offer less than the minimum offer?

No. An offer more than a quarter below the base price is ineffective. The minimum price allowed is stated in the sale notice.

If I lose the auction, is my deposit returned?

Yes. The deposits of unsuccessful bidders are refunded after the bidding round by bank transfer. The timing depends on what is stated in the notice.

Do I need to already have a mortgage?

It is not compulsory, but you must pay the balance within 120 days. If you use a mortgage, the bank pays directly at the balance stage, and the application must be started before the bidding round.

Sources

• Civil Procedure Code on Normattiva
• C.p.c., art. 571 (minimum offer and deposit)
• C.p.c., art. 586 (transfer decree)
• Portale delle Vendite Pubbliche
• Ministero della Giustizia