Going to the public auction well prepared
Buying at an auction requires the potential buyer to be well prepared. The civil law notary is required to place an auction notice in one or more local newspaper no later than 30 days before of the auction. Beside the notice in the newspaper, all auctioned properties are described in detail on this website.
The description includes:
1. Mention of a foreclosure (ex article 3:268 Civil Code) by a mortgagee (bank, financial institution, or private) or a foreclosure (ex articles 502 through 513 Civil Law/Court Proceedings) pursuant to a lien;
2. The date, time and place of the auction;
3. The description of the property on auction;
4. The reserve price of the property;
5. The availability of an appraisal report, auction conditions, estimate of the costs and other charges for the account of the buyer, available at our office;
6. Other information of interest, including photographs of the properties when available.
In case of a foreclosure by a mortgagee the auction notice shall also confirm if potential buyers are allowed make a private bid to buy the property before the auction date. A private bid is not allowed by law in case of a foreclosure pursuant to a lien. This private bid shall confirm the price being offered by the buyer, which shall be equal to or higher than the reserve price.
The private bid shall be addressed to the civil law notary in writing at the latest two (2) weeks before the date of the auction, and shall be irrevocable. The civil law notary shall relay/forward these private bids to the mortgagee and the debtor. The mortgagee as well as the debtor have the right to instruct the civil law notary to submit the private bid of their choice to the Court of First Instance in Aruba for approval. Once such bid has been submitted to the Court, the auction will be suspended until a ruling has been rendered. The Court shall determine if said private bid is acceptable for all the creditors (mortgages, liens/attachments, etc.) and the debtor. The Court shall reject the private bid in the event the Court is of the opinion that the property would yield a higher amount at the auction. In the event that the Court approves the private bid the sale shall be executed privately and the public auction will be cancelled.
Potential buyers (at the auction as well as private bidders) shall identify themselves with a valid passport, driver's license or ID-card and also provide the civil law notary with a bank guarantee showing that they have sufficient funds to pay the purchase price and the additional costs and charges.
It is of the paramount/utmost importance for potential buyers to consult with the general and special conditions before the auction. The special auction conditions are determined by the mortgagee. The auction shall be held according to the auction conditions. Besides any applicable special auction conditions, auctions shall be subject to any legal restrictions that apply to that property such as lease agreements, easements, or certain charges or obligations for which the bank has excluded any liability. Any such restrictions shall be announced prior to the commencement of the auction.
The auction procedure.
Each bid shall be irrevocable, unconditional and without reservations.
The auction shall consist of two rounds for each property through a Dutch auction system.
The first round shall take place by raising bids of USD 1,000 or an amount higher as confirmed by the bidder, which session will be concluded when the highest bid has been confirmed. If the reserve price established by the seller of a certain property has been set at USD 300,000, all bids during the first round shall start from this amount and end at the highest bid, for instance at USD.330,000. After asking the potential buyers for three successive times if anybody wants to bid higher and no such higher bid has been placed, the civil law notary will close the first round.
The second round shall consist of a sale by decreasing bids. In the example above, if the first round ended with the highest bid at USD 330,000, the seller shall instruct the civil law notary to add an additional amount as a starting price for the second round. Let's say that an amount of USD 50,000 has been added to the highest bid of USD 330,000 and that the decreasing bids have been set at USD 2,000 each. This will mean that the civil law notary shall start auctioning from an amount of USD 380,000 and decreasing the amount with USD 2,000 each time, until a potential buyers calls mine while raising their hand. If this happens before the amount is lowered to the original bidding price of USD 330,000, say at USD 340,000, then this amount will be the final auctioning amount and this bid shall prevail over the highest bid in the first round. However, if no such bid is made in the second round then the highest bid in the first round shall be the final bid.
It should be noted that any buyer who has place the highest bid in the first round, can still bid in the second round. Please note as well that if no bids are made in the first round, the civil law notary will not go over to a second round of bidding and consquently close the auction.
If you have any further questions concerning the above, please refer to the contact us page.