Conditions and Guidelines


For potential bidders

At the compulsory auction of (developed and undeveloped) real estate, building lease rights (heritable building rights), freehold apartments and co-ownership.


1. Publication:

The official announcements of compulsory auction are published in the local courts of the federal states and specialized local press.


2. Type of Auction:

There are compulsory auction in the way of law enforcement (debt auction) and compulsory auction for nullification of community (nullification auction). The first type is conducted by one or more creditors of owner of the real estate; the second type by one of the owners. The nullification auction deviates in some cases from the debt auction.


3. Visit of the Object:

As the local court as well as INCOS is not liable for deficiencies and inaccuracy and, the description in the cadastral register can differ from the actual condition, a personal visit is necessary. However, the owner is entitled to deny the access inside the property. Sound and detailed enquiries among experts, professional and neighbors are very important. Thus, the potential purchaser can find out if there are tenants in the house. It is possible that the owner may sell the real estate directly with approval of the debtor and creditor even if the object will be sold by auction from the local court. Nonetheless, it is not desirable, as the purchaser has to cover all the debts of the owner. The creditor bank and the local court are not allowed to sell the property.


4. Expertise Report:

It is an official expertise report conducted by an independent engineering agency appointed by the local court to evaluate the open market value of the property. The reason of the report is to present the actual condition of the object at the moment of expertise showing the deficiencies and avoiding that the object is sold under the market value. A special attention has to be devoted to the extract from the cadastral register.


5. Foreigners:

Foreigners are allowed to make their bids in the auction. Each foreigner, including juridical persons outside the European Union, can purchase real estate by auction in Germany without special permission.


6. Open Market Value:

On the basis of the expertise report, the open market value is set up. The open market value can be an orientation for the participants and potential bidders. It must not be however bided either as lowest or highest price. Should nevertheless 5/10 of the open market value not be bided, the court must officially deny the award. The award is also denied ipon request of a beneficiary (creditor bank), who is prejudiced by a highest bid under 7/10 of the open market value. If the award was once already refused from one of these reasons, the minimum bid limits of 5/10 and 7/10 are to ignored in the repeated auction.


7. Least bid:

The least bid has nothing in common with the open market value. It is calculated according to special criteria and announced in the auction. As the least bid is set up not until the auction date, prior enquiries cannot be answered. It consists of two parts: permanent (persisting) rights (these are particular rights recorded in the cadastral register that the purchaser has to assume) and demands to be paid in cash. As bidder, one has to bid at least this "least bid". In some cases bidders give their bid under the 5/10 in the first auction to make this rule invalid in the second auction. If there are no bids at all in the first auction, at least the least bid, the auction is closed, but the minimum bid limits of 5/10 and 7/10 will apply in the second auction.


8. Auction Date:

Each bidder has to be capable contractually and identify himself through an official identity card with photo. If more persons want to bid all of them have to be present and indicate the contribution relationship, for ex. 2 persons: each to ½. The representative of a juridical person, company or one-man company has to submit his power of representation by presenting an extract of the companies' register not older than 3 weeks. Persons who want to bid as representative of a third party must submit an officially authorized power of attorney to bid (authorization through notary or local court).


9. Bidding time lasts at least 30 min.

It is open as long as bids are made and the end of bidding is not clearly announced by the judicial officer. It is recommended to make "round" bids and to start bidding long before the end of the bidding time.


10. Security Deposit.

The law entitles certain beneficiaries, not the court, to ask a security deposit from the bidder. This represents usually 10% of the published open market value, however at least the costs of the process disclosed at the beginning of the auction. The security deposit must be paid at once. Otherwise the bid is denied. Due to changes in the law on compulsory auction as from February, 16 the security deposit cannot be paid in cash. This must be provided in a) cheques of German federal banks; b) cheques for deposit only, c) bank guaranties or d) money transfer to the court account.


11. Liability for Defects:

The court is not liable for the correctness and completeness of the statements and information provided by the tax authority. Auctioning of property recorded in the cadastral register takes place in its real condition even if deviates from the description of the cadastral register. There is no liability for defects! The purchaser does buy on his own risk. The auction spans basically on parts and parcels as well as accessories (belongings).


12. Payment of the highest Bid:

The highest bidder has to pay his cash bid latest in the date of distribution - ca. 2 months after the award. He can do it only by means of transferring the money to the account of the cash box of the court. The court account must be credited before the distribution date and submit a confirmation at the appointment. A deposit is also possible. The proof of deposit is to be submitted latest in the distribution date. From the award to the payment in the distribution date or deposit the cash bid is to be charged with 4% interest.


13. Attention with the Financing!

The highest bid must be paid before the transcription of real estate in the cadastral register. It is recommendable to contact banks, savings banks or construction savings banks before the auction date or latest straight after the award.


14. Real Estate Transcription in the Cadastral Register:

The contractor can be registered in the cadastral register only if:

  • a) the distribution date took place,
  • b) the award decision is valid,
  • c) tax clearance certificate of the tax office is in the court.

The contractor must in principle pay the property acquisition tax (calculated from the highest bid, as well as persisting rights - 3,5%) and the court costs (0,5%-0,6% of your bid).



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