Legal framework and types of public auction
Public auction is a method of enforced execution under Chapter XL CPC — Art. 483–499. It applies when the debtor cannot pay a monetary claim and the creditor has initiated enforcement via a PEA (by choice) or a State Enforcement Agent.
Enforcement officers
- Private Enforcement Agent (PEA) — registered at the Chamber of PEAs. Chosen by the creditor.
- State Enforcement Agent — at the district court where assets are located.
- Public enforcement officer (NRA) — special regime for public receivables (taxes, social security) under DOPK.
Subject of auction
Eligible assets:
- Immovable property — dwellings, offices, agricultural land, industrial facilities;
- Movable assets above a minimum value;
- Motor vehicles;
- Securities, rights, shares in companies;
- Debtor’s claims against third parties.
Distinction from commercial auction. Public auction is not a commercial auction despite the shared bidding mechanism. It is a legally mandated enforcement method with strict procedural rules, debtor protection and specific rules for distribution of proceeds.
Property valuation and starting price
Expert valuation
Art. 485 CPC: the PEA appoints a certified expert to prepare the valuation, covering:
- Description of the property (area, condition, particulars);
- Market value by the comparable method (comparable regional transactions);
- Factors affecting price (tenancies, mortgages, encumbrances).
Starting price — first auction
Art. 485(4) CPC: the starting price is 75% of the valuation. This is the minimum below which the property cannot be awarded at the first auction.
Starting price — second auction
If the first auction fails, a second auction is announced. The starting price is 80% of the first starting price — i.e. 60% of the valuation.
Challenging the valuation
The debtor may object to the valuation within 7 days of notification. Where justified, the PEA may appoint a new expert or collective expertise. Importantly: challenging the valuation is the most effective debtor defence — low valuation means low sale price and large residual debt.
Auction announcement
Art. 487 CPC requires a written auction announcement containing:
- Property owner;
- Detailed description (type, address, area, cadastral ID);
- Mortgages and encumbrances;
- Valuation and starting price;
- Day and place of start and end of auction;
- Participation terms (10% deposit, deadline);
- Viewing details.
Publication and disclosure
Published at:
- The National Register of Public Auctions (izpalniteli.com);
- PEA office board;
- District court board;
- Municipality or mayor’s office.
Minimum 1 month between publication and auction start (Art. 487 CPC). Gives potential buyers time to review and visit.
Auction participation — deposit and bidding
Who can participate
- Any legally capable person or legal entity with a deposit paid.
- The debtor may participate as a buyer of their own property.
- The creditor may participate without deposit, setting off against the claim.
- Participation is forbidden for the PEA, deputy, spouses and relatives.
10% deposit
Art. 489 CPC: each candidate deposits 10% of the announced starting price to the PEA bank account before the auction ends. Without deposit, the bid is not accepted.
Auction conduct
The auction runs 1 month (Art. 488 CPC). Bidding is via sealed written offers to the PEA. At the announced close, the PEA opens the envelopes and announces the highest offer.
If equal highest offers are received, an oral auction is conducted between those bidders, with a minimum step set by the PEA.
Successful auction consequences
- The buyer has 2 weeks to pay the price minus deposit.
- On non-payment — the next highest bidder becomes buyer; the non-paying loses the deposit.
- On successive refusals — third, and so on.
- On exhaustion of all bidders — the auction is deemed unsuccessful.
Assignment order
After payment, the PEA issues an assignment order in favour of the buyer (Art. 496 CPC). The order:
- Transfers ownership to the buyer;
- Must be entered in the Real Estate Register;
- Has the force of a notary deed of ownership.
Appeal of the assignment order (Art. 435 CPC)
The assignment order may be appealed within 14 days of notification. Those entitled to appeal:
- Person who deposited a deposit by the auction’s last day;
- Creditor who bid without deposit (by set-off);
- The debtor — but only on two limited grounds:
- Bidding was not properly conducted (procedural breach);
- Property not awarded at the highest offered price.
The debtor cannot appeal on general grounds — general challenges to PEA actions use the separate Art. 435 CPC procedure.
