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Procedure for conduct of an auction, rights and obligations of participants

Deposit at an auction
Written bid
Persons permitted to bid at auctions
Declaration of the best bid
Objections of persons present at auction
Obligation to pay the purchase price immediately
Payment of the purchase price by a loan
Increase of paid amount
Legal consequences of an auction
Passing of risk of accidental loss of thing
Declaration of an auction invalid

Deposit at an auction

In the case of an auction, a bailiff may determine a deposit for the auction participants in the amount of up to ten percent of the starting price. If deposit is determined, a person who wishes to participate in the auction will pay the deposit. A deposit paid by a purchaser will be included in the purchase price and, in the case of others who participated in the auction, a deposit will be refunded on the working day following the date of the auction.

The deposit can be paid to the account determined by the bailiff or in cash to the bailiff upon registration for the auction. If the deposit is paid to the account determined by the bailiff, the deposit will be deemed to have been paid when the bailiff’s account is credited to the extent of the deposit. The deposit may be paid in cash if the amount of the deposit does not exceed 640 euros.

A deposit need not be paid:

  1. by the state and a local authority, or Eesti Pank;
  2. by a claimant and a pledgee if their claim covers the required deposit. Basis: § 83 of the Code of Enforcement Procedure.

Written bid

The person who wishes to purchase the movable/immovable property may submit a written bid to the bailiff until the beginning of the auction, which must include:

  1. the name and place of residence or location of the bidder;
  2. the general description of the thing;
  3. the price offered for the thing;
  4. if an immovable property is sold, the registry part number and location of the immovable property.

A written bid must be submitted in a closed envelope. The envelope will be opened at the auction. Basis: §§ 86 and 154 of the Code of Enforcement Procedure.

Persons permitted to bid at auctions

The debtor and the claimant may also make bids and an auction. A bailiff or a person who has been present at the seizure of assets as an impartial observer and a person who organises an auction or is an impartial observer upon conduct of the auction and a person acting for the account of such person will not participate in the auction personally or through a representative. Sale of property to aforementioned persons and disposal of a thing by the specified person are void. If a new auction has to be organised for this reason, the person who committed the violation will bear the costs of organising the auction and pay the difference between the price offered by the person and the price offered at the new auction if the price offered at the new auction is lower than the price offered by the person. Basis: § 87 of the Code of Enforcement Procedure.

Declaration of the best bid

A bailiff will refuse to declare a bid to be the best if the conditions of the auction have been materially violated or the right of a third person obstructs the auction or continuation of the auction. The best bid will be announced to the participants of an oral auction at the place of the auction on the day of the auction and in the case of an electronic auction in the auction environment on the working day following the date of the auction. In exceptional cases, a bailiff may postpone the announcement by up to seven days. The bailiff will notify the participants in the auction immediately of postponement. Declaration of the best bid is valid as of the time of its announcement. Basis: § 91 of the Code of Enforcement Procedure.

Objections of persons present at auction

After the announcement of the last outbid, persons who are present may submit objections concerning the conduct of an auction. If the persons present submit no objections, they have no right to file complaints against the incorrect preparation of a report or rely on the fact that the report is incorrect or the conditions of an auction were materially violated later. Participants in an electronic auction may submit objections concerning the conduct of the auction within the working day following the date of termination of the auction. Basis: §§ 92 and 921 of the Code of Enforcement Procedure.

Obligation to pay the purchase price immediately

The winner of an oral auction will pay the purchase price immediately after the end of the auction. If the purchase price exceeds 12,700 euros, the winner of an oral auction will pay one-tenth of the purchase price immediately after the end of the auction, the rest of the price will be paid within 15 days. If a debtor is the purchaser, he or she will pay the total purchase price immediately. Payment in cash or transfer to the account of the bailiff will be deemed to be immediate payment.

If a claimant is the purchaser and his or her claim exceeds or is equal to the purchase price, the claim of the claimant will be set off to the extent that corresponds to the share the claimant would be entitled to receive upon distribution of revenue received from the sale of the property purchased by the claimant. The claimant will pay the share of the purchase price that was not set off to the official bank account of the bailiff pursuant to the procedure provided for in this section.

