How to buy homes at judicial and bank auctions in Peru

In Peru, "foreclosed-home auctions" are mainly judicial auctions ordered by civil judges, plus direct property sales executed by banks, COFIDE or the Fondo MiVivienda when they recover mortgage loans. They can offer relevant discounts but require a careful review of the partida registral at SUNARP and of the case background.

The most frequent types of forced sale

Judicial auction

When a creditor enforces a mortgage or a lien, the judge orders the asset appraised and auctioned in public hearing. The base is published in El Peruano and a circulation newspaper. The minimum base of the first auction is usually two-thirds of the appraised value; it then drops 15% for each unsuccessful call.

Direct bank sale

Banks have "adjudicated assets" departments. When the borrower hands over the property as dación en pago or the auction was deserted, the bank sells directly with discounts of 10% to 25% off commercial value.

COFIDE and Fondo MiVivienda adjudications

COFIDE manages refinanced loan portfolios. When real-estate projects default, the properties go to a fund that sells them in open competitions. The Fondo MiVivienda also recovers homes and reassigns them via calls.

Indecopi and bankruptcy proceedings

In bankruptcy proceedings (Sistema Concursal General Law), Indecopi supervises liquidation of the debtor's estate. Properties are auctioned through a liquidator and it's wise to review the creditors' assembly agreement.

Requirements to bid in a judicial auction

• Valid DNI.
• Corresponding judicial fee.
• Oblaje: deposit at Banco de la Nación equal to 10% of the appraised value, payable to the court.
• Proof of capacity to pay the balance within the legal term (3 business days for sole bidder, up to 8 days in some cases).

If you participate via legal entity, add the SUNARP-recorded power validity.

Step-by-step procedure

1. Identify the call

Check the Judicial Branch portal, El Peruano and local newspapers. They are also posted on court boards and, in some cases, on the Sistema de Notificaciones Electrónicas (SINOE).

2. Study the partida registral

Before bidding:

• Pull a literal copy of the property's partida registral at SUNARP.
• Review encumbrances, liens, mortgages, additional embargos.
• Verify the declaratoria de fábrica is recorded.
• Confirm the property isn't included in other proceedings.

3. Visit the property

Although auctions are sold "ad corpus" (cuerpo cierto), having a visual sense of the property's condition and whether it's occupied is essential.

4. Total-cost calculation

Add:

• Auction price (base + your improvement).
• Alcabala (3% on the excess over 10 UIT).
• Notarial fees and SUNARP registry fees.
• Outstanding Predial debt with the municipality.
• Attorney's fees and possible eviction proceeding.

5. Auction day

Show up at the court with DNI, oblaje and powers if applicable. Bids rise in increments set by the judge. If you win, you deposit the balance within the ordered term and the judge issues the adjudication order.

6. Recording and delivery

The adjudication order is recorded at SUNARP, replacing title. If the property is occupied, eviction (lanzamiento) is requested from the judge.

Lima example

Apartment in Pueblo Libre, appraised value S/420,000:

• First-auction base (2/3): S/280,000.
• Winning bid: S/305,000.
• Alcabala: approx. S/8,000.
• Notary + SUNARP: S/4,500.
• Outstanding Predial: S/3,200.
• Eviction (fees and procedure): S/6,000.

Estimated total cost: ≈ S/326,700, with market value of S/420,000.

Common risks and errors

• Precarious occupants: removing them can take 6 to 18 months. Factor in the financial cost of the eviction.
• Uncancelled liens: if the partida shows an earlier mortgage that wasn't cancelled, disputes may arise. As a rule, the auction cancels encumbrances later than the recording that triggered enforcement, but earlier ones deserve legal analysis.
• Outdated appraisal: in moving markets, real value can be higher or lower than the court's expert valuation.
• Contentious proceedings: if a challenge is pending, adjudication could be delayed or annulled.
• Bancarización: as in any sale, relevant payments must go through the financial system.

Tips to avoid getting burned

• First attend one or two auctions as an observer in the same judicial district.
• Work with an attorney who knows the court and the real timelines.
• Compute the project's IRR factoring 9 to 18 months of vacancy, not just acquisition cost.
• For direct bank sales, negotiate delivery free of occupants and lien cancellation at the seller's expense.
• Always request an updated lien-free certificate (CRI) before signing.

Want to know what the awarded property is worth? Get a free Realio valuation in under a minute.