Most investors buy a penthouse like this one in Frankfurt to enjoy the view. However, this can be delayed in the case of real estate acquired in foreclosures.
Image: Frank Röth
With luck and skill, a private citizen bought a chic apartment in court. But then began a long, expensive and nerve-wracking march through the authorities. How can homebuyers avoid nasty surprises?
M.ichael Müller (his real name is known to the editors) has been the owner of a neat penthouse apartment in a north German city for exactly one year, but so far he has never seen the rooms from the inside. As a successful bidder in a foreclosure auction, he had already been awarded the contract by the local court in November 2019. Then the unexpected happened: shortly after the auction, the district court temporarily revoked the enforcement title, so that Müller could not take possession of his property and the previous owner could continue to live in it. Since then, Müller has found himself in a hanging game that is not only nerve-wracking, but also expensive. He feels like he’s in a bad movie. What happened – and what is it about?
If real estate owners run into financial difficulties and cannot repay their building loan, the bank or other creditors may initiate a judicial foreclosure sale of the property as a final consequence. The remaining debt should be settled or reduced with the proceeds of the auction. Foreclosures can offer private investors opportunities to acquire a coveted property. That does not always go smoothly, which is also due to the fact that the debtor defends himself with all available means. After all, the auctioned property is often the debtor’s own home, i.e. his last refuge.