Forced sales in Germany (Zwangsversteigerung): how it works

What is a Zwangsversteigerung?

It is an auction ordered by a German local court (Amtsgericht) under the forced sale law (ZVG). It takes place when an owner fails to repay debts, or to bring co-ownership to an end (for example between heirs or former spouses who cannot agree on a sale: "zum Zwecke der Aufhebung der Gemeinschaft"). The seller is therefore not a private individual setting their own price: the court organises the sale.

Where to find the auctions

Hearings are announced publicly several weeks in advance, in particular on the joint official portal of the Länder (ZVG-Portal). Bidorado republishes these notices, with the agreement of their publishers, and translates them: you see the type of property, the location, the market value, the date and the courtroom, then a link to the official notice.

Market value and the expert report

Before the sale, the court has the property valued by an expert. This report (Gutachten) sets the market value (Verkehrswert). It can be inspected at the court and is often available online. Note: the expert may not always have been able to enter the property, and the valuation may be several months old. Read it in full, especially the sections on the condition of the property and its occupancy.

The 5/10 and 7/10 thresholds

At the first hearing, two thresholds protect the owner:

• a bid below half the market value (5/10) is rejected automatically;
• a bid below 70% of the market value (7/10) may be rejected at the request of a creditor.

If the first hearing does not result in a sale, these thresholds no longer apply at a subsequent hearing. That is where the best bargains are sometimes found, but the other bidders know it too.

How the hearing runs

The hearing takes place at the court, in German. The judge (or the court officer in charge of the sale) presents the file and the conditions, then opens a bidding period of at least 30 minutes. Bids are made out loud. You must bring photo ID. If you are bidding for someone else or for a company, you need a properly executed power of attorney.

The security deposit (Sicherheitsleistung)

A creditor may require a deposit of 10% of the market value. It is not paid in cash: it is usually provided by a prior transfer to the court's account, or by a banker's cheque accepted by the court. Ask the court several days before the hearing about the exact form and deadlines.

The award and what follows

The property is awarded to the highest bidder by a court decision (Zuschlag). The buyer becomes the owner with that decision. The price (Bargebot) is then paid by a date set by the court, with interest from the date of the award. There is no estate agency commission or notary fee for the purchase itself, but transfer tax (Grunderwerbsteuer), court fees and land registry registration costs still apply.

Points to watch

• Rights that remain: some charges registered in the land registry do not disappear with the sale. They are set out in the conditions read at the hearing.
• Occupancy: a tenant keeps their lease, with special termination rules for the buyer. If the former owner occupies the property, the award decision allows steps to be taken to remove them, which can take time.
• Viewings: the owner is not obliged to allow viewings. Purchases are often made on the basis of the expert report alone.
• Postponement or cancellation: a hearing can be cancelled at the last moment (agreement with creditors, payment). Check the official notice on the day.

This guide is a general overview, not legal advice. For a purchase, have an experienced lawyer or professional who knows the German procedure assist you.