Buying at an auction requires the potential buyer to be well prepared. Hereunder you can find more information and important aspects to consider before buying at an auction.
All auction costs are for the account of the buyer, which costs include: transfer tax (overdrachtsbelasting), registration fees Land Registry, the outstanding long lease fees (erfpacht canon) and property taxes (grondbelasting) for execution of the necessary notarial deeds, other auction costs (rent of auction room, bailiff fees, cancellation of liens and mortgages, advertisements), and the costs to have the property vacated, if necessary.
The auction shall be held according to the auction conditions. It is important for potential buyers to consult the general and special conditions before the auction. The special auction conditions are determined by the mortgagee.
Besides any applicable special auction conditions, auctions shall be subject to any legal restrictions that apply to that property such as lease agreements, easements (erfdienstbaarheid), or certain charges or obligations for which the bank has excluded any liability. Any such restrictions shall also be announced prior to the commencement of the auction.
It is important to note that the seller may stop or postpone the auction at any time.
In case of a foreclosure by a mortgagee the auction notice shall also confirm if potential buyers are allowed to 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.
The private bid must 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 private bid shall confirm the price being offered by the buyer, which shall be equal to or higher than the reserve price. The civil law notary shall relay 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.
The auction consists of two rounds for each property through a Dutch Auction System. The auction will take place by raising bids (bij opbod) and by decreasing bids (bij afmijning) in one session.
The first round (opbod ; raising bids) shall take place by raising bids from a pre-determined reserve price, which session will be concluded when the highest bid has been confirmed. For example, 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 (afmijnen ; decreasing bids) 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. For example 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 means 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 bidder calls mine while raising their hand. If this happens before the amount is lowered to the original bidding price of USD 330.000,-- for example 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.
The bidder who has placed 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 proceed to a second round of bidding but instead close the auction without the property being sold.
Each bid shall be irrevocable, unconditional and without reservations. Once a bid is made it cannot be withdrawn and the seller has the right to not accept any bid at his sole discretion.
If you have any further questions concerning the above, please call our office and you will be referred to our auction expert.