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Compulsory and Partition Auction in Real Estate

If the debtor is no longer able to meet his liabilities, an existing titled monetary claim against him can be asserted by way of compulsory enforcement in order to obtain satisfaction. In this case, for example, foreclosure on the property is an option.

While movable assets are enforced in the case of execution on movables, immovable assets are enforced in the case of execution on real estate. Immovable assets are essentially land, its structures, condominium ownership, partial ownership and rights equivalent to land, i.e. real estate.

In accordance with § 866 ZPO, there are various ways of enforcing execution. In addition to the foreclosure auction, among other things, the registration of a security mortgage can also be considered.

Foreclosure auction (zwangsversteigerung)

The purpose of a forced or foreclosure sale is to realize the existing assets. The creditor is satisfied from the proceeds. In simple terms, the property is auctioned off and the creditor receives the amount of his existing claim from this. Since the debtor thereby loses his ownership of the property, this is probably the most drastic measure for him. First of all, the creditor has to pay some costs in advance. These include expert costs and costs for announcing the auction date. The decisive factor for the amount of the costs is the market value of the object and the costs of the expert. In this respect, the disadvantage of the forced auction is the initial cost intensity for the creditor.

A special form of foreclosure auction is the partition auction. Here, no creditor is satisfied, but according to § 180 ZVG the community is to be dissolved, as it does not agree on the whereabouts of the property.  Special cases of application are those for a marriage community, a community of heirs or a civil law partnership (GbR).

Proceedings of the Partition Auction (Teilungsversteigerung), §§ 180 ff ZVG

The partition auction procedure is a special procedure of the foreclosure auction. Here the community regarding the property is to be cancelled. A divisible sum of money is to be put in place of the property in order to satisfy the part owners and finally dissolve the community.

According to § 180 para. 1, 15 ZVG, the partition auction is initiated by application of the entitled party to the competent court. Unlike the “normal” foreclosure auction procedure, no title is required here, § 181 ZVG. Creditors of liens on real property are involved in the proceedings and are taken into account in accordance with their status in the land register.

compulsory auction real estate

In principle, every co-owner is entitled to file an application, regardless of the size of his share.

If the court decides positively on the application, the partition auction is ordered by resolution. This results in seizure and, according to § 23 ZVG, a prohibition of sale.

After seizure, a market value appraisal is prepared. This determines the market value. Value limits are then determined on the basis of this. The most important of these is the 5/10 limit. This must be exceeded at the auction.

Once the lowest bid has been determined, the court schedules a date for the auction. The court announces the date publicly. If a valid bid is made at the auction, the successful bidder becomes the new owner of the property.

The court refuses to accept the bid if the highest bid is lower than the lowest bid. In a second hearing, the lowest bid is then considered as the lower limit. If there is then no valid bid, the proceedings are discontinued.

Proceeds Distribution

After the foreclosure sale has taken place and the successful bidder becomes the new owner, the proceeds are distributed at the distribution meeting. Here, the procedural costs are taken from the auction proceeds and the rights are served, which are to be covered by payment. The community regarding the property ends and only continues in the proceeds. The actual distribution of the proceeds is not made by the court. If the former co-owners cannot agree on the distribution of the proceeds, the proceeds of the auction shall be deposited with the court for the benefit of all of them.

If the debtor does not agree with the partition auction, he/she may oppose it. § 180 ZVG provides as a protective provision that the temporary suspension of the proceedings can be applied for.


Marital partnership

If both spouses have bought an apartment or house together and now divorce, there is often disagreement about the whereabouts of the property.

A distinction must be made between the time before the divorce becomes final and after. A partition auction prior to a final divorce is only possible if the spouses are not in the status of community of gains or community of property and the joint property does not represent the entire assets.

The legal matrimonial property regime at the time of marriage is regularly that of community of accrued gains. In this case, the assets remain separate during the marriage. If a divorce or the death of one of the spouses does occur, an equalization of gains is carried out.

If spouses acquire real estate, they regularly do so in a community of fractional shares. In case of doubt, it is assumed that both have equal shares. Theoretically, each can then dispose of his or her share, but not of the property as a whole. For this reason, the partition auction is of particular importance here.

Separate from this is always the question of how the use of the property is to be remunerated.

