Buying a property at auction in Italy can look appealing when the asking price is lower than comparable homes on the open market. For buyers, however, a winning bid can also bring responsibilities that may affect the cost, condition and availability of the property after purchase.
Judicial sales follow the seizure of a home to meet debts, although unpaid mortgages are only one possible cause. Buyers may face unauthorised building works, unpaid condominium charges for which they can be jointly liable, and delays in taking possession if former owners remain in the property.
Why a property goes to auction in Italy
A judicial sale generally takes place when an owner cannot meet their debts, and a judge orders the seizure and auction of the property. The proceeds are then used to satisfy creditors’ claims.
An unpaid mortgage is one possible reason. For agreements covered by Article 40 of Legislative Decree 385/1993, serious default can include at least seven payment delays, even if they are not consecutive, of between 30 and 180 days after the payment deadline.
Other circumstances that can lead to a forced sale:
- unpaid personal loans, utility bills or business debts, where a creditor has the legal grounds to begin enforcement proceedings;
- tax debts involving the Revenue-Collection Agency, subject to the conditions set out in Article 76 of Presidential Decree 602/1973 and the rules that can prevent seizure of a main residence;
- unpaid condominium charges;
- enforceable judgments or payment orders concerning contractual or non-contractual obligations;
- inheritance disputes or disputes between former spouses involving an indivisible jointly owned property.
How Italian property auctions work
Once a property enters the judicial-sale process, it is subject to an expropriation constraint. A court-appointed custodian takes responsibility for preserving and managing the property. The custodian can organise viewings for interested parties and carry out other procedural activities, including those connected with a possible release of the home.
An expert valuer then prepares the official judicial valuation. The property is published on the Portale delle Vendite Pubbliche, while availability may also be listed on major judicial-auction portals by the custodian.
Sale proceeds first cover procedural costs. The remaining amount is distributed to creditors according to legal priority rules.
How long it can take for a home to reach auction
There is no fixed period between the seizure process and an auction. Timing depends on the type of debt and the housing and family circumstances of the owner.
Usually, between 12 and 18 months may pass from notification of the seizure order. Some properties do not reach auction because the owner pays the debt or agrees to a repayment plan with the bank for overdue mortgage payments.
There is also no fixed number of unsuccessful auctions after which a property automatically returns to the owner. The decision rests with the judge.
After a first unsuccessful auction, a new sale may be arranged. The reserve price can be reduced by up to 25%, or by up to half from the fourth attempt. Further attempts can be held several months apart, resulting in a gradual reduction in the property’s value.
Can former owners remain in the property?
Debtors and their families may, in certain cases, remain in a seized property until the transfer decree is issued. However, this is not automatic. A judge may order the home to be vacated earlier where valid reasons exist.
For buyers, this means that release of an auctioned property may not be immediate, particularly if former owners remain in occupation.
Risks of buying a property at auction in Italy
There are several risks for auction buyers.
No standard guarantee for property defects
Forced sales exclude guarantees for material or structural defects. A buyer cannot generally take action over flaws or non-compliance discovered only after the purchase, except in exceptional cases.
Unauthorised building works
A buyer may be responsible for regularisation and restoration procedures where there are unauthorised building works.
Outstanding condominium charges
The successful bidder may have joint liability for unpaid condominium charges for the current year and the year before the property is awarded.
Delayed possession
Vacant possession may not be immediate, especially if former owners continue to occupy the property.
Loss of the deposit
A buyer who does not pay the outstanding balance within the required period may lose both the property and the deposit.
Measures available before a property reaches auction
There are steps that an owner may use to avoid an auction:
- agreeing a debt settlement, known as saldo e stralcio, with the creditor;
- applying to convert the seizure before a sale is ordered, with payment of one sixth of the debt and, for property cases, repayment of the remaining balance in up to 48 monthly instalments;
- selling the property privately, provided this is agreed with creditors, and the seizure is extinguished at the same time as the notarial deed.
