Function, significance and legal position of the publicly appointed and sworn auctioneer (auctioneer) in pledge auctions, realization of collateral and voluntary auctions, public auctions
fThe publicly appointed and sworn auctioneer (auctioneer) provides significant legal and economic added value compared to a private sale by internal workout teams or as part of distressed M&A:
- Finality and legal conformity: Award as a sovereign, final act → Deal Certainty without renegotiation, with exclusion of warranty, no earn-out.
- Market mechanics: Competition-based bidding arena → resilient price discovery.
- Speed: Time to liquidity: 4–6 weeks.
- Costs: low and predictable (only publication and third-party costs < 6k; buyer’s premium); regularly lower than with internal workout teams or (distressed) M&A.
- Economic outcome: IRR protection, net-of-risk proceeds, auditable governance; secure closing capability and reputationally strong process framework for entrepreneurs, financiers, hedge funds and investment funds.
As independent, neutral public auctioneers for collateral enforcement (public auction), collateral realization, corporate asset auctions and share auctions , we are regularly called in by creditors, lawyers, the real estate industry, logistics companies, entrepreneurs, merchants, private equity and family offices, hedge funds, investment funds and (mezzanine) financiers when it comes to the legally compliant realization of distressed assets or the sale of NewCos and NewCo shares .
The publicly appointed and sworn auctioneers of Deutsche Pfandverwertung act on the basis of a sovereignly legitimized mandate.
The acceptance of the bid by the publicly appointed and sworn auctioneer is not merely the conclusion of a contract, but a legally binding act of sovereignty — final, transparent and without renegotiation.
The special position of the sworn auctioneer in contrast to M&A and private treaty proceedings
As generally publicly appointed and sworn auctioneers, we are sworn to secrecy towards third parties and to conduct our proceedings conscientiously and impartially. At the same time, we are sworn to our independence and must safeguard the property interests of all parties involved — creditors and debtors alike (§ 34b para. 1 GewO). The owner of an auctioned item has no influence on either the price or the minimum bid. They must therefore be able to rely on the auctioneer to represent their property interests in a particularly qualified manner. Public appointment therefore requires proof of special expertise, which is demonstrated by sound specialist knowledge — in particular legal knowledge — many years of professional experience, the successful passing of a specialist examination and particular trustworthiness. In this function, we enjoy a special position of trust because we do not act pro domo, as is regularly the case with M&A advisors, but independently, neutrally and exclusively in accordance with our legal obligations.
The four core functions whose legal force distinguishes the publicly appointed and sworn auctioneer (auctioneer) from the M&A advisor and which ensure significant legal effects and structuring advantages in the liquidation process can be summarized as follows:
1. market function (§§ 156, 817 ff. ZPO; § 1239 BGB analogously)
The auctioneer (auctioneer) opens a legally structured, transparent bidding process in which supply and demand meet in open competition. This means for creditors: The price is formed in accordance with the law through the direct market participation of all interested parties, without hidden agreements or non-transparent individual negotiations.
2. fiduciary function (§ 34b GewO, § 383 para. 3 BGB, §§ 156 ff. ZPO)
As a publicly appointed and sworn auctioneer, he is committed to the principle of neutrality and fiduciary duty. He safeguards the interests of the client as well as those of the bidders, ensures the proper handling and safekeeping of securities (Section 383 (3) BGB) and guarantees compliance with the statutory formal and procedural requirements. For the client, this ensures maximum legal conformity and confidence in the process. He receives the payments on a fiduciary basis: Section 34b (5) GewO obliges the auctioneer to keep the funds entrusted to him separate from his assets. The fiduciary function is thus enshrined in law.§ 10 VerstV specifies this: The auctioneer must accept the purchase price immediately after the hammer falls and manage it in a special account. These funds may not be mixed with the auctioneer’s own assets (third-party money management). Purpose: To ensure that the auctioneer acts as a neutral trustee and that the proceeds flow to the entitled parties (e.g. creditors) in accordance with the law.