If the purchase price exceeds 12,700 euros, a bailiff will extend the term for the payment of the purchase price provided for in subsection (2) of this section at the request of the purchaser by additional 15 days. A bailiff will formalise the extension of the term for the payment of the purchase price as a decision. The decision will be forwarded to the debtor, the claimant, the person who submitted the best bid and persons whose rights regarding the thing at auction are known to the bailiff.

A thing will be delivered to the purchaser after payment of the total purchase price. A bailiff will declare an auction to have failed, if the best bidder fails to pay the purchase price or one-tenth of the purchase price by the prescribed time. In such a case, the thing will be immediately submitted to a repeated auction. An initial purchaser may not participate in a repeated auction organised due to the circumstances specified in the previous sentence. The deposit paid thereby will not be refunded and will be transferred to the common budget section of the Chamber. The initial purchaser will pay the difference between the price offered by the initial purchaser and the price offered at the repeated auction if the price offered at the repeated auction is lower than the price offered by the initial purchaser. Basis: §§ 93, 99 and 100 of the Code of Enforcement Procedure.

Payment of the purchase price by a loan

If a purchaser wishes to buy a thing sold at an auction by a loan granted by a credit institution, he or she will notify a bailiff thereof immediately after his or her bid is declared to be the best. Notification of the bailiff on the date of declaring the bid to be the best is deemed to be immediate notification. The obligation provided for in § 93 of this Code to pay one-tenth of the purchase price or the total purchase price immediately does not apply to the purchaser upon payment of the purchase price by a loan. The purchaser undertakes to pay the total purchase price or ensure performance of the obligation to pay the purchase price by a credit institution within 15 days as of the day following the date the bid is declared to be the best. A debtor may not apply for payment of the purchase price by a loan. Basis: § 931 of the Code of Enforcement Procedure.

Increase of paid amount

If it becomes evident after an auction that the right of security or another right taken into account upon determination of a starting price is invalid or has extinguished, the purchaser who knew or should have known that the right is invalid on has extinguished will also pay, in addition to the purchase price, the amount taken into account upon determination of the starting price to the extent of the value of the right. This also applies if the right is conditional and a suspensive condition is not fulfilled or a resolutive condition is fulfilled and the purchaser new or should have known that upon submitting the bid. Basis: § 94 of the Code of Enforcement Procedure.

Legal consequences of an auction

Ownership regarding a thing sold at an auction is created upon delivery of the thing on the basis of a report on the auction. Ownership regarding an immovable property sold at an auction is created by making an entry in the land register on the basis of an auction report. No ownership is created if seizure is void or the essential conditions of an auction have been violated and a court has declared the auction to be invalid. This applies regardless of the fact whether the person who purchased a thing at an auction knew of the aforementioned circumstances. For the creation of ownership, the prerequisites provided for in the Law of Property Act need not be complied with, in particular a claim set out in an enforcement instrument need not actually exist and a thing sold at an auction need not belong to a debtor. This does not preclude filing of claims for compensation for unlawfully caused damage. If an acquirer has paid the price at an auction and, due to reasons specified above, no ownership is created, the acquirer may file a claim against a claimant arising from unjustified enrichment. This does not preclude claims for compensation for unlawfully caused damage. The right of preemption cannot be exercised at an auction. Basis: §§ 98 and 156 of the Code of Enforcement Procedure.

Passing of risk of accidental loss of thing

Upon sale of a thing in enforcement proceedings, the risk of accidental loss of the sold thing passes to a purchaser as of the time of delivery of the thing. As of delivery, the purchaser will incur all costs and encumbrances relating to the thing and receive all the profit.
Upon sale of a movable thing in enforcement proceedings, the risk of accidental loss of the thing will pass to the purchaser as of the transfer of the thing. As of delivery, the purchaser will bear all costs and encumbrances relating to the thing and receive all the profit. Upon sale of a thing in enforcement proceedings, a bailiff or a debtor will not be liable for any defects in the sold thing. This does not preclude claims for compensation for unlawfully caused damage. Basis: §§ 103 and 155 of the Code of Enforcement Procedure.

Declaration of an auction invalid

Within 30 days after the delivery of a report on an auction, a participant in enforcement proceedings may file an action with a court for the declaration of the auction invalid if property has been sold to a person who did not have the right to purchase the property or if the auction was conducted on the basis of a void seizure or other essential conditions of the auction were violated. Basis: § 223 of the Code of Enforcement Procedure.