Compulsory auction (tvangsauktion)
Also known as forced sale, auction, judicial sale, tvangssalg, auktion
A compulsory auction is the forced sale of an attached asset — it is where the attachment turns into money.
Key facts
- Realises
- The attachment
- Proceeds distributed
- By priority
In practice
The attachment is security. The compulsory auction is the act that turns that security into money.
The proceeds are distributed by priority: charge holders first, then attaching creditors in the order they arrived. If there is not enough to go round, those at the back of the queue get nothing — the auction does not change the order, it merely settles how far the money reaches.
Where it commonly goes wrong
- Applying for an auction on an asset that does not cover the debt. If the charges ranking ahead of you exceed what the asset is worth, the auction costs you money and returns nothing.
- You budget on the valuation instead of the auction price. An asset at forced sale rarely fetches what it is worth on the open market.
- The costs are left out of the sum. Auction costs rank ahead of your recovery, not behind it.