Forced sale

The forced sale is usually carried out by a competent local court and is strictly regulated in most countries in order to protect the rights of all parties involved. The procedure can vary from country to country, but in Germany it usually looks like this:

1. Application: A creditor (often a bank) files an application for foreclosure with the competent district court.
2. Examination and expert opinion: The court examines the application and usually commissions a valuation report for the property.
3. Market value: The market value of the property is determined on the basis of the appraisal, which serves as the basis for the minimum bid (usually the so-called 5/10 limit, i.e. 50% of the market value) at the auction.
4. Announcement: The forced sale is publicly announced to inform potential buyers.
5. Auction date: On this date, bidders have the opportunity to submit bids for the property. Bidders often have to provide a security deposit in order to participate.
6. Surcharge: The highest bidder wins the bid and becomes the new owner of the property, provided the highest bid fulfils the minimum requirements set by the court.
7. Distribution of the proceeds: The proceeds from the auction are used to settle the creditors' claims. If there is any money left over, the previous owner is entitled to it.

Foreclosures are often complex and emotionally stressful, especially for the previous owners. They can also harbour risks for buyers, as the properties are usually sold "as is" without warranty. It is therefore advisable to seek legal and financial advice in the event of a forced sale, whether as a debtor or as a potential buyer.