August 9 (Xinhua) — According to the website of the Supreme People's Procuratorate, judicial auction of houses, as an important means of realizing property disposal and liquidation, directly bears on the lawful property rights and interests of the public. Procuratorial case handling has revealed that certain current judicial auction house activities contain "minefields" that require heightened vigilance and advance precautions.

1. Bidders colluding in bad faith and bidding at low prices disrupts the order of judicial auctions. Some bidders, in order to win auctioned houses at lower prices, collude in bad faith with others, harming the interests of property owners or other bidders. For example, in the enforcement case of a private lending dispute, a certain drinking water company and a certain materials company both registered to participate in a judicial auction. On the day of the auction, the drinking water company proposed to compensate the materials company 1 million yuan to persuade it to withdraw from the auction, and the materials company agreed. In the end, the drinking water company successfully bid for the house at the starting price of 12.17 million yuan. After receiving relevant leads and upon investigation and verification, the procuratorial organ, on the grounds that the two companies had colluded in bad faith to bid at a low price, recommended that the court re-auction the property. The court adopted the procuratorial recommendation and reorganized the judicial auction, and the house was ultimately sold at a price of 24.93 million yuan, effectively protecting the lawful rights and interests of the property owner, creditors, and others.

2. Persons subject to enforcement fabricate lease relationships to obstruct auctions and evade debts. In recent years, some persons subject to enforcement, in order to evade debts and obstruct enforcement, have exploited the "sale does not break lease" rule, colluded in bad faith with others, and through means such as backdating contracts, mixed payment transfers, and false litigation, fabricated false lease relationships, agreed on longer lease terms and collected rent in advance, thereby obstructing the normal conduct of house auctions. For example, in the enforcement case of a financial loan contract dispute, the auctioned property presented abnormal circumstances such as a "lease term of more than 10 years" and "one-time payment of rent." The procuratorial organ ascertained that the person subject to enforcement, Lou, had colluded in bad faith with the tenant of the house involved, and through signing false lease agreements and forging rent payment transaction records and other means, fabricated a lease relationship; moreover, Lou borrowed the name of an outsider to participate in the bidding in an attempt to continue controlling and using the house involved. The procuratorial organ conducted supervision in accordance with law and transferred to the public security organ leads on Lou's suspected crime of refusing to execute judgments or rulings. Lou was held criminally responsible, and the house involved was disposed of in accordance with law.

3. Unclear tax amounts easily give rise to disputes. Article 30 of the Provisions of the Supreme People's Court on Several Issues Concerning Online Judicial Auctions by People's Courts stipulates: "Taxes and fees formed by the online judicial auction itself shall, in accordance with the provisions of relevant laws and administrative regulations, be borne by the corresponding entities; where there are no provisions or the provisions are unclear, the people's court may, based on legal principles and the actual circumstances of the case, determine the entities and amounts responsible for bearing the taxes and fees." In practice, some courts remind in advance at auction that "all taxes and fees shall be borne by the buyer," while others note that "bidders are requested to consult and confirm with relevant functional departments on their own regarding taxes and fees related to transfer of ownership." Some bidders fail to fully understand in advance the taxes and fees and the burden situation of the house involved before the auction, and after the auction, when faced with taxes and fees exceeding expectations, they feel regret, leading to unnecessary disputes. For example, in the enforcement case of a loan contract dispute between a certain rural commercial bank branch and a certain construction company, the enforcing court conducted a judicial auction of the real estate under the name of the construction company in accordance with law and stated in the auction announcement that "the buyer shall handle the transfer registration procedures for the subject matter on its own, and taxes and fees arising during the transaction shall be borne by the buyer in accordance with the provisions of the Tax Law and other relevant laws, regulations, and policies." The buyer, Chen, won the bid at a price of 14.876 million yuan, and later, when handling the transfer registration procedures, the tax bureau informed him that more than 8 million yuan in taxes and fees should be paid. Chen raised an objection on the grounds that the transaction taxes and fees were too high. After review, the enforcing court held that although all parties stated that the auction procedures complied with legal provisions, there was a major misunderstanding regarding the amount of taxes and fees, and ruled to revoke the auction in accordance with relevant provisions.

4. Difficulty in vacating houses involved affects buyers' use. In December 2019, the Supreme People's Court issued the Opinions on Further Strengthening the Concept of Good Faith and Civilized Enforcement in Enforcement Work, which clearly stated that where the auctioned property is immovable property and is occupied without right by the person subject to enforcement or others, the people's court shall be responsible for vacating it in accordance with law and may not state in public information such information as "not responsible for vacating and delivery." In December 2021, the Supreme People's Court issued the Opinions on Further Improving the Restriction Mechanism for Enforcement Power and Strengthening Enforcement Supervision, reiterating this requirement. However, in judicial practice, courts face many difficulties in vacating houses in accordance with laws and regulations, and sometimes bidders have to delay taking possession of the property. For example, in an enforcement supervision case applying for delivery of a judicially auctioned house, Xie won the house involved on a certain online judicial auction platform at 4.213 million yuan, but the third party residing in the house, Ji Mouhong, refused to move out on the grounds of being older and having limited mobility. The procuratorial organ recommended that the court take corresponding enforcement measures against the house involved in accordance with law, facilitated a settlement agreement between Xie and Ji Mouhong, and Ji Mouhong voluntarily moved out of the house involved.

In conjunction with supervisory case handling, the procuratorial organ reminds: when participating in bidding for judicially auctioned houses, one should understand the relevant procedures and formalities in advance, read the public information carefully, fully understand the various risks existing in the house, and participate in bidding on the premise of rational budgeting, awareness of risks, and understanding of the rules.