How can I form a picture of any unauthorized construction or poor internal condition of the premises?
No internal on-site inspection of the property being auctioned is permitted to the prospective bidder. Only an external visual inspection is possible, which is already carried out by the bailiff during the seizure of the property. The bailiff, however, has the statutory power to enter the property to be seized, which would allow them to describe its interior, but in practice this rarely happens, owing to fear of friction. The law also gives the bailiff the right to inspect the town-planning file of the property to be seized. Consequently, the prospective bidder cannot today have an accurate picture either of the internal condition of the property or of any unauthorized construction/changes of use, etc.
What is the greatest risk I face when participating in an auction?
The principal risk faced today by the successful bidder at an auction is the lodging of legal remedies by the last owner of the property. The most dangerous remedy capable of overturning the auction is the opposition against the seizure report. If the corresponding opposition has not been filed within the prescribed deadline (45 days from service of the seizure report), then the risks of participation are minimised (an opposition against the auction itself, unless it is based on the invalidity of the seizure report etc., rarely succeeds).
The problem with the whole procedure is that oppositions against the seizure (and against the declaration of continuation/substitution, etc.) are not posted electronically, so as to be made known to prospective bidders and assessed by their legal representatives. The lawyer of the prospective bidder must therefore search for any legal remedies filed by the debtor at the competent Magistrate’s Courts/Courts of First Instance, usually after receiving information from the creditor, who holds the full file of the dispute (an independent check will, however, always be required, regardless of the information provided by the creditor, since the latter has an interest in not highlighting any invalidities that have arisen, in order not to reduce bidding interest).
What happens if the property is leased?
The successful bidder may terminate a residential lease, provided that the three-year period from its conclusion has elapsed. Of course, here lurks the risk of sham residential leases entered into shortly before the seizure, in order to make participation in the auction less attractive. Finally, it is worth noting that the bailiff is to obtain copies of the lease agreements from the competent Tax Offices (DOY), so as to inform prospective bidders accordingly through the extract of the seizure report posted electronically.
How do I obtain the keys to the property after the auction?
The successful bidder has managed to acquire ownership of the property. However, the property is occupied either by the debtor themselves or by a third-party tenant. In order to take up occupation, if the occupant of the property does not leave voluntarily, the bidder will have to commence an eviction procedure with a bailiff. That is, to commence a new compulsory enforcement procedure, which may also be challenged by corresponding legal remedies (oppositions). Here, however, the defensive options of the previous owner are quite limited. The issue nevertheless remains a real one, since the successful bidder must, on the one hand, bear additional expenses for the eviction procedure and, on the other, movable items located inside the property must be kept safe — provided their owner does not remove them or they are not auctioned — for a period of 6 months.
Does the acquisition of the property involve other costs beyond the amount for which I will make the winning bid?
When someone makes the winning bid by paying, e.g., the starting price of EUR 100,000, they may believe that this is where their financial burden ends. However, this is inaccurate. They must also factor into the acquisition cost the following: notary’s fee and registration fees. The notary’s fee consists of the fee for drawing up the auction report and the summary of the award report. In addition, the successful bidder will be charged with the registration fees for the summary of the award report (which amount to 5 or 6 per thousand, depending on whether registration takes place at a land registry office or a cadastral office respectively, plus VAT). The successful bidder will usually also be burdened with an additional cost for the real estate transfer tax.
What about the “source of funds” declaration (“Pothen Esches”)?
Those who proceed with the purchase of a property must be in a position to justify the origin of the funds they use to acquire it. They must, that is, justify the funds against their declared income and revenue, in order to avoid trouble with the tax authorities. One solution to navigate the tax hurdle is the parental gift of monetary amounts, which is tax-free for amounts up to EUR 800,000. The parental gift must be completed before the signing of the deed of sale of the property.
Information regarding the neighbours and the neighbourhood of the property?
Even if the property you have chosen seems ideal for you, a bad neighbour can make you regret your choice. There are not a few cases where buyers have been forced to sell immediately the property they had just bought, owing to problems with a resident of the apartment building. As far as possible, get to know the neighbours and gather information about them. If one of them is in fact the reason why the owner is transferring their property, perhaps you should think carefully about whether you should be the buyer.
