Author: Attorney-at-law Aleksandar Popović

Auctions are a multiple source of excitement: besides activating emotions that the very nature of competition provokes, eventual victory or acquisition of an item at a lower price than the market brings special joy. What can stand in the way of that joy, we reveal below.

E-auction is an electronic public bidding procedure for the sale of immovable and movable property that has been subject to enforcement proceedings. Registered users participate in the bidding, either personally or through a proxy. Details about the course of the e-auction and its steps are available online and will not be discussed further here; instead, we will focus on issues that have not been widely written about but are important for participants.

During the coronavirus pandemic, technology emerged as an alternative to the previous oral bidding method. This change brought transparency, speed, centralization, and increased reliability of the procedure itself.

On the other hand, easier access to auctions, despite the mandatory deposit, introduced the possibility of somewhat more impulsive purchases. It is important to emphasize that participation in auctions can have long-term financial consequences. It is of utmost importance that the participant in the auction is familiar with the characteristics of the auctioned item and the procedure itself, so that consequences do not arise which would not only destroy the excitement that guided the participant during the process, but also create lasting trouble for the impulsive buyer.

Before the auction

The buyer at an e-auction does not acquire only the item of sale, but also the legal situation that accompanies it. Most risks can be identified even before the deposit is paid. Participants often rely only on brief advertisements on the e-auction portal, while they less frequently check the property register, the basis of enforcement, whether it is the first or second sale, whether there are grounds for suspension of the procedure, as well as numerous other issues that vary depending on the item being sold.

It is of exceptional importance to determine the purchase strategy in advance: clearly establish the maximum price, so that the purchase (in case of the highest bid) remains profitable. In addition to the difference between the real value of the item and the purchase price, taxes, transport costs, or other specific expenses for the particular item must also be considered. Defining the price limit prevents long-term regret that comes after a surge of happiness hormones.

During the auction

Every participant should know that the electronic bidding procedure is strictly formal and that the provisions of the Law on Enforcement and Security and the Regulation on the Organization and Procedure of Electronic Public Bidding apply. The importance of knowing these regulations lies in the fact that, in order to submit an adequate bid, it is necessary to know the procedure – what is considered a valid bid and what is not, as well as to pay attention to the duration of the bidding interval and deadlines.

Knowledge of the procedure and relevant legal provisions helps not only in submitting the participant’s own bid, but also in recognizing irregularities during the process. When such irregularities occur, knowing the available actions is of exceptional importance for protecting the participant’s rights.

It is again important to emphasize that throughout the bidding process, the strategy established at the beginning must be kept in mind, since an e-auction is not a game of chance, but a procedure in which the participant must at all times consider the legal and economic justification of the next step.

After the auction

Winning the auction does not mean the end of the legal obligations of the participant who submitted the best bid. Although for most participants the procedure ends – for the winner it is only the beginning. After the conclusion is issued by the Public Enforcement Officer, its content, data on the procedure, participant, and auctioned item are checked, and the use of legal remedies is considered. Deadlines are again crucial: especially the deadline for using legal remedies and the deadline for paying the auctioned price in case of victory. Missing deadlines has tangible consequences: loss of deposit and status as the most favorable bidder.

Sometimes after the auction, new legal proceedings may arise, e.g., before the cadastre or in a possession dispute. To increase the chances of success in such proceedings, it is crucial that all previous steps comply with the law and that the situation is legally clean regarding the auction procedure itself. It happens that another participant files a legal remedy – then it is important to protect one’s rights and preserve the victory.

Proxy in the procedure

Throughout the procedure, the participant may have a proxy. For legal entities, it is possible to appoint a legal representative, while natural persons may authorize a relative in the direct line or an attorney.

A proxy from among attorneys, in addition to contributing by undertaking factual actions and knowing the procedure, brings two important components not explicitly stated by law.

First, the client does not have to think about the legal aspects of the item being bid on, since the attorney takes care of that and provides peace of mind.

Second, two heads are better than one: at all times there is another person in the procedure – a professional without emotional reactions to the bidding situation – who can cool-headedly remind the participant of the established strategy and the justification of the planned step.

Conclusion 

This text of an informative nature was written with the aim of highlighting the weight of legal consequences of an exciting activity such as bidding. Only after the auction procedure is completed, when actions become legally binding for the best bidder, does a series of other issues arise, often not considered in advance. Discussion of these topics serves to raise awareness of the nature of this phenomenon, since only when everything is taken into account can an informed decision be made.

Note: This text expresses solely the personal opinion of the author and does not constitute legal advice.