New regulation on auctions organized and conducted by notaries
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The Ministry of Justice approved a new Regulation that sets forth detailed rules on auctions organized and held by notaries.
The auctions can be held by notaries upon the request by all owners of chattel/movable property or real property, or by mortgagee.
The right of notaries to hold auctions was provided for by the new Law on Notarial Procedure (passed in 2018 and came into effect on 01 March 2019). For example, the notaries may organize auctions to sell mortgaged property in the interests of mortgagees. The new Regulation sets forth detailed rules on organizing and holding such auctions.
The financial resources for organizing and conducting the auction come from the non-reimbursable participation fee payable by auction participants. The person requesting the auction (applicant) pays in advance the costs of organizing and conducting the auction. If the costs of the auctions are later recovered through the participation fees and/or deposit, the notary returns the advance payment to the applicant upon his/her request.
The participants pay in advance a participation fee and a deposit (which makes up 5 % of initial price).
The participation fee is non-reimbursable, except in the case the auction is cancelled because of the applicant withdrawing the lot.
The deposit is later included in the final price of the lot. The deposit paid by other participants who have not won the auction is returned to them within 7 working days from the moment of signing the minutes of the action.
The deposit may not be returned by the notary to the participant, if the respective participant was not present at the auction, refused to sign the minutes, failed to pay off the selling price set forth in the minutes, or refused to sign the sales contract.
The initial price of the lot is determined by the applicant. If the applicant is a mortgagee the initial price is based on the market evaluation determined by the appraiser chosen by the applicant.
The winning bidder shall pay off the selling price for the purchased lot within 10 working days from the moment of signing the auction minutes. Should he fail to pay off that price, the notary cancels the results of the auction.
Within 7 working days after paying the selling price the winner has to sign the sales agreement with the applicant or his representative. The costs of notarization of the sales agreement are born by the winner of the auction.
The minutes of the auction can be challenged within 5 days after its signing.
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