The process of "judicial auction" of real estate by the court (detailed version)

Foreword In practice, when the court has seized the property of the other party, how to quickly auction and sell the real estate in the name of the respondent is very important to realize the interests of the applicant. What is the process of judicial auction of a property? What is the treatment after the foreclosure house is unsuccessful? Will the price be reduced after the auction is unsuccessful? How many unsuccessful auctions will be sold? What should I do if I can't sell it? This article answers these questions one by one.

1. What is the process of the court auctioning a property? (The parties provide the property information to the court), ---- the court seizes the property (the court will issue a ruling on the seizure before taking measures), ----- after the seizure, the court will issue a notice of vacating the house, serve a notice of performance, and a notice of appraisal) ---- the court entrusts an appraisal agency to evaluate the value of the house (online inquiry, Directed inquiry) ---- (the parties may request reconsideration if they have objections to the appraisal results) ---- the court conducts the ---- on the auction platform (Taobao and JD.com are commonly used in practice) to the first auction of real estate--------- (after the first auction is unsuccessful), and the second auction of real estate (after the second auction is unsuccessful) can enter the property sale procedure ---- settle debts in kind

2. How is the price of the house auction and sale determined? 1. According to the "Provisions of the Supreme People's Court on Several Issues Concerning the People's Court's Determination of the Reference Price for Property Disposal", the people's court shall initiate the procedure for determining the reference price for property disposal within 30 days after the people's court seals, seizes or freezes the property, and the property that needs to be auctioned or sold. The methods of determining the disposal reference price include party bargaining, directional inquiry, online inquiry, entrusted appraisal, etc. Where the court conducts an online judicial auction, it shall determine the reserve price, and the auction reserve price is the starting price. 2. Article 10 of the "Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions by People's Courts": Online judicial auctions shall determine the reserve price, and the auction reserve price shall be the starting price. The starting price shall be determined by the people's court with reference to the appraisal price; If no appraisal is made, it shall be determined with reference to the market price, and the opinions of the parties shall be sought. The starting price shall not be less than 70% of the appraisal price or market price. 3. Article 26 of the "Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions in People's Courts": If no one bids during the bidding period of online judicial auctions, the auction will be unsuccessful. After the auction fails, it shall be auctioned again on the same online judicial auction platform within 30 days, and where movable property is auctioned, it shall be announced 7 days before the auction; Where the auction of immovable property or other property rights is to be announced, 15 days before the auction. The starting price of the second auction shall not be reduced by more than 20% of the starting price of the previous auction. Where the auction fails again, it may be sold on the same online judicial auction platform in accordance with law. 4. The "Notice of the Supreme People's Court on Conscientiously Doing a Good Job in the Connection between Online Judicial Auctions and Online Judicial Sales" stipulates that the sale price of online judicial auctions is the unsuccessful price of the second auction of online judicial auctions. Summary: 1. The starting price of the first auction shall not be less than 70% of the reference price for the disposal of the appraisal and determination price (in practice, the two parties can negotiate to determine the auction reserve price, if it cannot be agreed, the court will directly follow the minimum 70% as the starting price) Note: The auction announcement period of the first auction shall not be less than 15 days for movable property and not less than 30 days for immovable property. 2. After the first auction fails, the starting price of the second auction shall not be less than 80% of the starting price of the first auction. 3. The selling price is generally the same as the price of the second auction. The bidding period for judicial auctions is 48 hours, and the time to sell is up to 60 days.

3. How will the court deal with the first and second auctions of the house? 1. According to the first paragraph of Article 16 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts (2020): In the case of unsuccessful auction of goods, if the applicant for enforcement or other enforcement creditors apply for or agree to accept the auctioned property at the reserve price set in the auction, the property shall be handed over to him to pay off the debt. 2. In accordance with the second provision of the "Notice of the Supreme People's Court on Conscientiously Doing a Good Job in the Connection between Online Judicial Auctions and Online Judicial Sales": On the issue of the time limit for issuing announcements on online judicial sales. After the second online auction fails, the people's court shall, within 10 days, inquire whether the applicant for enforcement or other enforcement creditors accept the payment of debts in kind. If the debtor is not accepted in kind, the people's court shall issue an announcement of the online judicial sale within 15 days of the second online auction being unsuccessful. 3<中华人民共和国民事诉讼法>. Article 490 of the Interpretation of the Supreme People's Court on Application: If the property of the person subject to enforcement cannot be auctioned or sold, with the consent of the person applying for enforcement, and it does not harm the lawful rights and interests of other creditors or the public interest, the people's court may hand over the property to the person applying for enforcement to pay off the debts or to the person applying for enforcement for management; Where the person applying for enforcement refuses to accept or manage it, it shall be returned to the person subject to enforcement. Summary: 1. After the second auction fails, the court must first inquire whether the applicant for enforcement or other creditors accepts the payment of debts in kind, and if they accept, they will directly make and serve the judgment in rem, and the ownership of the subject matter will belong to the debtor after receiving the judgment on the payment of debts in kind. 2. If the applicant does not agree to repay the debt and the property is not successfully sold, the court will return the property to the person subject to enforcement.

