Sales under execution are held on the instructions of mortgage holders or judgment creditors (entitled to enforcement) and, for that reason, are forced sales. At auctions the property is sold to the highest bidder. Once implemented the bill should increase the revenue from the auctions. Currently, residential properties are usually bought by commercial traders and resold at (substantially) higher prices within six months. The bill makes it possible to announce the forced sale of residential properties on-line (on a public website instead of an ad in a local newspaper and placard on the property). The following amendments should minimize the risks of buying at an auction:
- The risks of damage to and destruction of the auctioned property from the time of award to the transfer (by means of entry of the record of sale) lie with the executor (Section 525.4 Code of Civil Procedure)
- The buyer just pays the transfer and turnover tax, the civil law notary’s costs, any costs of eviction and cadastral fees. Any remaining auction costs are charged to the executor (Section 524a Code of Civil Procedure)
- The record of the auction proceedings is a valid basis for evicting tenants and users occupying real property without right or legal basis (Section 525 Code of Civil Procedure)
- For residential properties the mortgage holder (usually the bank) must invoke the letting clause prior to a sale under execution unless it is in the interest of the revenue from the public sale to uphold the rental agreement or if no one is occupying the residential property under a rental agreement (Section 3:264 Civil Code)
- The provisions on management and eviction clauses will be clarified (Section 3:267 Civil Code)
- New is the provision that executors and other residents must allow inspections as soon as the execution has been announced (Section 3:267 Civil Code)
The amendments listed above aim at lowering the threshold for private individuals to take part in auctions, by giving mortgage holders a better chance to take the properties to auction in a vacated condition and by making inspections mandatory. On-line auctioning would make the auction better known among the public, and more private individuals would get to bid. The bill has been submitted to the Upper House for approval.
Jetske Heikens
heikens@slangen-advocaten.nl
9 September 2014
