Judicial real estate auction Italy

Judicial real estate auction Italy

Prospective buyers looking at cost-effective investments as concerns property in Italy should definitely keep buying property at a judicial auction in mind. In Italy, properties are put up for auction when they are foreclosed, either by a bank or by a creditor, with a claim. This happens when the owner is unable, or unwilling, to honor his or her debts. In these cases the creditor may refer to a judge, who will then invite the debtor to pay. The decree becomes enforceable when the debtor declares to be unable to honor payment: at that point the owner’s property becomes the only way for the creditor to satisfy the claim. The property is hence blocked, or foreclosed, and thus subject to a judicial auction.

Italian law establishes that the auction of the property be compliant with the principle of publicity, and available to an unlimited number of persons, to guarantee the creditor’s interests. Consequently, the offer must be listed on the Ministry of Justice’s website.

There are two types of auctions provided for by Italian law. These are Vendita con incanto and Vendita senza incanto.

The most commonly practiced type of auction is the Vendita Senza Incanto. This proceeding implies a minimum price as well as a specific time frame within which participants are required to present their bids.

The auction starts at the first minimum price as established, offers are presented in sealed envelopes, and there is a specific procedure which regulates opening of the envelopes by the competent authorities. As established by the Italian Code of Civil Procedure anyone apart from the debtor is allowed to bid.

The bidder is usually required to provide a deposit, generally equal to 10 % of the auction price. Because the minimum price is predetermined all participants are required to deposit 10 % of this minimum amount prior to the first bid.
The Vendita Con Incanto is an open public auction in which a property is available for sale to the highest qualified bidder independently of the price.

This auction is applicable solely to those cases for which there were no offers at the vendita senza incanto or those in which such an auction could not be finalized.

Prospective buyers are requested to present their bids on a specified date, and if no new bids come in within three minutes the last bidder wins. This kind of deal is provisional: new proposals presented within 10 days of the auction are in fact accepted, and may prevail if they are at least one fifth higher than the first winning bid.

An auction with this outcome is reopened, to be attended solely by the participants of the previous auction.

All offers are to be presented in sealed envelopes and submitted to the court together with an application form which can be downloaded from the same court’s official website. Offers may also be drafted by a qualified lawyer, provided he/she is appointed to do so via a Power of Attorney act. In this case the POA needs to be presented alongside the offer as well. Envelopes will then be opened before the bidders at the time the auction is set for, and the highest offer wins.

This person, called “the successful bidder” does not immediately gain ownership. He/she must in fact settle the outstanding balance for the full purchase price, within a specified time frame, generally 120 days from the auction date. If the balance is not settled within the established interval the “successful bidder” loses his/her deposit, and the property goes back to the auction list.

Once the outstanding balance has been settled a judge signs a decree of transfer confirming that the auctioned property’s ownership is transferred to the winner. The purchase transfer allows for immediate release of the property and is enforceable. Any difficulties, an appeal by the previous owner for instance, which may occur from this moment onwards are the successful bidder’s responsibility, and he/she will be required to carry out any further legal auctions at their own expense.

Buying real estate via judicial auctions ensures safer and more straightforward proceedings than purchasing property privately, and is definitely cost-effective This because there are no transcription and registration costs to be sustained, and properties on auction are usually priced below market value. 

In compliance with the principles of publicity and transparency Italian law establishes, all real estate auctions in Italy are available on the Internet.

All properties on judicial auction are published on the website of the Ministry of Justice, an easy user-friendly page which lists properties alongside thorough descriptions and minimum bid prices, with a dedicated pdf called “Avviso” comprising auction date, time and place. The website also provides a search engine which allows one to “surf” through desired locations.

The official page of the National Association of Judicial Auctions provides detailed data concerning properties on judicial auction and a convenient search engine offering selection by type and purpose of each property, minimum and maximum price, preferred location.
Unfortunately this website is in Italian only, so it is definitely not a good tool for foreigners not fluent in Italian.

Alternatively prospective investors may choose to go through the Italian Courts’ single websites: all have a section named “Aste”, i.e. auctions. The single search engines then redirect users to the Ministry of Justice’s website.

Finally, all websites provide detailed data regarding the professionals delegated by the Court (lawyer, notary or accountant) that provide the necessary information on the property, auction, and appointed custodian in charge of property visits. 

Purchasing properties put up for auction can definitely be a cost-effective way to invest in Italian real estate but mastering all the procedures, and finding the right property, may be daunting for a foreign investor.

Our team of experts, including real estate agents, surveyors, architects, accountants and lawyers, assists prospective foreign buyers desirous to participate in a judicial real estate auction in Italy facilitating procedures and providing dependable service. 

We share our insight with our clients, allowing them to become familiar with the local real estate market and judicial auction proceedings and rules, inspect documents on their behalf, providing advice and translations when needed. We draft technical and due diligence reports, and are at clients’ disposal to discuss bidding strategies and represent them in court if and when required. 

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