Appealing PEA actions (Art. 435 CPC)
Art. 435 CPC governs the general procedure for appealing enforcement actions. The deadline is 1 week from the act or notice (unified from 30 June 2021).
Who may appeal
- The debtor — on specific violations (inflated costs, wrongful encumbrances, erroneous valuation, procedural breach);
- The creditor — on refusal to act or wrongful action;
- Third parties — whose rights are affected (co-owner, buyer).
Competent court
The regional court at the PEA’s seat. Its decision is final and not subject to cassation (with exceptions).
Limits of appeal
The debtor cannot challenge:
- Existence of the claim (separate action under Art. 439 CPC);
- Amount of the debt (via the underlying court act);
- Validity of the writ of execution.
Actions that may be appealed
- Attachment or prohibition on non-existent claims;
- Inclusion of protected property in the enforcement;
- Procedural violations;
- Inflated costs;
- Erroneous valuation (material deviation from market value);
- Illegal expert appointment.
Protection of sole home and other assets (Art. 444 CPC)
The CPC lists protected property that is not subject to enforcement. Art. 444 CPC:
Sole home
- The debtor’s and family’s sole home — within size limits (e.g. up to 30 sq.m. for 1 member, up to 120 sq.m. for 4+ members);
- Property above these limits is deemed “excess” and may be auctioned, with the debtor receiving monetary compensation for the protected portion;
- Protection falls away if the home is mortgaged — then it can be auctioned regardless.
Other protected assets
- Personal belongings of debtor and family;
- One month’s food;
- Professional tools up to BGN 1,000 (EUR 511);
- Support and maintenance (alimony, pensions up to limits);
- Agricultural land of small farmers (up to 5 decares per person);
- Items needed for disabled persons.
Staying enforcement
The debtor may request a stay in specific cases:
- Filing a claim under Art. 439 CPC (denying the claim) with collateral;
- Art. 435 CPC appeal with grounds undermining the core enforcement act;
- Instalment agreement with the creditor.
New public auction and negotiated sale
New public auction
Art. 499 CPC: if the first and second auctions fail (no bids reaching the starting price), the PEA announces a new public auction without a fixed reduction cap — the price is redetermined after a fresh valuation.
Negotiated sale
After a failed public auction, with written consent of creditor and debtor, the PEA may conduct a negotiated sale — direct contracting with a specific buyer without deposit or bidding. The price cannot fall below the last starting price.
Distribution of proceeds
After buyer payment and issuance of the assignment order, the PEA distributes proceeds among creditors in the following order (Art. 136 OCA + CPC):
- Enforcement costs (PEA fees, expert fees);
- Public (state/municipal) liabilities on the property (real-estate tax, fees);
- Secured creditors (pledge/mortgage) — by order of creation;
- Privileged claims (employee wages up to a limit, maintenance);
- Ordinary creditors — pro rata if funds are insufficient.
Any surplus after full payment is returned to the debtor.
Practical tips for a debtor in enforcement
- Do not ignore notices. Each PEA message triggers deadlines — missed deadlines are usually irreversible.
- Act in the first weeks. Largest defence opportunities are at the outset — challenging the valuation, requesting a stay, negotiating with the creditor.
- Challenge undervaluation. If the property is valued below market, file an objection and request a fresh expertise.
- Check sole-home protection. Sole home without mortgage — invoke Art. 444 CPC.
- Negotiate with the creditor. Instalments, partial waiver, “good-faith” sale can replace the auction.
- Preserve appeal rights. The assignment order is appealable within 14 days — counsel should be engaged in advance.
- Check the writ of execution. Formal defects or time limitation may support an Art. 439 CPC claim to deny the debt.
- Watch for “controlled” buyers. If the creditor steers a specific buyer, appeal for lack of transparency.
CPC text at lex.bg. Public auction register — izpalniteli.com.
Received notice from a Private Enforcement Agent?
Proper defence in enforcement proceedings is critical — valuation challenges, sole-home protection, appeals of PEA actions, Art. 439 CPC claims, instalment negotiation. Deadlines are short (7–14 days for most actions). The Innovires team represents debtors across the full proceedings — from commencement through appeal of the assignment order. Contact us for urgent consultation.