Risks of buying a property at auction (and how to avoid them)
Updated on 2026-07-07
The below-market price has a trade-off: risk. At auction you often buy without a viewing, as-is, and some charges can transfer to the buyer. Knowing these risks is what separates a good deal from a trap.
Encumbrances that remain
Not all encumbrances are extinguished by the sale. In an enforcement sale, many mortgages and liens are cancelled and ranked, but some charges — such as certain easements or a lease predating the seizure — may survive. Reading the land registry and the conditions of sale is indispensable.
Occupied property
A property may be occupied by the debtor, a tenant or third parties. Obtaining possession may require court action, with cost and time. Always confirm occupancy before bidding — it's one of the factors that most affects the real value of the deal.
Debts to the condominium and the tax authority
Recent condominium debts and some tax charges can follow the property. Add them to the acquisition cost before setting your maximum bid.
Missing paperwork
Sometimes part of the documentation is missing (use permit, technical sheet, certificates). That doesn't prevent the purchase, but it increases uncertainty — and should mean a more cautious bid. The Relatório Licito explicitly flags what's missing.
Frequently asked questions
Am I liable for the previous owner's debts?
It depends on the type of debt and the process. In enforcement, many encumbrances are ranked and cancelled; others (certain condominium debts, surviving charges) may follow the property. That's why reading the case file before bidding is essential.
How do I know if the property is occupied?
The conditions of sale and the case file usually indicate it. When unclear, assume the worst case in your calculation and factor in the cost/time of a possession action.