GuideRisksLegal

Reviewing a property before a compulsory auction: appraisal, land register and hidden risks

By Pascal Szorath··4 min read·

At a compulsory auction you buy with no warranty and often without an interior inspection. What to check in the appraisal, the land register and the occupancy before you bid.

The biggest mistake at a compulsory auction is bidding blind. You buy with no warranty, you usually cannot see the property from the inside – and your bid is still immediately binding. Your only safeguard is the documents. This article is step 3 of our beginner's guide: the four sources you should have worked through before every bid.

1. The market value appraisal

The court sets the market value, usually on the basis of an expert appraisal (§ 74a (5) ZVG). This appraisal is your most important source of information: year of construction, condition, floor areas, deferred maintenance, defects – and often a note on whether the appraiser was even inside.

Important: the market value is an estimate, not a guaranteed value. If the appraiser could not get in, they often build in a safety discount – and the real condition may be worse (which is exactly why your bank finances cautiously, too). In our property overview we evaluate the appraisal automatically and flag auctions for which no appraisal is available.

If you are pre-sorting several properties, the next step is the risk-class analysis: there we explain which appraisal indicators ZVG Melder detects automatically, how heavily they are weighted and why a low class with thin data is no all-clear.

2. No warranty, no enforceable inspection

The court is not liable for defects: "A claim for warranty does not arise" (§ 56 ZVG). And you cannot enforce an interior inspection – the debtor does not have to let you in. So you buy with a residual uncertainty about the condition; factor in a buffer for surprises.

3. The land register: rights that remain in place

Not all encumbrances are extinguished by the award. Rights that remain in place under the terms of the auction (§ 52 ZVG) – such as a residence right, a usufruct or an easement in section II of the land register – you have to take on. A lifelong residence right can make a property practically unsellable. Such rights also count towards the value thresholds – so read the terms of the auction carefully.

4. Is the property occupied?

A property bought at auction is not automatically empty:

  • Is the debtor still living in it? The award decision is an eviction title against the possessor (§ 93 ZVG) – you can have them evicted, but that costs time and money.
  • Is the property let? Then the tenants stay (sale does not break a tenancy). You only have a special right of termination for the first permissible date (§ 57a ZVG) – more on this under After the award.

5. For owned flats: HOA arrears

If the property belongs to a homeowners' association (WEG), a priority claim for service-charge arrears can fall to you – up to 5 % of the market value (§ 10 (1) no. 2 ZVG). You pay these amounts on top of your bid.

In brief

  1. Read the appraisal – condition, deferred maintenance, was the appraiser inside?
  2. Check the land register – which rights remain in place?
  3. Clarify the occupancy – debtor (evictable) or tenants (stay)?
  4. WEG? – service-charge arrears of up to 5 % of the market value are possible.
  5. No appraisal, no view inside? Plan a buffer – or steer clear.

Note: General orientation, not legal advice. What counts is the original appraisal, the land register and the court's official notice.

Sources