Real Estate Auctions in Greece

What Are Real Estate Auctions?

Real estate auctions are a method of buying and selling real estate in which transactions are determined by a bidding process. Interested buyers compete by placing bids, starting with an initial bid price, and the highest bid wins the property.

The winning bidder is usually required to pay a percentage of the winning bid immediately (often 10%) and complete payment within a specified time period (e.g., 30 days).

Real estate auctions are a dynamic way to buy or sell property, offering opportunities for both buyers and sellers, but they also come with specific risks and requirements that participants should understand.

There are several types of real estate auctions:

• Absolute Auction: The property is sold to the highest bidder regardless of price. There is no minimum bid or reserve price.
• Reserve Auction: The seller sets a minimum price (reserve) and the property will not be sold unless the bid meets or exceeds that price.
• Foreclosure Auction: Typically conducted by banks or lenders to recover money owed on a defaulted mortgage. These are often held on-site at the property or at the courthouse.
• Government Auction: Properties seized for unpaid taxes or other legal issues may be auctioned by government agencies.

Sellers, including individuals, banks, or government agencies, may choose to auction properties to ensure a quick sale, especially in cases of foreclosures, estate sales, or distressed properties.

Through real estate auctions, buyers can find unique properties at competitive prices, especially in distressed sales. At the same time, buyers may have limited opportunities to inspect the property, leading to potential hidden problems, as properties are typically sold with no warranties, meaning the buyer assumes all risks. And while auctions can result in great deals, the competitive nature can also drive up prices, sometimes above market value.

Real Estate Auctions in Greece, The Legal Framework

In Greece, real estate auctions are regulated by several laws, with recent amendments focusing on increasing transparency, efficiency and digitalization of processes.

Greek law provides a well-defined framework for real estate auctions, with a particular focus on foreclosure auctions and the protection of creditors’ rights.

The Greek Civil Code and the Code of Civil Procedure provide the general framework for real estate transactions, including auctions. Specific provisions of the Greek Civil Procedure Code govern the procedures for the enforcement of debts through the sale of real estate, including the procedure for the auction of real estate repossessed for non-payment of debts.

All foreclosure auctions are now conducted electronically.

Law 4512/2018 introduced mandatory electronic auctions (e-auctions) for foreclosures, which significantly changed the auction landscape by moving from physical to online platforms. The goal is to improve transparency, reduce the potential for auction disruptions, and ensure a safer and more efficient process.

Law 4738/2020, known as the “Bankruptcy Law”, reformed the way auctions are conducted in cases of insolvency, with the aim of streamlining the process and protecting the rights of creditors.

The Real Estate Auction Process in Greece

The real estate auction process in Greece, particularly for foreclosure auctions, begins when a creditor, often a bank, initiates foreclosure proceedings due to a debtor’s failure to meet its financial obligations. After the legal process, the court approves the foreclosure and orders that the property be sold at auction as a means of recovering the amount owed.

There are several important steps in the process:

• Notice and publication: Once the auction is scheduled, a public notice must be published. This notice includes details such as the description of the property, the opening bid, the date and time of the auction, and the method of auction (which is usually electronic). The notice is published in legal newspapers and online to ensure that potential buyers are aware of the upcoming auction.
• Property appraisal and opening bid: Before the auction, the property is appraised to determine its market value. The opening bid at the auction is usually set at a percentage of the appraised value, often between 60% and 80%.
• Deposit: Interested bidders may be required to pay a deposit to participate in the auction, usually 10% of the opening bid.
• Electronic auction: As of 2018, all foreclosure auctions in Greece are conducted electronically. Participants must register on the official auction platform and the bidding process is conducted online. This move to electronic auctions was intended to increase transparency and reduce the potential for disruption or collusion.
• Bidding process: The auction follows a competitive bidding process in which participants submit bids throughout the auction period. The highest bid at the end of the auction wins the property.

Next Steps After The Property Auction

At the end of the property auction, the highest bidder must immediately make an initial payment (usually the deposit) and complete the purchase by paying the balance within a specified timeframe, usually 30 days.

As of 2024, all payments must be made through the banking system, as cash transactions are prohibited. This is part of efforts to combat money laundering and ensure transparency.

Once payment has been made in full, the property is transferred to the winning bidder and the sale is registered with the relevant authorities, including the Land Registry.

The winning bidder will be required to complete all necessary paperwork, including the payment of any applicable taxes and fees, and the filing of the necessary legal documents to complete the transfer of ownership.

Rights and obligations of The Parties Involved in Real Estate Auctions

Each of the parties involved in real estate auctions in Greece has specific rights and obligations. These include the creditor (often a bank or financial institution), the debtor (the property owner), the auctioneer and the bidders (potential buyers).

The rights and obligations of these parties are framed within the broader legal structure of the Greek Civil Code and the Code of Civil Procedure.

