Buying a home at auction: how it works and what to check

Court auctions sell homes that have been seized to pay the owner's debts. You can buy at an attractive price, but under different rules from an ordinary sale.

Where to find them

Sale notices are published on the Ministry of Justice's public sales portal (Portale delle vendite pubbliche) and, for property, together with the court order and the valuation report on dedicated websites, at least 45 days before the deadline for offers (Code of Civil Procedure, article 490). The valuation report is the first document to read: it describes the home, the state of its paperwork, any irregularities and who occupies it.

The offer

The sale order sets the base price and the minimum offer. An offer is valid even if lower than the base price, but by no more than a quarter; a security deposit of at least 10% of the price offered is required, and as a rule an offer once submitted cannot be withdrawn (articles 569 and 571). If there are several offers, a bidding contest is held between the bidders.

The balance and the mortgage

The successful bidder pays the balance within the term set by the order, which cannot exceed 120 days; for good reason the judge may allow payment in instalments within twelve months. It can also be paid with a mortgage that the bank pays directly to the proceedings, secured by a first-ranking charge on the same home (article 585). The mortgage should be arranged before bidding: the timescales are tight.

The transfer decree

Once the price is paid, the judge transfers the home with a decree that also orders the cancellation of attachments and mortgages and the release of the property (article 586). If the home is lived in by the debtor and their family, the release is ordered together with the decree and carried out by the custodian, at no cost to the buyer unless the buyer waives it (article 560).

The risks

In a forced sale there is no warranty against defects in the home (Civil Code, article 2922): anything the valuation report does not mention and that comes to light later is the buyer's problem. That is why it is worth viewing the home with the custodian before bidding, and the debtor must allow the viewing (article 560), and having a surveyor read the report. Also check for unpaid condominium charges and irregularities to be put right.

Taxes

If the debtor is a private individual, the taxes are those of a purchase from a private seller, including the first-home relief. For homes you can ask for the price-value rule, meaning taxes calculated on the cadastral value instead of the auction price: according to the Revenue Agency the rule also applies to purchases in forced sales and public auctions.