With house prices rising steadily, auctions can offer significant savings compared to the free market. As a result, the general public is showing increasing interest in this formula, information on which can be found on the Official State Gazette's (BOE) auction portal. It also displays other extrajudicial auctions carried out by the tax authorities, the Social Security or notaries.
However, although this alternative has benefits, it is important to bear in mind that the possessory status is not known until you set foot in the house, as "the organism that launches the auction is not obliged to indicate whether the property is vacant or, on the contrary, has been illegally occupied or is occupied by a tenant with a rental contract," points out Sandra Aurrecoechea, lawyer and partner at Marín y Mateo Abogados.
This can slow down the takeover, as there will be different actions depending on the entity behind the auction and the case. That's why "buying a property at auction becomes less attractive when you intend to move into the house immediately," Aurrecoechea points out. Not knowing the ownership situation implies "very significant risks and cost overruns".
Nearly a year and a half to repossess a squatted house
If there are squatters after a judicial auction, the winning bidder has one year to request the eviction, but if it is an administrative auction, "the precarious eviction applies, as these bodies do not have the power to order squatters to be evicted".
According to General Council of the Judiciary (CGPJ) data, it takes a year and a half on average to recover an illegally occupied home in Spain. In addition, Aurrecoechea reminds us that "regulations protect squatters in a situation of exclusion," which is why such evictions are suspended until May 2024.
Tenants with a valid contract
In a property with a tenant who has a valid contract, you should look at the contract date. Contracts signed in the land registry before 6 March 2019 must be respected in terms of the agreed duration, but if they have not been registered before the foreclosure, they will be terminated.
However, if the contract was signed after 6 March 2019, the successful bidder must respect the lease for five years from the contract date if it is a private individual and for seven years if it is a company.
If the tenant pays their monthly rent, "the profitability could be interesting if the property was bought for investment purposes," but if they default, the eviction process would begin. It is worth noting that data from the second quarter of 2023 from the CGPJ show that 72.9% of evictions were related to proceedings related to the Law on Urban Leases (LAU).
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