Insolvency
Insolvency is the situation where a person or company cannot meet its obligations; once declared by the court, their assets are liquidated to pay creditors.
What it is, why it matters when bidding, and a worked example.
Once insolvency is declared, the court appoints an administrator who takes the insolvent's assets into the estate. Liquidating those assets — frequently through private auction houses — is the origin of a significant share of the properties on the auction market, especially corporate portfolios.
The differences from an enforcement sale matter in practice. Deadlines and formats are set by the administrator with the creditors' committee, notices circulate on auction-house platforms rather than only judicial channels, and the available documentation varies widely between cases — from complete dossiers to a notice with one photograph and three lines.
The effect on encumbrances resembles an enforcement sale: security interests over the asset sold lapse. The reading requirement is unchanged, though — the registry certificate, the conditions of sale and the occupancy status remain the difference between a real discount and a problem bought at a discount.
Example
An insolvent developer leaves eight units in an unfinished building. The auction house lists them as a lot and individually, with base values between €35,000 and €60,000. The discount is large, but the cost of completion and licensing — which the notice does not mention — is what decides whether each unit is a deal or a trap.
Frequently asked questions
Is buying in an insolvency riskier than in an enforcement?
Not inherently, but the documentation is more uneven and the assets tend to be more complex (unfinished works, lots, commercial property). The risk lies in what is undocumented, not in the type of case.
Do encumbrances also lapse in an insolvency sale?
Security interests over the asset sold lapse with the sale in the case. As always, earlier charges of a different nature should be confirmed on the registry certificate.
Related terms
Go deeper
Enforcement, insolvency and tax sales: who runs them, what values and what deadlines.
Read the full guide