- See also the article Property Purchase
- See also the article Property Sale
- See also the article Fraud against Property Buyers by Sellers
- See also the article Action for Partition of Property
- See also the article SYPOTHA – Unauthorized Constructions
- See also the article Fines for Unauthorized Constructions
- See also the article Annulment of SYPOTHA Decision
- See also the article Acquisitive Prescription
- See also the article What is the KAEK?
- See also the article Pre-notation of Mortgage
- See also the article Eviction of Tenant
- See also the article Professional/Commercial Leases
- See also the article Correction of Manifest Error – Unknown Owner – National Land Registry
FREQUENTLY ASKED QUESTIONS ON RISKS OF BUYING PROPERTY AT AUCTION
1. What risks do I face if I buy property at auction?
The most serious risk for the successful bidder is the lodging of legal remedies by the previous owner, the most important being the opposition against the seizure report. If the opposition succeeds, the auction may be overturned and the buyer may be left without the property. In addition, internal inspection of the property is not possible before the auction, so there is uncertainty about unauthorized constructions, town-planning violations or poor condition of the premises. Another risk is sham leases entered into shortly before the seizure, as well as the need for a fresh eviction procedure if the debtor or a third party refuses to leave.
2. How can I protect myself before participating in an auction?
Protection requires a thorough legal due-diligence check before lodging the participation guarantee. The lawyer searches at the competent Courts of First Instance for any oppositions filed against the seizure, the declaration of continuation or substitution, since these are not posted electronically. They check whether the critical deadlines have elapsed (45 days from service of the seizure report), the title deeds, the encumbrances and the status at the National Land Registry. They also examine any lease agreements posted in the extract of the seizure report. Information from the creditor is never sufficient on its own, since the creditor has an interest in not highlighting any invalidities that would reduce bidding interest.
3. How long does completion and my installation in the property take?
After the award, the drafting of the summary of the award report and its registration are usually completed within a few weeks to a few months. However, if the property is occupied by the debtor or a third-party tenant who does not leave voluntarily, a fresh compulsory enforcement procedure is required to evict them, which may take several months, especially if oppositions are filed. For residential leases, termination is possible only after the three-year period from their conclusion has elapsed. Overall, the time depends on possession of the property and on any pending judicial dispute.
4. What documents and checks are required before I make the winning bid?
A check is required of the seizure report and the extract posted electronically, of the debtor’s title deeds, of encumbrances and mortgages, as well as of the status at the National Land Registry or land registry office. The lawyer searches at the court registries for copies of any oppositions filed and checks whether a hearing is pending. The town-planning file is gathered, to the extent it is accessible, along with the lease agreements from the Tax Office (DOY). In addition, the buyer must have a documented source of the funds for the “source of funds” declaration, with the option of a parental gift of monetary amounts (tax-free up to EUR 800,000), which must be completed before signing.
5. What additional costs burden the successful bidder?
The award price does not exhaust the cost of acquisition. The successful bidder is burdened with the notary’s fee for drafting the auction report and the summary of the award report, as well as registration fees (5 per thousand at a land registry office or 6 per thousand at a cadastral office, plus VAT). They also pay real estate transfer tax and their lawyer’s fee. If an eviction procedure is needed in order to take up occupation, bailiff’s costs, legal representatives’ fees and possible costs for safekeeping movable items of the previous occupant for a period of up to six months are added.
6. What is the lawyer’s role in the auction procedure?
The lawyer of the prospective bidder is the principal safety filter before the winning bid. They carry out legal due diligence on titles and encumbrances, search for pending legal remedies at the competent Courts of First Instance, assess whether the deadlines for challenging the seizure have elapsed, and evaluate the risk of the auction being overturned. They take into account any sham leases, issues of unauthorized constructions and possession of the property. After the award, they handle the registration of the summary and, if necessary, the eviction of the debtor or tenant by way of compulsory enforcement, contesting any oppositions. The experience of the law firm Ziamparas D. & Associates ensures comprehensive support at every stage.