The Supreme Court of the United States said: “There is no word more ambiguous in its meaning than possession” (National Safe Deposit Co. v. Stead, 232 U.S. 58, 34 S. Ct. 209, 58 L. Ed. 504 ).
At auction, the words, “title” and “possession” take on somewhat special meaning — but not all that special.
In a personal property auction, possession implies custody — control. Such is property a seller drops off to an auction house, or a buyer leaves at this same auction house: The auctioneer has possession.
However, title means ownership. Even though our seller dropped off that personal property to the auction house, the seller remains in title. The seller didn’t sell the property to the auctioneer, but rather merely allowed him to possess (unless the auctioneer bought the property.)
You want a simpler example? You borrow your neighbor’s lawn mower; you now have possession, but your neighbor still has title to the lawn mower. Here too, we previously wrote about title and possession in regard to firearms: https://mikebrandlyauctioneer.wordpress.com/2015/06/22/gun-buyer-at-auction-is-denied/
Various types of auctions address title and possession differently. Here’s how most auctioneers view title and possession in these circumstances:
- In a typical onsite auction, once the auctioneer says, “Sold!” title transfers when the buyer pays and possession transfers almost immediately.
- In a typical auction at an auction house, title transfers when the buyer pays but possession may not transfer until the buyer picks up the item the next morning.
- In a real property auction, title and possession typically remain with the seller following, “Sold!” until a closing 30-45-60 days later when the buyer acquires both title and possession.
- In a car auction, title stays with the seller until the buyer transfers the physical title and possession typically remains with the seller following, “Sold!” until the buyer pays.
- In the online auction world, title usually passes with announcement of, “Sold!” if payment is immediate, or later if payment is delayed, but possession — if being shipped — typically remains with the auctioneer/seller until delivered to the carrier (USPS, for example.)
What are the implications of title and possession being disparate (but closely related) concepts? Those in title have certain responsibilities, and those with possession have other responsibilities; one would, however, conclude that title includes possession by default.
You have borrowed your neighbor’s lawn mower … you can’t just leave it out in the yard overnight, or not otherwise care for it as it’s in your possession. Yet, this home owner’s association assesses lawn mower owners to help pay for common area landscaping: $50/year for walk-behind mowers, and $150 for lawn tractors. Your neighbor still pays this $50 because he is in title.
What is the take-home for auctioneers in this regard?
- If you are in possession of property (real or personal) then you are charged with its reasonable care and generally that right to possess is temporary and determined by the person in title.
- If you are in title of property (real or personal) then you have the right to possess, and even the right to grant others possession, or revoke possession (and to sell, lease, encumber, waste, improve) and these rights are more permanent.
As an auctioneer, it’s important to know if you, your client, or your customer has possession, and if you, your client, or your customer has title. Answering these questions usually results in a simple allocation of rights and responsibilities.
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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.