Immediately after the hammer falls, you must provide security for the auction bid you have made. This is referred to as a sikkerhedsstillelse (security deposit). It's important to note that the security deposit is not part of the auction bid/purchase price. Read more below.
Security deposit. Immediately after the hammer falls, you must provide security for the auction bid you have made. This is referred to as a security deposit. It's important to note that the security deposit is not part of the auction bid/purchase price. The size of the security deposit is stated on the last page of the sales listing.
Once you have provided this security deposit, you gain actual use of the property. To obtain legal ownership of the property, you must register an auction deed. This, however, can only happen once:
- The størstebeløb (priority amount) has been paid
- You have satisfied the auction bid by redeeming or taking over the charges on the property
- You have paid the various fees
The priority amount (størstebeløbet)
The priority amount is stated in the sales listing and announced at the start of the auction, so you are always informed of its size. The amount covers the costs of the forced auction, any outstanding property taxes, outstanding insurance premiums, etc.
Satisfying the auction bid
The whole point of the auction is for the property's creditors to try to recover their claims. However, the auction bid is rarely enough to cover all the creditors. The auction bid will therefore cover the claims until there is no more money left. If there are still outstanding claims on the property, the seller of the auctioned property will be personally liable for these.
Various fees
This covers, among other things, the auction fee and the registration fee for any loan.
What should you be especially aware of when buying a property at a forced auction? The auction itself. Since only people who are physically present or physically represented at the auction may place a bid, it's important to know that you must show up yourself or send a representative.
It can also be recommended to attend other forced auctions beforehand to get a feel for how such an auction unfolds.
The finances
Before diving into bidding on a property at a forced auction, you should talk to your bank. The payment rules differ from those in an ordinary free-market sale. As shown above, you must be able to provide a security deposit on the day and, relatively soon after, pay the purchase price (the auction bid), the priority amount, and various other fees.
It is therefore important to know whether you have financing from the bank or sufficient funds of your own before bidding on a property at a forced auction, since your bid is binding.
The property itself, on which you are placing a bid
The Consumer Protection Act for the purchase of real estate does not apply to properties sold at forced auction. Among other things, this means:
- The rule on a 6-day right of withdrawal does not apply
- No condition report or electrical installation report is prepared, so no owner's change-of-ownership insurance can be arranged. If you subsequently discover damage to the house, you are on your own and cannot make a claim against the seller, the party requesting the auction, or the bailiff's court.
In addition, there may be tenants in the property who are protected under the Danish Tenancy Act and who therefore cannot be given notice with effect from the fall of the hammer at the forced auction. It is therefore important to check whether there are tenants and what their rights are.
You can read more about forced auctions here.
Advice. It can therefore always be recommended to bring a building surveyor along to the viewing of the house, thereby avoiding nasty surprises after the purchase.
In addition, we would encourage you to seek financial and legal advice before placing a bid. A financial adviser can help with the finances, while a legal adviser can, among other things, help review the sales listing and advise on any potential tenants, etc.
Fill in the contact form so we can talk about how we can help you with buying and financing your home.