Creditors

The creditor has the right to initiate foreclosure proceedings if the debtor defaults on its loan obligations.

The creditor is entitled to recover the outstanding debt from the auction proceeds. If the auction does not cover the entire debt, the creditor may pursue further legal action for the balance.

The creditor must ensure that all legal procedures are followed, including providing proper notice of the auction and ensuring that the property is accurately described and appraised.

The creditor must also provide clear and accurate information about the property and the auction process to ensure fair participation by all bidders.

Debtors

If the court orders the sale of the property, the debtor must comply with the order and vacate the property if necessary.

The debtor has the right to be notified of the foreclosure and the upcoming auction. He must be informed of the details of the auction, including the opening bid and the valuation of the property. The debtor may challenge the foreclosure or auction process in court if the debtor believes there has been a legal or procedural error.

The debtor is responsible for any remaining debt not covered by the auction proceeds, unless otherwise discharged by law.

Auctioneer

The auctioneer has the right to manage the auction process, including setting the auction rules, opening bids and declaring the winning bidder.

The auctioneer must conduct the auction impartially and ensure a fair process for all bidders.

The Auctioneer is responsible for ensuring that the Auction is conducted in accordance with the legal and procedural requirements established by Greek law.

Bidders

Bidders have the right to inspect the property prior to the auction and to obtain accurate information about the condition and legal status of the property. In some cases, bidders may withdraw their bids if they can prove that they were misled or that the auction process was flawed.

Bidders are usually required to pay a deposit to participate in the auction, which may be forfeited if they fail to complete the purchase after winning the bid.

The winning bidder must pay the full auction price within the specified timeframe, usually 30 days. Failure to do so may result in forfeiture of the deposit and possible legal action.

Bidders must accept that the property is being sold “as is”, which means they assume all risks related to the condition or legal status of the property.

How to Prevent Your Property From Being Put Up For Sale at Auction

Preventing your property from being sold at foreclosure auction requires proactive financial and legal strategies.

These are just a few of the steps you should take to prevent your property from being sold at auction:

• As soon as you realize you may be having trouble making your mortgage payments, contact your lender. Banks and financial institutions are often willing to negotiate alternative payment arrangements, such as extending the loan term or temporarily reducing payments.
• Ask for a loan restructuring or modification. This could include lowering the interest rate, extending the repayment period, or consolidating your debt to make your payments more manageable.
• If possible, pay off the overdue balance or negotiate a lump-sum settlement with your creditor. Creditors may be willing to accept a reduced payment if it means avoiding the costs and delays of a foreclosure sale.
• Consider seeking financial help from family, friends or third-party investors who may be willing to buy the debt or help pay it off.
  In some cases, filing for bankruptcy (under Greek Law 4738/2020, also known as the “Bankruptcy Code”) may protect you from immediate foreclosure. Bankruptcy proceedings can sometimes halt the auction process while your financial situation is evaluated.
• Under the Greek Bankruptcy Code, you can propose a reorganization plan if you are unable to pay your debts. This plan can help you manage your debts while avoiding an auction, although it usually requires the approval of your creditors and the court.

Because the matter is so sensitive and each case is unique, please consult with our lawyer or a financial advisor who specializes in foreclosure and property law in Greece. We can help you explore all available options, navigate the legal process, and potentially negotiate better terms with your creditor.

If you are at risk of foreclosure, our law firm can advise you on legal strategies to avoid foreclosure, such as debt restructuring, negotiating with creditors, or exploring bankruptcy options under Greek law.

If there are legal grounds, such as procedural errors or disputes over the amount of the debt, we can file a legal challenge to stop or delay the auction. This may involve seeking a court order to suspend the auction while the issues are resolved.

Common Issues and Solutions

Real estate auctions, especially those related to foreclosures, can encounter several common problems and challenges, often due to legal complexities, procedural delays, or market conditions.

Here are some of the common issues related to real estate auctions in Greece:

• Title disputes: Disputes over ownership or unclear title can arise, often due to inaccuracies in the land registry or unresolved legal claims. This can complicate the auction process and deter potential buyers. To address this issue, the Greek government has been working to improve the accuracy and completeness of cadastral records. Recent legislation has extended deadlines for correcting errors in property records, which should help clarify ownership before properties go to auction.
• Legal challenges and appeals: Debtors or other interested parties may challenge the validity of the auction in court, causing further delays. These challenges are often based on procedural errors or claims that the auction process was not properly followed.
• Legal and procedural delays: The legal process for foreclosure and auction can be slow, with potential delays due to procedural challenges or appeals by the debtor. These delays can extend the timeline for creditors to recover funds and frustrate potential buyers.
• Low participation and unsuccessful auctions: Auctions sometimes fail due to low bidder participation, often because the starting bids are set too high or because of the condition of the property. In some cases, auctions are held repeatedly without a successful sale, which can delay the resolution of debt issues for creditors.