Are you considering participating in the property auction process overseen by the Court in Puerto Rico? Here, we address some common questions to assist you in navigating this process effectively.

1. What is an auction in the foreclosure process?

In Puerto Rico, the foreclosure process initiates when a property owner with a mortgage ceases making monthly payments. The law in Puerto Rico outlines a procedure for executing and publicly auctioning a mortgage lien used as collateral for a loan granted by a mortgage creditor. During this process, any eligible bidder can vie for the property.

The winning bidder assumes responsibility for any liens or encumbrances affecting the property they acquire. Should no one emerge victorious in the auction, the property becomes the possession of the mortgagee as an involuntary acquirer.

2. Can I visit the property before the auction?

Access to the property's interior before the auction isn't feasible. Properties bought through the auction process are sold in their existing "as is" physical condition.

Prospective buyers can estimate repair or improvement costs from a distance. However, entering the property or disturbing its occupants could be considered criminal behavior in Puerto Rico, as these properties are not under the ownership of the mortgagee.

3. Can I use financing to acquire the property?

No, according to Rule of Civil Procedure 51.7. The winning bidder is required to pay in cash or with a certified check made payable to the assigned officer overseeing the sale. Bidders should acquaint themselves with the process and requirements beforehand and arrive prepared on the auction day.

4. What is the difference between a court auction and a private sale?

Several distinctions exist between a court auction sale and a private sale. Due to the public nature of auctioned property sales, bidders do not receive precise or comprehensive information about the property's current condition, unlike in a private sale. Bidders are encouraged to seek out information independently, often through available online resources.

5. What does it mean that the property is sold "as is"?

Properties sold at public auction are acquired in their current state, "as is." This implies that the winning bidder accepts the property regardless of its condition, known or unknown issues, and assumes responsibility for all repairs, inspections, charges, defects, permits, or any other matters related to the property.

6. What is the difference between the Minimum Rate and the Bank Tender?

The Minimum Rate signifies the value of the mortgaged property agreed upon by the parties at the loan's inception. This figure establishes the minimum value for the property's initial auction in a foreclosure scenario. The Bank's Bid, on the other hand, indicates the minimum value the bank would bid, supporting its judgment, during the auction. Both figures serve as benchmarks in the auction process.

7. Who determines the winning bidder in the auction?

The responsibility of selecting the winning bidder rests solely with the Court officer overseeing the auction process. Neither the bank nor its affiliates are involved in selecting the winning bidder or managing the process.