3. valuation function (§ 156 BGB, § 9 BewG, § 12 VerstV) with binding effect for tax authorities
The award is a legally formative sovereign act (Section 156 BGB). The price achieved in the procedure corresponds to the objective market value, as it is determined through an open, transparent and non-discriminatory bidding competition. The award documents an objectified, market-based determination of value, which is recognized in numerous areas of law — be it for settlement in pledge auctions or voluntary public auctions, foreclosure, as a valuation basis in insolvency proceedings or as a reference in company law. This provides the client with a legally compliant, unalterable valuation basis. In tax law, the fair market value (§ 9 BewG) is determined on the basis of the price that could be achieved in the ordinary course of business. The hammer price achieved in a public auction generally accurately reflects this market value. The tax office is therefore generally bound by the hammer price. BFH, judgment of 17.10.2001 — II R 85/99: The hammer price from a public auction is the fair market value. Furthermore: Inheritance tax guidelines (R B 11.2 ErbStR): In the case of public auctions, the actual proceeds realized must be taken into account. The knockdown at a public auction replaces expert opinions or estimates and binds the tax office. A deviation is only permitted in rare exceptional cases. The public auction thus offers a legally compliant and reliable valuation for tax purposes.
4. property creation function — surrogation in rem via sovereign act (sections 90, 929, 873 BGB; section 156 BGB; section 90 InsO; no application of section 166 (1) InsO for rights; section 935 (2) BGB)
With the knockdown (Section 156 BGB), the auctioneer performs a legally formative act of sovereignty that leads directly to the transfer of ownership of objects and rights of all kinds; in connection with the appointment as a publicly appointed auctioneer, the knockdown is also assigned a public law quality . The knockdown acts like an administrative act; it is legally formative, incontestable and directly creates original ownership. It cannot be reversed — renegotiations (renegotiations) are excluded.
The insolvency administrator has no access to rights of any kind; no application of section 166 (1) InsO; BGH ruling of 27.10.2022, case no. IX ZR 145/21.
Particularly important: Section 935 (2) of the German Civil Code (BGB) allows for acquisition in good faith in the case of acquisition by public auction even if the item has been lost by the previous owner. The knockdown therefore not only creates legal conformity, but also unassailable ownership that is valid against all third parties.
For the client, this means: clear and immediate legal consequences, guaranteed usability of the property and the greatest possible legal certainty in market sales.
The role of the publicly appointed, sworn auctioneer / auctioneer in the market economy
The generally publicly appointed, sworn auctioneer (auctioneer) is a key institution of the German legal system and serves the short-term, market-driven solution of performance-based contracts. He is not an enforcement organ of the state, but an organ of the administration of justice in collateral enforcement. The focus is always on safeguarding the property rights of all parties involved, in particular the debtor, as guaranteed by the Basic Law. This function is intended by the legislator as an essential part of the administration of justice. He acts independently and impartially. The auctioneer is not a service provider for the creditor, but rather an institution sworn to independence in the realization procedure. We — Deutsche Pfandverwertung — see ourselves as a neutral authority for safeguarding the balance of interests between creditor and debtor. This position is expressly in line with the legislative intention as expressed in § 1239 BGB. The provision regulating rent bidding by creditors and owners illustrates the legislator’s desire to ensure a balanced procedure that takes into account both the creditor’s security interest and the debtor’s property protection. In economic terms, a public auction is a market-based reality check. Read more about this in our article on value and valuation.
New legal framework from 2025 — deposit auctions also as online auctions
With the amendment to Section 383 BGB (legal definition), which came into force on 01.01.2025, the legislator has expressly strengthened the importance of the pledge of rights — and for the first time enshrined the conduct of online auctions by publicly appointed, sworn auctioneers in law. This reflects the trust placed in auctioneers as an independent authority: as a guarantor for legally secure procedures, economically sound realization and transparent processes. In accordance with Section 383 of the German Civil Code (BGB), the publicly appointed, sworn auctioneer is now expressly named in first place as the central authority for the realization of objects and rights based on contractual and statutory pledges of rights. His involvement guarantees independent, legally compliant and fair handling of the realization procedure, which is accepted by both creditors and debtors. When realizing claims to pledged rights and objects, the generally publicly appointed, sworn auctioneer specializing in these realizations in accordance with Section 1237 of the German Civil Code ensures the best possible realization proceeds.
Ensuring legal peace and economic order
Publicly appointed auctioneers are commissioned on an ad hoc basis by the state, which prohibits self-help. They play a decisive role in maintaining legal peace by carrying out the sovereign act of realizing statutory or contractual pledges of rights, court decisions and other rights of realization. This form of realization represents an efficient alternative to lengthy and cost-intensive court proceedings and is enshrined in legislation as well as in commercial training and business administration.
In carrying out their tasks, auctioneers are subject to the statutory provisions of the German Commercial Code (HGB), the German Civil Code (BGB), the German Stock Corporation Act (AktG), the German Limited Liability Companies Act (GmbHG), the German Trade Regulation Act (GewO) and the German Sale of Goods Ordinance (VerstV). The provisions of the ZPO and GVGA are not relevant for him.
