What separates a good auction deal from a bad one is rarely the bid. It is what gets checked before bidding. The property is awarded with its charges, and the buyer takes on some of them. That is why registry due diligence is not optional.
In this article
The basic rule: what is cancelled and what survives
When a property is awarded at auction, the charges registered after the one that triggered the enforcement are cancelled; the earlier ones, ranking ahead, survive and are taken on by the successful bidder. So knowing where the charge being enforced ranks is the most valuable piece of information in the whole deal.
Request the land registry extract (nota simple)
It is the first document to ask the Land Registry for. It shows ownership, the description of the property and, above all, the registered charges and their order. It must be recent: an extract from months ago may not reflect the current situation.
Identify the charges that survive
Prior mortgages, easements, seizures ranking ahead or tax liens may survive the auction. If you buy, you take them on in addition to the auction award price. This is the point where most deals go wrong.
Review the debts that do not appear in the registry
The IBI (property tax) of the last few years (with a real charge over the property) and the community of owners' fees for the current year and the three preceding ones do not appear in the land registry extract, but the law ties them to the property. The new owner ends up paying the community fees. Unpaid IBI falls on them only if the former owner does not pay it and the town hall claims it from them, within the four-year limitation period.
Check the occupancy status
The auction notice usually indicates whether the property is occupied and on what basis. An occupant with a prior lease, or the debtor themselves living inside, completely changes the calculation. Here it is worth reviewing how to act when facing an occupied property.
To find auctions and keep each notice at hand, a search tool such as Subastas de Viviendas lets you filter by province. The land registry extract, however, must always be requested from the Land Registry.
But the law ties them to the property. The successful bidder pays the community of owners' fees for the current year and the three preceding ones. Unpaid IBI can only be claimed from them if the former owner does not pay it, within the four-year limitation period. Request a debt certificate from the community of owners and check the IBI situation before bidding.
Checklist before bidding
Gather and verify: an up-to-date land registry extract, the registry position of the charge being enforced, the community of owners' debt certificate, the IBI situation, the property's occupancy status and a realistic market valuation. Only with all of that on the table can you set a maximum bid price with sound judgement.
If it is your first time, it is worth getting a good grasp of how the purchasing process at a judicial auction works, considering the auction assignment (cesión de remate) as an alternative and comparing the different real estate investment routes to choose the one that fits your profile.
At Equus Capital we carry out the full due diligence of auctions in Valencia and throughout Spain: we analyse charges, debts and occupancy before you bid, so you know exactly what you are buying. First consultation free and with no obligation.
Frequently asked questions
Does the buyer pay the charges on a property at auction?
It depends on their registry position. The charges registered before the one that triggers the enforcement survive and are taken on by the successful bidder; those registered afterwards are cancelled upon the award. That is why you need to review the land registry extract before bidding.
Where can I see the charges on a property at auction?
In the land registry extract (nota simple) from the Land Registry, which reflects ownership and the registered charges in their order. It must be recent so that it shows the real situation at the time of the auction.
Are community debts and IBI inherited when buying at auction?
Yes, in part. The successful bidder is liable for the community of owners' fees for the current year and the three preceding ones, and for any outstanding IBI, which attaches to the property itself, if the former owner does not pay it. These debts do not appear in the land registry extract, so you have to ask for them separately.
Can I go in to see the property before bidding?
During the auction you can ask the court to inspect it, but it only happens if the person living there consents (article 669.3 of the Civil Procedure Act), and often it does not, especially if it is occupied. That is why the documentary review (charges, debts, occupancy) and the external valuation are even more important before deciding on the bid.