E-auction of real estate

In December 2020, the Council of Ministers adopted planned changes to the civil procedure. The regulations, among others, include the introduction of e-auctions of real estate, similar to the already existing e-auctions of movable property. Amendments to the Code of Civil Procedure have been prepared by the Minister of Justice and are aimed at accelerating execution of debt by seizure of real estate and counteracting irregularities in enforcement proceedings. According to the announcement of the Government Information Center they wish “to take the next step in the digitization of public services and enable the sale of real estate through electronic auctions - following the already proven solutions that enable the sale of movable property in this manner. This solution is especially important during the COVID-19 pandemic”.

The Government’s assumption should be considered correct, especially when taking into account the previous changes through the digitization of enforcement proceedings, i.e. e-auction of movable property, e-files. The draft assumes that this form of auction will take place at the request of the creditor, and in the event of failure to submit one, the auction will be held in the traditional form. An application for e-auction can be submitted both during the first and the second real estate auction. It will be held in the ICT system, and the notice about the auction will be made available by the bailiff on the website of the National Council of Judicial Officers. The tender in the proposed form will last one week.

The positive aspects of such a solution are certainly lower costs of enforcement proceedings, wider access to auctions, and improved transparency of the tender, as well as its security. The new type of auction will also speed up the procedure and enable obtaining a higher price. The proposed regulatory changes are particularly important today, given both technological advances and the ongoing pandemic hampering access to courts and offices.

However, the procedure of drafting new regulations and the legislative process should also be taken into account. As has been the case for a long time, the government bill has not been submitted to public consultations, including even the National Council of Judicial Officers. This is all the more puzzling as the postulate of e-auction of real estate came from the National Council of Judicial Officers itself. Inaccuracies in the proposed changes are also indicated by the judges in terms of real-time e-auction supervision, verification of people participating in the auction (e.g. those remaining in joint property of spouses, joining a tender of several people intending to purchase real estate in shares). At the moment, these doubts have not been clarified.

Another problem may be the actual introduction of bailiff's e-files, which was supposed to function from January 2021. Many bailiffs have not prepared documents in electronic form so far, which may affect the introduction of further computerization of enforcement proceedings. However, even making bailiff documents available in the ICT system requires securing the data contained in them against unauthorized access.

Taking into account the pathologies occurring during the previous real estate auctions, like the appearance of a dozen or so bidders when one person actually participates in it, or even attempts to intimidate or bribe people applying to participate in the tender, the proposed changes should be assessed positively. They will be relevant both during an ongoing pandemic and after its end.