Specialization and high level of qualification
Generally publicly appointed, sworn auctioneers specialize in the sale of pledges of rights. Their appointment requires demonstrably comprehensive legal and commercial expertise, many years of professional experience and particular trustworthiness, which clearly sets them apart from other auctioneers. Their integrity is documented by many years of unchallenged activity, as a result of which they enjoy a high reputation as reputable auctioneers.
The legally compliant execution of public auctions is guaranteed at all times, as they are bound by oath to carry out their duties conscientiously and impartially. This makes them indispensable players for the efficient and legally compliant realization of economic collateral.
Protection of property rights
Legal certainty, protection of property and social balance as the basis of the social market economy
A functioning social market economy is based on legal certainty, the protection of property and a balanced social equilibrium. Companies bear responsibility for production, trade, services and the generation of market-driven earnings — always aware of the entrepreneurial risk. In contrast to a planned economy, payment defaults are an inherent consequence of the system.
Contractual disruptions and their economic management
Payment defaults affect privately agreed contracts. The economically sensible response to this is the realization of receivables via contractual and statutory pledges of rights through voluntary public auctions. Performance defaults usually have commercial causes and require pragmatic solutions.
Publicly appointed, sworn auctioneers as specialized merchants
Claims can be realized most efficiently by qualified experts — in particular by publicly appointed, sworn auctioneers. The legislator has provided for this possibility through contractual and statutory pledges of rights. As neutral, commercially-minded partners, they bring about a legally secure and realization-optimized solution.
In accordance with the obligation to minimize damages under Section 254 of the German Civil Code (BGB), pledged items must be liquidated promptly after the order has been placed. Publicly appointed, sworn auctioneers act as experienced specialists in securing claims and maximizing proceeds from the sale — to the benefit of creditors and debtors alike.
Licensing as a guarantee for fair market prices
The auction uses the principle of licensing to determine the highest paying buyer. The preconception of a loss of value in distressed sales is long outdated: the digital reach of the internet has considerably expanded the circle of potential buyers and enables fair market prices.
Pledge of rights — realization: Why does the sale of pledges have to take place by public auction at ?
The public auction is carried out by the publicly appointed, sworn auctioneer on a case-by-case basis, as the state prohibits unauthorized self-help.
Pursuant to Section 1235 BGB, pledged items must be realized by public auction. This also applies to items to which the creditor has a right of realization in accordance with Section 885a ZPO within the scope of the so-called Berlin eviction.
The purpose of the public auction in accordance with Section 1235 of the German Civil Code is to protect the property rights of the debtor, who is often absent. As the debtor has no influence on the realization of their property, the legislator ensures that the procedure is transparent and fair by appointing a neutral auctioneer. The publicly appointed, sworn auctioneer is an independent body sworn to uphold the rights of the debtor.
Legal consequences of the public auction
The public auction is a sovereign act for which the publicly appointed, sworn auctioneer is authorized to conduct. The sale takes place by way of surrogation in rem, whereby the market price achievable at the time of the auction is determined by the highest bidder. Upon acceptance of the bid, ownership is irrevocably transferred to the buyer.
Essential for clients: Auctioned items are sold under exclusion of any warranty in accordance with § 445 BGB. As compensation, § 4 VerstV obliges prospective buyers to allow a viewing of at least two hours or a viewing by appointment.
In addition, Section 935 (2) BGB stipulates that items acquired by public auction are always acquired in good faith. This increases legal certainty and protects against possible claims for damages by third parties.
Duties of the publicly appointed, sworn auctioneer in the realization on the basis of a pledge of rights
The publicly appointed, sworn auctioneer is sworn to carry out his task conscientiously. He is sworn to secrecy towards third parties, in particular with regard to the debtor’s data.
Before accepting an auction order, the creditor must obtain confirmation from the creditor that the pledge has been realized. The entitlement to realize the claim must be justified either by law or by contract. Legal proceedings or a separate agreement on this is not required.
Neither the auctioneer himself nor his employees or close relatives may participate in auctions conducted by him in their own interest. According to § 1237 BGB, the auction date must be announced publicly. This ensures transparency, informs potential buyers and maximizes bidding competition, which is essential for achieving the best possible sale proceeds. At the same time, the announcement protects the debtor from an unreasonably low realization of his pledged assets. Inadequate publication would have the consequence that the award may be invalid in accordance with Section 1243 of the German Civil Code (BGB) and the client may be liable for damages.
The entire liquidation process must be fully documented in an auction file.
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