Every German foreclosure auction has statutory protective thresholds. Below certain levels the court may not make the award, or must refuse it if asked. The thresholds protect both the debtor and the creditors from a giveaway price. Knowing them helps you judge a bid and pick the right hearing.
There is no fixed minimum in euros. The thresholds are fractions of the appraised market value the court has set: five tenths and seven tenths, that is 50 and 70 per cent. If the highest bid falls below 50 per cent of that value, the court must refuse the award. Between 50 and 70 per cent, secured creditors can object.
If the highest bid is below half the appraised market value, the court may not make the award. The rule is mandatory and applies whether or not any creditor objects.
The court then sets a new auction date. At the second hearing the 50 per cent threshold no longer applies.
Note that the threshold always refers to the appraised market value set by the court in these proceedings, not to the current market price and not to another bidder's opening bid.
If the highest bid falls between 50 and 70 per cent of the appraised value, secured creditors, typically a bank with a registered land charge, may apply within two weeks of the hearing for the award to be refused. The court then sets a new date.
At the second hearing the 70 per cent threshold falls away too. The award is then made even on a very low bid, since the 50 per cent threshold has gone as well.
| Bid as a share of the appraised value | Consequence |
|---|---|
| Below 50 % (five tenths) | The award must be refused (§ 85a ZVG) |
| 50 to 70 % (five to seven tenths) | Creditors can block the award (§ 74a ZVG) |
| Above 70 % (seven tenths) | The award is normally made |
| Second hearing | Both thresholds fall away |
The court instructs a publicly appointed surveyor to determine the market value of the property. That value is fixed in the proceedings and announced at the hearing. It is the sole basis for both thresholds.
Our article on reading a valuation report explains what such a report contains and how it is structured.
A property has an appraised market value of 280,000 euros, set by the court.
| Threshold | Calculation | Level |
|---|---|---|
| 50 per cent | 280,000 × 0.5 | 140,000 euros |
| 70 per cent | 280,000 × 0.7 | 196,000 euros |
In practice that means:
If no sufficiently high bid came in at the first hearing, or creditors successfully invoked the 70 per cent threshold, the court sets a new date. At the second hearing neither threshold applies. In theory the property can then be bought for any amount.
In practice creditors often bid themselves, and other bidders take part too. Even so, prices at a second hearing can be markedly lower than at the first. That is what makes repeat hearings worth watching.
Our article on bidding successfully at a foreclosure auction covers the tactics.
Yes. For the purposes of the thresholds, the bid is the cash bid plus any land charges the bidder takes over. If a bidder takes over an existing land charge of 80,000 euros and bids a further 60,000 euros in cash, the total bid is 140,000 euros. That is what the thresholds are measured against.
Is there a statutory minimum a bidder must offer? No. Bidders may offer any amount. The thresholds only decide whether the court makes or refuses the award. A bid below them does not create a contract, it simply leads to the award being refused.
What if no bid comes in at the second hearing? The proceedings can be stayed for the time being, or a third date can be set. In practice a hearing with no bid is rare, because creditors usually place a strategic bid of their own.
Can the debtor challenge the appraised value? The debtor can apply for the value to be set again if market conditions have changed substantially or the surveyor made mistakes. The court then decides whether to order a fresh valuation.
As a creditor, can I use the 70 per cent threshold to postpone the sale? Yes. Secured creditors can apply within two weeks of the hearing for the award to be refused if the bid is below 70 per cent of the appraised value. The point of the right is to achieve a better price at the next hearing.
For the exact course of an auction hearing, see how a German foreclosure auction works. What a bid below market price really saves you is worked through in calculating the yield on a buy-to-let bought at auction.
This article is general information. It does not replace advice from a qualified lawyer.
Klaava
Foreclosure auctions across Germany. Valuation reports read. Yield calculator. Updated daily.
Open the map →
Germany's partition auction explained: who can apply, how the procedure runs, what differs from a creditor-driven foreclosure and what bidders must check first.
How a foreclosure auction hearing runs at a German local court: the opening reading, the bidding hour, the bid deposit and the award, with every statute and deadline.
What deposit do you need at a German foreclosure auction? Amount, accepted means of payment and what happens if you do not pay. All under § 67 ZVG.