The auction of a property is the most severe compulsory measure that can be used in the event of non-payment of an enforceable monetary claim.
However, with the exploding real estate prices, compulsory auctions are also becoming an attractive way to purchase real estate – often below market price – and are attracting more and more interested parties.
The compulsory auction system has been further optimized in recent years and these auctions are now only held online.
The procedure is regulated by Law No. LIII of 1994 on compulsory enforcement, which achieves two objectives: the rapid processing of an auction and the prevention of abuse of law.
The virtual compulsory auction system is operated by the Hungarian bailiffs.
- Registration
Participation in auctions is tied to registration in the system.
Any person or organization can apply to any bailiff of their choice for inclusion in the electronic register; Several people and organizations can also register as bidders – stating their share of the property acquisition.
Entry into the electronic register of bidders can be requested from any bailiff in person or with a corresponding power of attorney by submitting the documents used to prove the bidder’s data and paying the registration fee.
The bidder must report any changes to his data immediately.
The bailiff will delete the bidder from the electronic register of bidders upon request.
Only the bailiffs may view the electronic register of bidders.
- Publication and duration of the compulsory auction
2.1. Auction notice
The register of virtual auction notices is public and can be viewed free of charge, even by non-registered persons.
The auction notices are published on the continuously accessible information technology framework and include the following:
a) the name of the bailiff, the address of his office, his telephone number and the number of his deposit account,
b) the names of the parties and the legal titles and amounts of the principal claims,
c) the land registry data of the property,
d) the accessories and characteristics of the property,
e) the sale of the property in a ready-to-move-in or occupied state,
f) the minimum bid for the property,
g) the amount of the auction advance,
h) the amount of the lowest purchase bid that can be made at the auction based on the specifications and whether the local authority corresponding to the location of the residential property or a co-owner has a pre-auction right for the residential property,
i) the start and end times of the auction and the time of the inspection of the property,
j) the bid threshold for an estimated value of less than ten million forints, which is two percent of the estimated value, but at least one thousand forints, or if the estimated value is over ten million forints, one percent of the estimated value, rounded to one thousand forints,
k) information that information on the legal provisions on bidders, the conditions and expiry of the deadline for virtual bidding, payment of the purchase price or holding a second auction is available in the register of virtual auction notices.
Before the sale of the property, the bailiff shall determine the estimated value of the property, taking into account a so-called tax and value certificate issued by the office, which is not older than six months, or on the basis of the opinion of a court expert, both in the case of a sale in a ready-to-move-in condition and in the case of a sale in an occupied condition.
2.2. Duration
The auction lasts until the hour specified by the bailiff between 8:00 and 20:00 on the 60th day after the auction notice is published in the register of virtual auction notices; if a new bid is received within five minutes before the auction closes, the duration of the auction is automatically extended by five minutes after the bid is submitted.
The virtual auction system automatically records the time of publication of the auction notice and the closing of the bid journal (the end of the auction) on the notice, which is thus supplemented in the register of virtual auction notices.
- Placing a bid as a bidder
3.1. Minimum bid
The minimum bid for the property is the sum of the estimated value.
A valid purchase bid for the property can be made with a sum of at least 50% of the minimum bid.
A valid purchase bid for a residential property can be made with a sum of at least 70% of the minimum bid – or at least the minimum bid when collecting debts based on a contract concluded with the consumer – if the debtor only owns this one residential property, has his residence there and also had his residence there in the six months before the initiation of the enforcement proceedings.
3.2. Placing a bid
Only the user registered in the register of bidders is entitled to access the auction system as a bidder, stating his user name and password specified and activated for this purpose.
The bailiff conducting the auction will activate the user name and password required to use the virtual auction system as a bidder upon request if the person or organization listed in the register of bidders has deposited or transferred an auction advance of 10% of the estimated value with the bailiff and this has been credited to the bailiff’s deposit account.
Activation can be requested no later than 3 working days before the bid journal (see below).
After the auction notice has been published in the register until the end of the so-called bid journal belonging to the auction, the bidder can submit a purchase bid electronically by specifying his activated user name and password as well as the amount of the purchase bid.
The purchase bid is automatically recorded by the virtual auction system and simultaneously published in the bid journal belonging to the auction. The bid journal contains the purchase bids submitted in the order in which they were received.
If the virtual auction system publishes a new bid in the bidding journal after the bidder’s bid has been published, the bailiff will, at the bidder’s request, arrange for the part of the auction advance reduced by the transfer costs to be transferred back within three working days; in the absence of a request, the advance must be transferred back to the other bidders other than the successful bidder after the auction has ended.
At the end of the auction, the virtual auction system automatically closes the bidding journal and publishes the closing time therein.
The bidding journal is public and can be viewed free of charge.
- Purchase and payment of the purchase price
4.1. Payment
After the auction has ended, the bailiff will ask the successful bidder to appear at the bailiff’s office at a specific time to sign the auction protocol and pay the purchase price. If he fails to do so, the successful bidder will lose his advance.
The purchaser must pay or transfer the full purchase price to the bailiff’s deposit account within 15 days of the day on which the auction protocol is signed; if he fails to do so, he will lose his advance.
The bailiff may grant a maximum 2-month extension of payment of the purchase price if this is justified by the higher purchase price or another important circumstance.
The purchase price reduced by the advance is subject to late payment interest in accordance with the Civil Code from the due date.
4.2. Ownership rights
If the purchaser has paid the full purchase price and 30 days have passed since the auction, the bailiff will hand over the property purchased at the auction to the purchaser.
The debtor and the persons living on the property under the debtor’s right must vacate the property from their movable property by the thirtieth day after the auction, if the bailiff has set a longer deadline for payment of the purchase price, by that time, and if an appeal is lodged in accordance with the order’s provisions, by the fifteenth day after the order has become final, and ensure that the bailiff hands over the property to the purchaser.
The ownership rights of the new owner who acquires the property subject to enforcement are burdened only by the following rights:
a) easement,
b) right of use in the public interest,
c) usufruct, unless the beneficiary is liable for the satisfaction of the enforcement creditor’s claim or if it was established by contract after the mortgage was taken out.