What happens when a property goes to auction?

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Everyone has heard of auctions, or knows someone who has acquired an asset through this means, such as a property or a car, either for their own use or as an investment .

However, despite being a very popular institute, the legal effects of an auction are not necessarily known and understood by everyone.

Who pays the auction expenses? Who pays the property expenses, such as condominium fees and property tax? Do real estate liens and encumbrances continue to exist?

These questions (and many others) will be answered in today's article, so that, at the end of the text, you can understand, legally, what happens when a property goes to auction.

If we could summarize the reasons that can lead to the mobile phone number data updated 2025 auction of a property, it would be with the following phrase: due to non-fulfillment of obligations , especially obligations to pay.

Imagine the following scenario: John takes out a loan from a bank for R$100,000.00 (one hundred thousand reais), but he fails to pay the installments on the loan and the bank initiates legal proceedings. If there is a property in John's assets, the bank may request the seizure of that asset. Once seized, the property will be auctioned, and the proceeds of the auction will be used to pay off the debt to the bank.

There are specific situations that can lead to a property being auctioned, which we will detail later. However, the general rule is that if you have an obligation to pay and you have not fulfilled it, your assets may be liable for that debt, even if the asset is a property, with some exceptions.

Different types of auction
Although the result and effects are the same, the auction can take place in different ways , namely: judicial, extrajudicial and direct sale.

Let's see what each of these modalities consists of.

Judicial auction: an auction is called judicial when the order for the sale of the property comes from the Judiciary. Normally, this determination originates from a tax execution process, execution by extrajudicial title or in the enforcement phase of a judgment. The judicial auction is provided for in articles 879 and 903 of the Code of Civil Procedure .
Extrajudicial auction: as the name suggests, an extrajudicial auction is one held outside the judicial sphere, also due to the non-payment of a debt. An example of this is the auctions held by Caixa Econômica Federal, within the scope of the execution of a debt secured by fiduciary alienation .
Direct sale: while in judicial and extrajudicial auctions any interested party can participate, in direct sales the properties are offered to a specific group of potential buyers, and are conducted by an official auctioneer.
Furthermore, auctions can take place digitally, in person or in a hybrid format.

what happens when a property goes to auction laptop
Different types of auction.

Reasons why a property goes to auction
Subject to legal exceptions, real estate can always be seized to satisfy debts not paid by the debtor.

Let's look at some examples of situations that can lead to a property being auctioned:

Labor and social security debts : Labor credits enjoy almost absolute priority for enforcement. Therefore, an employee who goes to court to obtain his credit and is unable to receive it may request the seizure of as many assets as necessary to satisfy his right. The same applies to social security debts owed by the employer.
Alimony debts : In addition to potentially resulting in the debtor being imprisoned, alimony debts can serve as grounds for a property to be auctioned. Furthermore, the non-attachability of family property does not apply in the case of alimony debts, which means that the property may be seized and auctioned even if it is the debtor's only property and residence.
Debts from financing the property itself : When credit is obtained to purchase a property, a guarantee is usually required. This guarantee, in turn, can be the property itself, through the constitution of a real guarantee of fiduciary alienation . When the buyer of the property fails to pay the installments, the creditor can execute the guarantee extrajudicially, so that the ownership of the property will be consolidated in favor of the creditor. As a result, the property will be auctioned to pay the debt from its acquisition, which was not honored by the buyer/debtor.
Debts due to property debts (IPTU, condominium fees) : Another reason for a property to go to auction is debts inherent to the property itself, such as condominium fees and IPTU. As with alimony debts, in the tax execution of IPTU or condominium debts, the non-attachability of the family property also does not apply.