Guide of auction in division of common thing

 subasta division cosa comun

 

How is the auction of the division of the common thing put into practice?  

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At the time we made a guide to the division of the common thing.  The next question that arises is how the judgment is executed and the dissolution of the proindividual.

At the end of the common thing division procedure, we will get a sentence that will say approximately the following:

FULLY ESTIMATE DEMAND filed by D. Antonio in front of Dª Pilar, With the followings pronouncements:

a) Declare the actor's right to end the community situation regarding the attached house and storage room located at c / DIRECCION000 nº NUM000, Valencia, registered in the Land Registry nº 2 from Valencia to Volume NUM00, Book NUM00, Folio NUM00, Finca nº NUM00.

b) Declare the indivisible character of the aforementioned property, should proceed if there was an agreement between the community members to award one of them with compensation for the rest or in default of agreement, for sale in public auction with strange bidders in the manner regulated in the arts. 655 and following of the Code of Civil Procedure, after appraisal of the property in the manner provided in the arts. 666 and 637, being able to bid commoners or improve positions and exercise all the powers granted by the arts. 670 and 671 the LEC , without being required to enter any amount to take part in the auction and without prejudice to the fact that the parties may agree in the process of forced execution alternative formulas to avoid the devaluation of the property ( Arts. 640 and 641 the LEC ).

c) The property is disposed of and its price will be shared among the owners in proportion to their respective quotas., previous liquidation in any case of the debts that the community of goods has with the co-owners.

d) Not to order the costs. ”

The problem is how to make said sentence effective.

At this point there are two ways. In view of the deadlines and legal uncertainty, It would be possible for the community members to agree on a transaction to carry out the sale through a notarial auction. In the absence of such an agreement, the alternative would be the judicial auction.

Notarized auction sale

If an agreement is reached between the community members, a conciliation deed can be made, which is executive in nature as expressly stated in art. 83 of the General Law of Notaries in relation to the article 517 paragraph 2 number 9 of the LEC.

This solution is faster, but we insist, needs the agreement between the community members and at this stage of the procedures, the positions are usually quite entrenched.

How to execute the sentence of division of the common thing?

In practice, numerous problems arise due to the special condition of these procedures. It is not a monetary sentence so it is not a purely monetary execution. It is a “sentence to do” whose execution is included in the articles 699 and following of the LEC in Title V "On Non-monetary Execution". However, there is no specific procedure for the execution of a sentence that orders the dissolution of the joint venture.

The direct application of the rules provided for the voluntary auction contained in the articles is not viable 108 a 111 Act 15/2015 (LJV). After a judgment in the declaratory trial, you cannot use a voluntary jurisdiction file.

Nor does the application of the monetary execution foreseen for the “real estate auction” fit perfectly into the articles. 655 and following the LEC, well in this case, there is not properly a "debtor".

In judicial practice, The solution is to rely on the items provided for the real estate auction. And to them is added what can be reasonably taken from the Voluntary Jurisdiction Law. Worth as sample, the impossibility of obtaining the certification of domain and charges through the article 656.2 the LEC, because there is no embargo, you cannot make a marginal note. This question is solved by referring to the article 111.3 of the LJV by means of a margin note by the Registrar of the issuance of the domain and cargo certification.

Is apply the rules of the Civil Procedure Law, completing them with those that are reasonable of the LJV.

The preferences of the community members are reflected in a Specifications. The Supreme Court in its STS of 19 October 2012 has indicated the prevalence of the will of the co-owners against the precepts of the Law (provided there is agreement).  We must indicate that at this point, agreements between the parties are very difficult.

Who can present the bidding specifications of the auction in the common thing division?

It is frequent that the executing community member does not present a specification along with his executive demand. Then, the court will require you for the correction and done this, will be transferred so that the rest of the parties formulate allegations.

Either party can go to the Court to indicate the conditions in which the sentence must be effective, such as property appraisal or auction details.

After giving all the community members the opportunity to demonstrate about the specific specifications, the court will decide.

In matters in which there is no agreement between the community members, the court will decide, applying the rules of public auction.

Is it convenient the admission of "strange bidders" to the auction of division of the common thing?

Depends on our client's strategy. If you want to be awarded the property at the lowest possible price, it is better that third parties do not intervene, who could raise the price to approach the market or even exceed it. This strategy could be completed by increasing the bond beyond the usual minimum of the 5% set by article 669 LEC. Conversely, if we want to get the highest possible price, we will admit strange bidders and lower the deposit to participate in the auctions.

The valuation of the property

As in the previous section, the appraised value can serve to attract or drive away other bidders. If the "auction rate" is very high, Bidders will not attend and the interested client may be awarded the property. Conversely,  auction may take place without minimum "auction type": That would attract more bidders and raise the award price., maximizing the interest of the community member who wants to sell his quota.

