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  • Writer's pictureMike Brandly, Auctioneer

Buyer buys, leaves, and now auction company owns it?

It seems I hear about this all the time? An auction takes place (online and/or live) and a buyer buys an item, pays for it, and then leaves it there … possibly abandoning the item (leaving with intent, without the intent to retrieve) and now the auctioneer owns the item.

We previously wrote about lost, mislaid, (misplaced,) and abandoned property here:

There are two basic questions here: (1) does the jurisdiction where this property is located mandate a certain amount of time/notice before the subject property is considered abandoned? (2) Does the auctioneer have a provision in his or her contract and terms/conditions stating that any abandoned property belongs to the auctioneer?

We would ask as well if this property was truly abandoned? If it is rather mislaid (misplaced) where a buyer has intended to leave it and possibly just forgot to retrieve it, it seems clear some reasonable attempts to contact him (reasonable notice and time) would also be required.

Otherwise, does an auctioneer want to have in his or her contract and/or terms that he owns any abandoned property? What if this airplane shell above sold for $1,000 and was left abandoned? Do you as an auctioneer desire ownership? Rather, do you only want the items you really want? Does your seller want to keep any abandoned property?

As well, how many auctioneers take ownership of so-called abandoned property when it has actually not met the legal requirements for such standing? Most all laws concerning abandonment are state-specific and a buyer would have recourse if an item he purchased was deemed abandoned before the state-mandated wait period and/or if certain notices were not mailed or made public.

Just imagine, if a buyer purchased a $1.5 million machine at auction, and paid in full — only to arrive a day late after the last day of the auctioneer’s pickup schedule to see the item was gone — and sitting, covered up, in the auctioneer’s warehouse down the street. Would a lawsuit follow? We happen to know it did, as we testified in such a case.

Auctioneers are encouraged to seek competent legal counsel when a materially valued property is sold at auction and then it is either mislaid or abandoned. Thereafter, the proper notices can be mailed/posted and the property can be held for at least the minimum time necessary before ownership is transferred to someone else, or the property is possibly discarded.

There is also the issue of payment. If the buyer has paid, has that money (minus cost of sale) been paid to the seller? If so, the seller may not care who the property is ultimately transferred to, but if the auctioneer has the money the seller may prefer the return of the property instead.

As well, did title transfer at “Sold!” or at payment? If the buyer is in title, can you keep or discard his property? Here again, your state likely has laws concerning abandonment and certain notices are required. Of course, if the property is shipped or has a document of title, those rules change.

Auctioneers should remember that they are [typically] agents for their seller clients and any policy regarding ownership of the property and payment following either it being mislaid or abandoned should have your seller’s knowledge and consent, and memorialized in that auctioneer/seller contract.

It is clear that sellers (and buyers) are particularly attentive to a subject lot being sold for $1.5 million, where the third-party buyer pays the purchase price and the seller is paid ($1.2 million) and the auctioneer then quickly secures the [arguably] mislaid or abandoned property and resells for $3 million.

Would such behavior constitute a “secret profit?” Does a $1.5 million (or a $1.8 million) profit — without the seller’s knowledge and consent — sound like a secret profit?

Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.

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