Civil law partnership

The property of a civil law partnership can also be the subject of a partition auction procedure. In this case, the apartment or house is the sole property of the civil-law partnership (GbR).  The rules of community also apply to the GbR according to § 731 para.2 BGB. Consequently, the division must be carried out by way of a partition auction according to § 753 BGB.

The individual shareholder is entitled to file an application. The provisions of § 181-184 ZVG apply here. In its decision of May 16, 2013 (Bundesgerichtshof Beschluss v. 16.05.2013, Ref.: V ZB 198/12) established that the individual shareholder can file an application without having to first enforce his claim for auction of the property in court. This means that the individual shareholder can apply for the partition auction against the will of the others and force the sale.

If the other partners raise objections, they may then assert them by way of an action for opposition pursuant to § 771 ZPO by analogy.


The partition auction in the case of a community of heirs is of equally great importance. A community of heirs comes into existence upon the death of the testator. If the decedent has not made a will or designated multiple heirs for an item, intestate succession takes effect. Each co-heir then becomes part of the community of heirs. The members of the community of heirs share ownership of the objects of the estate. Each can dispose of his or her part. However, when disposing of the whole thing, all must agree. In this respect, it is obvious that disputes about the common property may arise. If a member of the community of heirs desires the dispute of this and the other members are not willing to compromise, ultimately only the possibility of the partition auction remains.  According to the provisions of Section 2042 of the German Civil Code, each co-heir can demand the division. To do this, he must submit an informal, written application for a partition auction. Content is the dispute of the community of heirs.

Recording of a forced security mortgage

The compulsory security mortgage or also compulsory mortgage is a security from which the foreclosure auction can be pursued. It is thus a state means of compulsory enforcement and secures the claim against the debtor. There is no direct satisfaction. In this respect, the compulsory security mortgage differs from the foreclosure auction.

The general provisions of the security mortgage pursuant to §§ 1184 – 1186 BGB apply as the means of security here. The difference to the ordinary security mortgage is in the origin. The forced security mortgage is acquired by way of execution. The security mortgage is an agreement under the law of obligations.

Here, too, it is a prerequisite that the creditor has an enforcement title against the debtor, which proves that he has a titled claim against the debtor in the amount of at least €750. This is intended to ensure the clarity of the land register, as this would no longer be guaranteed in the event of registration due to many low-value claims.

According to § 867 ZPO, the creditor can have the security mortgage entered in the land register upon application. Responsible for this is the land registry office, which also checks before registration whether the conditions for compulsory enforcement are met.

Advantages for the creditor

In this way there are advantages for the creditor:

– the registration of the forced security mortgage discourages buyers and thus puts the debtor under pressure

– the mortgage creditor automatically becomes a party to the foreclosure auction proceedings in accordance with § 9 no. 1 ZVG and can thus, for example, file applications

– the costs of registration are relatively low

– in the event of an auction, the mortgagee has a better ranking than creditors of unsecured claims and is thus satisfied with priority

The disadvantage for the creditor is the fact that his claim is only secured and he can only obtain satisfaction through the realization (i.e. through forced sale or administration).

If the debtor pays after the forced mortgage has been registered, the forced mortgage is automatically converted into a land charge against the owner. He can then either have this deleted or use it to secure other claims.

Clearance after the forced sale

If the purchaser wants to use the property himself, problems may arise. Insofar as the former owner wants to remain in the apartment, it must be vacated by way of eviction execution. The creditor needs an enforcement title for this. According to § 93 ZVG, the award decision is such an eviction title. With the help of this title, he can pursue the execution against the former owner.

Eviction of a tenant

The case is different if the property is rented. Here, the tenant cannot be evicted by the award order. § 57 ZVG refers to the §§ 566 ff BGB. The tenancy continues with the buyer. However, according to § 57a ZVG he is entitled to a special right of termination. The termination must be made on the first permissible date, otherwise it is inadmissible. The first permissible date is calculated on the basis of the surcharge. The decisive date for the effectiveness of the award is the announcement, § 89 ZVG. It is important that the purchaser has a legitimate interest in the termination and complies with the statutory period of § 573d BGB. The termination must be declared on the third working day of a month with the end of the month after next. The standard examples of § 573 BGB are to be applied with regard to legitimate interests. A justified interest represents regularly the own need.