Legal basis for reference: 1. Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions by the People's Courts, 2. Provisions of the Supreme People's Court on the Appraisal, Auction and Sale of Property Entrusted by the People's Courts, 3. Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts (Revised in 2020) 4. Notice of the Supreme People's Court on Conscientiously Doing a Good Job in the Connection between Online Judicial Auctions and Online Judicial Sales.

After the real estate auction is "unsuccessful", the applicant for enforcement does not accept the "repayment of debts in kind",

What should the court do with the property?

Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by People's Courts (2020 Amendment)

Article 16 Where there is no bidder at the auction or the highest price of the bidder is lower than the reserve price, and the applicant for enforcement or other enforcement creditors present apply for or agree to accept the auctioned property at the reserve price set in the auction, the property shall be handed over to him to pay off debts.　

If two or more enforcement creditors apply to use the auctioned property to settle debts, the creditor with the priority of statutory repayment shall be given priority; If the order of compensation is the same, the recipient shall be determined by drawing lots. If the amount of the creditor's rights to be repaid by the assignee is less than the value of the debtor's property, the people's court shall order it to make up the difference within the specified period.

Article 23 Where there is no bidder at the auction or the highest price of the bidder is lower than the reserve price, and the applicant for enforcement or other enforcement creditors present at the auction do not apply to settle the debt at the reserve price set in the auction, the auction shall be conducted again within 60 days.

Article 25: The people's court may, in accordance with the provisions of Article 16 of these Provisions, hand over the immovable property or other property rights that are still unsold in the second auction to the applicant for enforcement or other enforcement creditors to pay off debts.

If the applicant for enforcement or other enforcement creditors refuse to accept or fail to deliver their debts in accordance with law, the third auction shall be conducted within 60 days.

If the third auction fails and the applicant for enforcement or other enforcement creditor refuses to accept or is unable to accept the immovable property or other property rights in accordance with law, the people's court shall issue a notice of sale within seven days from the date of the conclusion of the third auction.

If no buyer is willing to buy the property at the reserve price of the third auction within 60 days from the date of the announcement, and the applicant for enforcement or other enforcement creditors still do not express their acceptance of the property for debt payment, the sealing or freezing shall be lifted and the property shall be returned to the person subject to enforcement, except where other enforcement measures may be taken against the property. ”

Analysis and Summary:

1. After that, you can repay the debt. If the applicant for execution does not agree to repay the debt, the second auction will be held within 60 days.

2. Debts can be repaid. If the applicant for enforcement does not agree to repay the debt, the person subject to enforcement may request the enforcement court to conduct a third auction of the property within 60 days.

3. First, you can repay debts. The person subject to enforcement may request the people's court to issue a notice of sale within seven days from the date of the conclusion of the third auction.

4. If no buyer is willing to buy the property at the reserve price of the third auction within 60 days from the date of issuance, and the applicant for enforcement and other enforcement creditors still do not express their acceptance of the property for debt payment, the sealing and freezing shall be lifted and the property shall be returned to the person subject to enforcement.

So how should the phrase "except for the property where other enforcement measures may be taken"?

If the creditor is unwilling to pay off the debt in kind after three failed auctions, does it mean that the person subject to enforcement can request the enforcement court to lift the seizure and freeze and return the property to the person subject to enforcement? Whether the enforcing court can initiate a new round of auction or sale proceedings.

In practice, there are a number of ways to deal with this situation.

Information Form 1:

If the auction or sale is unsuccessful and the person applying for enforcement also clearly states that it does not accept the property for payment, the enforcing court may rule to lift the sealing or freezing measures in accordance with law.

Information Form 2:

The "other enforcement measures" provided for in this paragraph may include the court's restarting of appraisal and auction procedures or changing from entrusted auction to online judicial auction according to changes in market prices, etc., rather than the immediate lifting of the sealing or freezing measures, nor the current enforcement procedure in which the enforcement case must be terminated.

Information Form 3:

Where the property of the person subject to enforcement cannot be auctioned or sold, and with the consent of the person applying for enforcement, and it does not harm the lawful rights and interests of other creditors or the public interest, the people's court may hand over the property to the person applying for enforcement for management; However, if the applicant for enforcement refuses to manage, it will be returned to the person subject to enforcement.

