Buying a property at auction can be a good way to pick up an asset below its market value. It is also one of the riskiest when you bid without having done your homework. There is no seller here to answer for hidden defects, as there is in an ordinary sale, and no room to renegotiate once the property is awarded: you buy it as it stands, with whatever charges it carries and with whoever is inside. The due diligence you do beforehand is what separates a good deal from a problem that lasts for years.
In this article
- 1. What due diligence is and why it is critical at auction
- 2. The land registry extract: ownership and charges
- 3. Charges that are cancelled and charges that survive
- 4. Occupancy: checking whether the property is occupied and by whom
- 5. Debts that "travel" with the property: property tax and community fees
- 6. Physical and planning situation
- 7. Deadlines and deposit
- 8. Final checklist before bidding
- 9. How Equus Capital operates
1. What due diligence is and why it is critical at auction
Due diligence is the orderly, documented review of everything that affects a property before committing to buy it: its legal, physical, tax and possessory situation. In a sale between private parties there is an identifiable seller, a deposit that can be lost but also recovered, and a notary who warns of charges before signing.
At auction that cushion disappears. You bid on a lot described in a notice, often without being able to view the interior, and the award is final. If a surviving charge, an occupant or a three-year community debt appears afterwards, the problem belongs to the successful bidder. That is why the review is not optional: it is the buyer's only defence, and it must be done before depositing and bidding.
To find auctions and read each notice before you start the review, you can use a search tool such as Subastas de Viviendas, which gathers BOE and Social Security auctions by province. The review that follows, however, is always done with the official documents.
2. The land registry extract: ownership and charges
The first document to request is the land registry extract (nota simple) from the Property Registry. It is informative rather than conclusive, but it reflects the registered situation: who the owner is, the description of the property, its area and, above all, the registered charges (mortgages, seizures, easements, resolutory conditions, tax liens).
It should be read in full and in chronological order, because the rank of the charges (which charge is earlier and which later) determines what happens to them after the auction. A recent extract, requested days before bidding, avoids surprises from last-minute annotations. If anything fails to match between the notice and the Registry, it must be clarified before committing a single euro.
3. Charges that are cancelled and charges that survive
The basic rule in enforcement auctions is one of registry rank: the charge that gives rise to the enforcement (the one being enforced) and all those subsequent to it are cancelled on the award; earlier charges (of preferential rank) survive and are assumed by the buyer. That is why identifying which charge is being enforced is the most delicate point of the whole review.
| Charges that are cancelled | Charges that survive |
|---|---|
| The mortgage or charge enforced in the proceedings. | Mortgages and charges ranking ahead of the enforced one. |
| Seizures and annotations subsequent to the enforced charge. | Easements and rights in rem registered with preferential rank. |
| Preventive annotations of lower rank. | Certain tax liens and debts with a legal privilege. |
This is a general rule, not something automatic: each procedure has its own order of charges, and it has to be checked case by case against the certificate of ownership and charges. We go into this in more detail in our guide on charges at auction and reading the land registry extract.
4. Occupancy: checking whether the property is occupied and by whom
A property may be vacant, occupied by its former owner, leased or occupied without title. The difference is huge, because getting possession back does not cost the same (or take the same time) in each case.
- Tenant under a prior lease: may have the right to remain depending on the tenancy rules and when their right was registered.
- Former owner or occupant without title: you have to apply to the court for eviction, with the judicial timeframes that involves.
Before bidding you need to find out the real possessory status: whether the file records it as a main home, whether there are tenants, and which eviction route would apply. Buying an occupied property cheaply without having worked out the time and cost of getting it back is one of the most common reasons a deal goes wrong.
5. Debts that "travel" with the property: property tax and community fees
Some debts do not appear on the land registry extract and yet accompany the property and end up falling on the new owner:
- Community of owners: the property answers for the unpaid fees of the current year and of the previous years that the law attributes to the buyer. You need to ask for the community debt certificate and the minutes of the last meeting: there may be approved levies that have not yet been billed.
- Property tax (IBI) and local taxes: the property remains liable for the most recent years of property tax, regardless of who was the owner when it accrued.
These debts do not appear in the Registry, so they have to be tracked down separately: the community certificate and a query to the local administration. Skip them and you add to the hammer price a bill that was not in your sums.
6. Physical and planning situation
The legal review is not enough on its own. Before bidding you also need to check the property's physical and planning situation:
- That the registered description matches the real area and boundaries.
- Whether there are works, extensions or divisions undeclared or without a licence that could give rise to planning liability.
- The state of repair and the possible existence of pending renovation levies.
- The planning classification of the land and any restriction affecting its use or value.
When you cannot get inside, you work with what there is: the cadastre's online office, municipal planning information, the façade and images of the surroundings. Every piece of information reduces the uncertainty about what is being bought.
7. Deadlines and deposit
Bidding requires having set up in advance the deposit established to take part, a percentage of the value of the asset that is lodged and returned to anyone who is not the successful bidder. The winner must complete payment of the price within the set period; if they fail to do so, they may lose the deposit.
All the due diligence has to be finished before that moment, because once the asset is awarded there is no going back. Reviewing charges, occupancy and debts after you have bid is too late.
8. Final checklist before bidding
Before lodging the deposit, the following should be verified and documented:
- A recent land registry extract, read in full and by rank.
- Identification of the charge being enforced and of those that survive.
- Possessory status: vacant, leased or occupied, and the applicable recovery route.
- Community of owners debt certificate and minutes of the last meeting.
- Status of property tax and other local taxes affecting the property.
- Physical and planning check to the extent accessible.
- Deposit amount, deadline to pay the balance and auction conditions.
- Calculation of the real total cost: hammer price + purchase taxes + land registry and other costs + surviving charges + debts + time and cost of recovering possession.
The hammer price is never the real cost. The real cost is the hammer price plus the charges that survive, the debts that travel with the property and whatever it costs to leave it vacant and clear.
9. How Equus Capital operates
At Equus Capital we do not bid blind. Every auction deal goes through full due diligence with our own legal team: we study the certificate of ownership and charges, work out what is cancelled and what survives, analyse the possessory status and the eviction route, track down community and property-tax debts, and check the planning situation. With all of that we calculate the real total cost of the deal and give you a reasoned recommendation before deciding whether to bid and how high. What we are after is that, when the asset is awarded to you, nothing turns up that we had not seen before the bid.