The art 110.3 c) of the LJV indicates that in the specifications, the valuation of the goods or rights to be auctioned will be collected. If there is no agreement on the valuation, an appraiser expert will be appointed.

Batch formation

If there are several farms that go to auction, You can make a single batch or several as established in the article 643 the LEC.

Publicity of the possessory situation

In the auction announcement, the possession status of the auction must be indicated (art. 661.1 LEC). The possessory situation will influence the bids that are presented and the price that is finally achieved.

It is convenient to set the deadline for the delivery of possession of the property after the award.

Deposit to participate in auction for division of common thing

The co-owners are not obliged to post the deposit to participate in the auction (art. 647.2 LEC).  However, It is advisable to set a deposit percentage so that the bids are made "seriously". If they don't have bail, it is frequent to bid "happily" then breaking the auction and having to start over. If the community members have to deposit a succulent deposit, the temptations of breaking the auction are avoided., for in that case, they would lose their amount.

Bidders may bid "subject to their bid" in case the auction breaks. If the auction breaks, la adjudicación se hará el mejor postor que haya hechoreserva de postura”.

Transfer of the auction

There is also the possibility that the community members reserve the power to transfer the auction to a third party., in accordance with the provisions of the article 647.3 the LEC.

Can co-owners participate in the auction even if there are no bidders?

The community members can bid, because there is not properly a performer of the article 647.2 LEC. Article 671 LEC is not applicable to auctions of dissolution of the indivisible.

Minimum award price in the auction for the division of the common thing

Article 111.6 of the LJV establishes that the auction is over, the LAJ will approve the auction as long as it covers the minimum rate that the applicant would have set. The LEC says nothing about it. Therefore, it is understood that it is possible to establish a minimum price.

It is also about facilitating or hindering the participation of third parties in the auction: a high initial minimum bid will drive them away and removing the minimums will attract bidders.

The problem arises if the auction is abandoned. Another auction should be held, modifying the sheet to prevent it from being deserted again. The limit will be set by the Court, to avoid the community members "de facto" preventing the execution of the sentence, demanding very high minimums. It is even possible that the Court may abolish said minimum price.

Deadline to enter the auction price

The LEC establishes a term of 40 days to record the difference between the deposit and the auction (art. 670.1 LEC). However, This period can be lengthened or shortened depending on the interest of the one that proposes the bidding conditions of the auction.

Payment of the price

Although it is something that falls by its pure logic, it must be indicated in the specification that the community member who is awarded the property, You should not enter the total amount but the part that results from discounting your part of the property.

Can community members present third parties that improve posture?

The first paragraph of the article 670.4 LEC establishes the possibility that a community member may present a third party that improves posture. Said new offer must be higher than 70% of the auction type.  Namely, once the auction is over, it is not possible that one of the community members increases his bid with a small amount with the intention of staying well, but from that moment on, only the presentation of a third party can be included, which must also exceed 70% of the auction type. However, this issue is not peaceful between the different courts (v.gr. AAP Madrid S8ª de 20 March 2012 is contrary to the application of 670.4 LEC to the auctions of dissolution of the indivisible).

Can the auction be approved for less than 50% of the appraised value?

The LAJ, heard the parties, will decide on the approval of the borrower in view of the circumstances of the case and taking into account the conduct of the debtor (art. 670.4 3rd LEC paragraph).  Namely, award is possible for less than 50%, even if, considering the circumstances of the case, an attempt will be made to avoid unjust enrichment.

What about loads?

At auctions for the division of the common thing there are no "subsequent charges" and their cancellation does not apply for the sake of Article 674 LEC. This article applies to auctions held under pressure.

Therefore, it is convenient in the specification to clearly indicate the situation of the property charges and what will happen in the event that new charges appear between the auction and registration.

Similar situation occurs with the fees of the community of owners.

What expenses does the auction entail for the division of the common thing?

Expenses are:

  • Property appraisal, if it has been necessary, for lack of agreement in the assessment.
  • Registro de la Propiedad: Issuance of certification and annotation outside the domain registration
  • Anuncio de subasta en el BOE

Los copropietarios deberán sufragar dichos gastos en función de su cuota de participación (art. 395 C.C).

Holding of auction for division of common thing

The auction will be held according to what is regulated in the LEC, as indicated in the article 111 of the LJV: You will register in the BOE Auction Portal indicating that it is a type of "Voluntary" auction, as well as the conditions of it.

Are there costs in the execution of the sentence of division of common thing?

Al no haber un ejecutado propiamente dicho, no hay imposición de costas en la ejecución de la disolución del proindiviso.

A auction attorney le podrá evitar los problemas que pueden surgir durante el procedimiento.

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