First, we did ask if the UCC 2-328 applies to real estate and we should probably say, “real property” instead, as real estate is only the land and actual and/or constructive attachments. However we’ll use “real estate” here as this is typically how this question is posed.
The UCC 2-328 was finally firmed as to language about 1952. Since then, all states have adopted the UCC 2-328 into their state law except for Louisiana. Louisiana courts rule as if it was adopted, interestingly enough, so one might fairly perceive the UCC 2-328 applies in all 50 of the states in the United States.
In the 1940’s when the UCC was being written, it was thought that the UCC would only apply to movable property, which might cross state lines. The theory was that the United States needed “uniform commercial codes” — a.k.a. UCC — for such transactions so that states would maintain the same rules concerning such.
Strictly speaking, the UCC 2-328 Sale by Auction was drafted to address “goods” only, which would include only personal property and secured paper transactions.
So, for auctioneers, this means that there are very distinct rules about the selling of personal property at auction — but not any of these same rules about selling real estate at auction?
As it turns out, the UCC 2-328 applies equally to real estate auctions every day in the United States because of court decisions and resulting case law. Thus, even though the state legislatures adopted the UCC 2-328 for goods only, those same state courts say the UCC 2-328 does apply to real estate … out of necessity.
According to the Administrative Office of the U.S. Courts on behalf of the Federal Judiciary, state and other common law courts not only have the authority to apply or interpret the law, but they often have the authority to create law if it does not yet exist by act of the legislature to create an equitable remedy to a specific legal problem.
And, that’s exactly what’s happening in regard to the UCC 2-328 and real estate. Courts are applying it to real estate to create an equitable remedy …
Probably no better case demonstrates the courts’ discretion regarding the UCC 2-328 in respect to this type of remedy as the Virginia Supreme Court’s case titled Hoffman v. Horton et al 212 Va. 565 (186 S.E.2d 79). In this case, the Court said, it was “both necessary and fair” to borrow the UCC 2-328 for a real estate auction case before them.
Would any other court rule in this same fashion? 100’s of courts all across the United States have done just that because of this lack of law in regard to real estate auctions, and the ease in which these personal property auction rules can be applied to real estate.
Does the UCC 2-328 apply to real estate? In a courtroom in the United States, chances are nearly certain it does.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is adjunct faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.