Buying a bank-owned or auction (subasta) property

Terms used

• Subasta — A subasta is a public auction where a property is sold to the best bidder, usually to repay a debt.
• NIE — The NIE is the Spanish tax number for foreigners.
• IBI — The IBI is the yearly local property tax paid by the owner.
• Nota simple — The nota simple is a registry extract showing a property's owner, charges and mortgages.
• Catastro — The Catastro is the property tax register that records each property's details.
• Decree of adjudication — The decree of adjudication is the court document that awards the property to the winning bidder.

Key rules

• Deposit: To bid you deposit 5% of the appraised value, and the balance is due within 40 days of the award notice.
• Lost deposit: If you cannot pay the balance in time, you lose the deposit.
• Occupants: Only a court can remove occupants, and it can take weeks to many months.
• Debts: Charges and recent unpaid community fees and IBI can stay with the property.
• Condition: Expect a sale as seen, with no seller's guarantee.

Is the discount worth it?

Only if you can price in three risks: someone living in the home, debts that come with it, and a condition you may not see before you buy. Add the likely cost of each to the price. If the discount no longer looks big, walk away.

Bank-owned homes versus auction homes

Bank-owned homes are sold by the banks' property arms or by servicing companies, through their own websites and through agents. Prices are often asking prices with some room to negotiate. Expect no seller's guarantee and a sale "as seen". Some banks offer a mortgage on their own homes, but this varies, so ask early.

Auction homes (subasta) are sold through the official online auction portal. Foreigners can bid if they have legal capacity and electronic identification, such as a digital certificate or a Cl@ve-type ID. Non-residents also need an NIE. The timeline below shows the steps. Take legal advice before you bid.

Risk 1: someone lives in the home

A home may be occupied, and an auction listing says so. Read it before you bid. For a bank-owned home, visit and check in person.

• Tenants with a lease that is valid against you may stay.
• Occupants with no valid title can be removed, but only by a court order. As the winning bidder you ask the court after you hold the decree of adjudication.
• Expect weeks to many months, and you pay the legal costs. Where the debtor's main home is involved, the court sets a period for leaving.
• Vulnerable occupants can bring in social services and suspend an eviction. These protections have been extended several times.
• Never force anyone out yourself. That is a criminal offence.
• Squatters (okupas) can be removed by a faster route, but it still goes through the courts.

Risk 2: hidden debts

Prior mortgages and other charges can stay with a property, and recent unpaid community fees and IBI can fall on you as the buyer. Before you bid or sign:

• Get a nota simple to see the owner, charges and mortgages.
• Ask for the community debt certificate.
• Check the Catastro and the licence status of the home.
• In an auction, read the file for charges and occupancy.

Risk 3: condition you cannot see

These homes are usually sold as seen, with no guarantee. Inspect the property if you can get in, and budget for repairs. Bank-owned homes sometimes lack the energy certificate or the habitability certificate. Ask for both.

Auction money: what you can lose

You deposit 5% of the appraised value through the portal to bid, and the balance is due within 40 days of the award notice. If you fail to pay, you lose the deposit. The other bidders get their deposits back.

If you need a mortgage, arrange it before you bid. No extension is given for financing. On top of the price you pay transfer tax or VAT, and you register the title yourself.

The award is made to the highest bidder when the bid is at least 70% of the appraised value. Below that, the debtor and the creditor have options, and higher thresholds apply when the debtor's main home is involved. The terms of each auction are in its announcement, so read that one.

Before you commit

Use the checklist, documents and warnings below, and have a lawyer read the file. If you want a normal purchase with fewer unknowns, a standard resale is the safer route.

Timeline and deadlines

• Register on the auction portal and check the charges and occupancy in the file: before you bid

• Pay the 5% deposit of the appraised value through the portal and submit your bid: while the auction is open, which usually lasts 20 days

• Wait for the best bid to be reviewed; the deposits of the other bidders are returned: after the auction closes

• Receive the decree of adjudication, pay the transfer tax or VAT and register the title: after you pay the balance

Documents you need

• Nota simple from the property registry, showing owner, charges and mortgages on the property

• Community debt certificate from the building's community administrator, showing unpaid community fees

• Energy certificate for the property, which bank-owned homes sometimes lack

• Habitability certificate for the property, which bank-owned homes sometimes lack

• Spanish tax number (NIE), needed by non-residents to bid in a judicial auction

• Electronic identification, such as a digital certificate or Cl@ve-type ID, needed to register and bid on the auction portal

Checklist

• Get a nota simple and look for unregistered or prior charges and mortgages

• Ask for the community debt certificate and check for unpaid community fees and IBI (the local property tax)

• Visit the property and check in person whether anyone is living there

• Check the Catastro (the property tax register) and the licence status of the home

• Inspect the condition of the property, since it is usually sold as seen

• Ask for the energy certificate and the habitability certificate

What to watch out for

• Hidden debts can pass to you: Unpaid community fees and IBI (the local property tax) may be your responsibility as the buyer, and prior mortgages and unregistered charges can remain with the property. Get a nota simple and the community debt certificate, and read the auction file before you bid.

• The home may be occupied: Tenants or squatters may live in the property. Occupants with a valid title may stay, and removing others needs a court order that takes weeks to many months, at your cost. Check occupation in person and in the auction listing, budget for delay and legal costs, and never force anyone out yourself, as that is a criminal offence.

• Vulnerable occupants can delay eviction: Where occupants are vulnerable, social services can get involved and eviction can be suspended under housing protection rules that have been repeatedly extended. Ask a lawyer how these rules apply before you bid.

• Poor condition and no guarantees: Bank-owned homes are usually sold as seen, without seller's guarantees, and may lack the energy or habitability certificate. Inspect the home and ask for the missing certificates before you commit.

• You lose the deposit if you cannot pay: A winning bidder who does not pay the balance in time loses the deposit, and no extension is granted for financing. Arrange any mortgage loan before you bid so you can pay within the balance period.

Frequently asked questions

Can I get a mortgage to pay for an auction property?

Yes, you can pay the balance with a mortgage loan, but the loan must be ready in time to pay within the 40 days. No extension is granted for financing, so arrange the loan before you bid.

Can I bid in a Spanish auction if I am not a resident?

Yes, foreigners can bid if they have legal capacity and an electronic ID, and non-residents also need a Spanish tax number (NIE). You register on the portal and place the bid with the deposit through it. Take legal advice before bidding.

Can I remove the people living in an auction property myself?

No, you cannot force occupants out yourself, because that is a criminal offence. Once you hold the decree of award, you ask the court to order out the debtor or anyone without a valid title.

Do tenants have to leave when I buy a bank-owned or auction home?

No, a tenant or occupant whose title is valid against the buyer may stay. Only those without a valid title can be ordered out. Squatters can be removed by a faster criminal or summary civil route.

Do bank-owned homes come with a seller's guarantee?

Usually no, bank-owned homes are normally sold as seen, without seller's guarantees. Some banks offer mortgages for their own homes, so ask the bank or its servicer what financing it has.