The five-tenths and seven-tenths thresholds explained simply
Below 50%, the award is refused ex officio at the first hearing; between 50 and 70% only on a creditor's motion. At the second hearing, both thresholds fall away.
Around compulsory auctions you constantly hear about the "5/10" and "7/10" thresholds. First, something important: these thresholds do not say from when you are allowed to bid – you can almost always bid much earlier. They decide whether the court grants the award (Zuschlag).
The five-tenths threshold (50%) – protection for the debtor
If the highest bid at the first hearing does not reach half (50%) of the market value, the court must refuse the award ex officio (§ 85a (1) ZVG). A bid below that is therefore worthless at the first hearing – the award would not come about.
The seven-tenths threshold (70%) – protection for the creditor
If the highest bid lies between 50% and 70% of the market value, a creditor who is not fully covered (usually the bank pursuing the enforcement) may apply for refusal of the award (§ 74a (1) ZVG). This does not happen automatically: if no one files the motion, the award can also be granted at, for example, 60%.
From 70%, none of these value thresholds stands in the way any longer.
Important: both thresholds count not only the cash highest bid, but also the capital value of the rights that remain in place under the conditions of sale.
The second hearing: both thresholds fall away
If no award is granted at the first hearing because of these thresholds, the court schedules a new hearing. There, neither the five-tenths nor the seven-tenths threshold applies (§ 85a (2) and § 74a (4) ZVG). An award is then possible even below 50% or 70% – this is often where the "bargains" arise.
A low award is nevertheless not an automatic bargain. What remains decisive is whether the condition, the rights and the data situation are right; the risk classes help you sort through such warning signs more quickly before you bid.
Bidding is not the award
In principle you may join the bidding from the lowest admissible bid onwards (which covers the costs of proceedings and the rights that remain in place, § 44 ZVG) – often well below 50%. The value thresholds only take effect at the award decision; how the auction hearing itself proceeds is set out in its own guide. Where your personal upper limit lies, by contrast, is determined not by the court but by your bank.
In brief
- Below 50%: first hearing – the award is refused ex officio.
- 50–70%: the award is possible, but a creditor can overturn it.
- From 70%: the award is all but certain.
- Second hearing: both thresholds gone.
Note: General orientation, not legal advice.