Looking for a highly profitable, win-win investment in real estate in Italy? Check out the properties put up for judicial real estate auctions, and you may find a cost-effective Italian dream house!
Though prospective purchasers, especially foreign ones, rarely think about considering the assets on judicial auction, these may in fact be a fabulous solution, seeing as the price of the property is bound to be lower than it would be in a “normal” situation.
How does a property end up being on auction anyhow? Well, Italian law maintains that a property be expropriated when its owner of a property is not able, or not willing, to pay his/her debts, whether these are with a creditor or with a bank. In these cases, pursuant to current legislation, the property is subject to a judicial auction in compliance with the principle of publicity.
To ensure the creditor’s interests are safeguarded, Italian law also holds that the said judicial auction be open to an unrestrained number of persons and that the offer be published on the official website of the Italian Ministry of Justice.
Judicial real estate auction in Italy
In Italy, the most commonly adopted kind of auction is what is known as Vendita Senza Incanto, a judicial auction that commences with a predetermined minimum price for the property in question, and a set time period within which participants must present their bids. . As per standing regulations, and the Italian Code of Civil Procedure, any person, except for the debtor himself, is allowed to bid, and all bids are to be presented in sealed envelopes that may be opened only by the authority in charge, according to a specific procedure. Customarily, bidders are demanded to pay a deposit - usually around 10% of the minimum price - upon presenting their offer. Seeing as the minimum price is pre established, all those participating in the auction are requested to deposit the set percentage of the minimum amount before the first bid is placed.
The other kind of auction provided for by Italian legislation is called Vendita Con Incanto. Open to the public, this type of judicial auction only takes place when there were no offers at a previously held Vendita Senza Incanto or in the rare cases in which it could not be finalized. What the Vendita Con Incanto allows for is that the real estate asset in question is available for purchase by the highest qualified bidder, without regard to the price offered. Interested parties must present their bids on a set date, and if there are no new bids are presented within three minutes the last person to bid wins.
An interesting aspect of this kind of auction is that its result is provisional: if any new proposals come in within 10 days they are examined and can prevail provided the offer is minimum one fifth higher than the proper winning bid. As per the Vendita Senza Incanto all bids are to be presented in sealed envelopes, and may be drafted by one’s trusted lawyer duly authorized to to do so via a specific POA (Power of Attorney) act.
Together with the offer, bidders must submit a filled in application form downloaded from the court’s website. When the auction formally starts, the officials in charge open the envelopes and the highest bid wins. Yet, this “successful bidder” becomes the owner of the property on auction only once he/she has duly settled the outstanding balance payment for the total purchase price. Payment fulfillment is due withing a specific time frame, usually set at a maximum of 120 days from the auction date. Should the balance not be paid within the due date, the so-called “successful bidder” loses his/her deposit. And the asset goes back into the judicial auction list.
A savvy prospective buyer is bound to want to know what happens after the balance has been settled. It’s time to transfer the ownership, hence the judge in charge issues a transfer decree to confirm the auctioned asset is now the winning bidder’s property. Henceforth, the property’s status is settled and enforceable, so if any problems occur, for instance if the former owner files for an appeal, it is up to the present owner to solve the issue.
Further to the above, one can easily see how much safer and smoother it can be to buy property on a judicial auction rather than have to negotiate for a privately handled purchase. As regards costs, it is certainly less expensive because, in addition to properties being available at costs below market price, there are no registration and transcription costs to be factored in.
As explained above, real estate judicial auctions must comply with the principles of publicity and transparency, henceforth all property auctions in Italy are available for online viewing on the official website of the Italian Ministry of Justice. Easy to use and straightforward, the dedicated page provides users with a useful search engine that allows one to see the different locations, and lists itemized properties with comprehensive descriptions and minimum bid prices. To see when and where the auction will be held, the interested parties can quickly access the pdf document “Avviso”, that bears auction date, time and place.
The only disadvantage of the National Association of Judicial Auctions’ website is that, alas, it is in Italian only… definitely not user-friendly for foreign investors...
Yet, buying a real estate asset put up for auction can be a rewarding, highly lucrative and even enlightening experience for a foreign investor aiming to close a good deal in a timely fashion. But the language barrier, and somewhat cryptic procedures, are serious drawbacks that are bound to hinder one’s enterprise.
No need to delay your quest for a perfect, and cost-effective, Italian property, our squad of real estate agents, surveyors, architects, accountants and lawyers is here to assist, expediting your path through Italy’s most profitable auctions and committed to securing your dream Italian real estate asset!
Specialized in property law, fiscal ruling and real estate management, our team efficiently assists prospective foreign buyers who wish to participate in a judicial real estate auction, facilitating proceedings and providing highly qualified trustworthy service throughout. Fluent in English and a variety of other languages, we supply undivided attention, meticulous inspection and drafting of documents due, legal advice as well as support with bureaucratic requirements and translations, when and if needed. Committed to meeting our clients’ expectations, we are at their full disposal for insight on local customary procedures, to explain bidding strategies and file POAs to represent them in court, if and when required.
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