Auction bid assignment: investing without bidding
The right to assign to a third party the asset won at a judicial auction. The law reserves it to the executing creditor, and from our credit position we channel it to the investor.
Auction bid assignment, explained.
It is the right to transfer to a third party the asset won at a judicial auction. The bidder reserves the right to assign the award, and the asset is adjudicated directly to another person, the assignee, without them having attended the auction or bid.
It is not open to everyone. Article 647.3 of the Spanish Civil Procedure Act reserves this faculty to the executing creditor or subsequent creditors, and it also applies to real estate and mortgage enforcement. That makes it a natural route for those who, like us, manage debt positions: as holders of the claim, we can bid reserving the faculty and assign the award to an investor.
From the debt to the adjudicated property.
Three steps, with the law up front.
Credit position
We start from a secured debt we manage. As executing creditor, we are entitled to bid at the auction reserving the faculty to assign.
Auction and reservation
We bid on record that we reserve the faculty to assign the award to a third party, as the law requires.
Assignment to the investor
The assignment is formalised before the Court Clerk, with the assignee's acceptance, prior to or at the same time as payment of the auction price. The asset is adjudicated to the investor.
With the cards on the table.
Advantages: access to adjudicated properties through a consolidated credit position, without attending the auction or bidding in person, and with potential for a discount against market value.
Risks we assess before investing: prior charges that may survive the adjudication, possible occupancy of the property, its real condition, court timelines beyond our control, and the taxation of the deal. There is no guaranteed return: each opportunity is studied one by one.
Illustrative example, with hypothetical figures: a property goes to auction with a reference value of 200,000 EUR. As holders of the debt we bid and reserve the faculty to assign. The award is set at 120,000 EUR. We assign to an investor, who pays that amount and receives the adjudicated asset. The margin against market value, once charges, taxes and refurbishment costs are deducted, is their investment potential.
Auction bid assignment, your questions answered.
If your question is not here, we answer it in the first consultation, free of charge.
No. The law (article 647.3 of the Civil Procedure Act) reserves it to the executing creditor or subsequent creditors. That is why we work from a credit position.
The assignment is formalised prior to or at the same time as payment or deposit of the price, before the Court Clerk and with the assignee's acceptance.
Charges prior to the registration entry may survive. That is why we review the registry and occupancy situation before proposing any deal.
Yes. Although the rule sits in the movable-assets section, it extends to real estate and mortgage enforcement by reference of articles 681.1 and 655.2 of the Civil Procedure Act.
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