I. Guidelines for the Work of the High People's Court of Henan Province on Issues Related to the Appraisal, Auction and Sale of Immovable Property (for Trial Implementation)

10. Where the property of the person subject to enforcement is not sold through auction or sale, and the person applying for enforcement or other enforcement creditors does not accept the payment of debts in kind, the enforcing court shall, within three months after the auction or sale of the unsuccessful auction, re-initiate a new round of appraisal and auction procedures for the subject matter involved in the case ex officio or upon application in accordance with changes in market prices.

II. Reference Opinions of the Executive Bureau of the High People's Court of Guangdong Province on Several Issues Concerning the Application of Law in Enforcement Procedures (May 2017)

Question 10: Can the immovable property and other property rights entrusted for auction be re-auctioned if they have been auctioned off three times, or if the movable property has been auctioned off twice or the property auctioned online has been unsold through two auctions?

Disposition opinion: Where the immovable property and other property rights entrusted for auction have been unsold through three auctions, or the movable property has been unsold through two auctions, or the property in online auction has been unsold through two auctions, and cannot be sold in accordance with law or the debts in kind have been re-entrusted, the people's court may re-entrust the appraisal or auction.

Main reason: Paragraph 2 of Article 28 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts stipulates that: "If the third auction fails and the applicant for enforcement or other enforcement creditors refuse to accept or cannot accept the immovable property or other property rights to settle debts in accordance with the law, the people's court shall issue a notice of sale within seven days from the date of the conclusion of the third auction." If no buyer is willing to buy the property at the reserve price of the third auction within 60 days from the date of the announcement, and the applicant for enforcement or other enforcement creditors still do not express their acceptance of the property for debt payment, the sealing or freezing shall be lifted and the property shall be returned to the person subject to enforcement, except where other enforcement measures may be taken against the property. "The 'other enforcement measures' provided for in this paragraph may include compulsory administration, as well as the reopening (evaluation) of the auction procedure by the enforcing court in accordance with changes in market prices.

Accordingly, if the immovable property and other property rights entrusted for auction cannot be sold in accordance with the law or repaid with debts in kind after three unsuccessful auctions, the enforcing court may restart the appraisal and auction procedures according to changes in market prices, rather than immediately lifting the sealing or freezing measures. Similarly, if the movable property entrusted for auction and the movable property, immovable property and other property rights in the online auction cannot be sold in accordance with the law or the debts in kind after two auctions have been unsuccessful, the enforcing court may also restart the appraisal and auction procedures according to changes in market prices, rather than the immediate lifting of the sealing or freezing measures.

3. Reference for the Review of Difficult Legal Issues in the Enforcement of the Third Division of the Executive Bureau of the Higher People's Court of Shandong Province (5) - Special Topic on Property Disposal (June 2023)

6. If the property of the person subject to enforcement fails to be sold or fails to be sold through auction, and the creditor does not accept the repayment of the debt, should the third party apply for purchase at the unsuccessful auction price?

Reference opinion: According to Article 9(4) of the Opinions of the Supreme People's Court on Further Strengthening the Concept of Good Faith and Civilized Enforcement in Enforcement Work, if the property is unsold after auction and the enforcement creditor does not accept the repayment of debts, the third party may apply for the purchase at the unsuccessful auction price. If a third party intends to purchase after the first or second auction, the application shall be submitted before the next disposal link is initiated; If the intention is to purchase after the completion of the sale procedure, an application shall be submitted within a reasonable period of time. If two or more persons apply in writing to purchase at the unsuccessful auction price, they shall be informed to participate in the bidding through the subsequent auction procedures.

7. After the auction or sale of the property of the person subject to enforcement is completed, if no one is willing to buy the property at the auction reserve price, and the applicant for enforcement or other enforcement creditors do not accept the repayment of debts, can the property be re-evaluated and auctioned?

Reference opinion: In accordance with the provisions of Article 25 of the Provisions of the Supreme People's Court on the Auction and Sale of Property in Civil Enforcement by the People's Courts, after the auction or sale of property is completed, if no buyer is willing to buy the property at the reserve price of the third auction, and the applicant for enforcement or other enforcement creditors still do not express their acceptance of the property for debt payment, the sealing or freezing shall be lifted and the property shall be returned to the person subject to enforcement, except where other enforcement measures may be taken against the property. The phrase "other enforcement measures may be taken" in this provision includes a re-auction of the property. Even if the enforcing court has returned the property to the person subject to enforcement after unsealing it, it does not mean that the property has become exempt from enforcement, and if the property has the possibility of being sold within a reasonable period of time, it can be seized again, frozen and the appraisal auction procedure can be initiated.

5. (2019) Supreme Court Zhifu No. 37