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Real and personal property sells at auction all the time. Our topic today involves, “When does title (ownership) transfer?”

Absent any contract provisions to the contrary, for personal property the UCC § 2-401 will be applicable here. For real property, title (ownership) transfers when the grantee (buyer) is delivered and accepts a valid deed.

Otherwise, personal property title transfers in this below fashion:

§ 2-401(2) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading

    (a) if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but
    (b) if the contract requires delivery at destination, title passes on tender there.

§ 2-401(3) Unless otherwise explicitly agreed where delivery is to be made without moving the goods,

    (a) if the seller is to deliver a document of title, title passes at the time when and the place where he delivers such documents; or
    (b) if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting.

Summarizing UCC § 2-401, the default rule is that title transfers at the time and place of delivery. If delivery is to be made without moving the goods, then UCC § 2-401(3) will control, and title will pass at the time of the delivery of the document of title (for things that have documents of title) and for things that don’t have documents of title, title will transfer at the time and place of contracting.

Further, many auctioneers wonder if title transfers at, “Sold!” (or delivery) but payment never arrives, what can be done? UCC § 2-703 seems to answer that question:

§ 2-703. Seller’s Remedies in General.
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make a payment due on or before delivery or repudiates with respect to a part or the whole, then with respect to any goods directly affected and, if the breach is of the whole contract (Section 2-612), then also with respect to the whole undelivered balance, the aggrieved seller may

    (a) withhold delivery of such goods;
    (b) stop delivery by any bailee as hereafter provided (Section 2-705);
    (c) proceed under the next section respecting goods still unidentified to the contract;
    (d) resell and recover damages as hereafter provided (Section 2-706);
    (e) recover damages for non-acceptance (Section 2-708) or in a proper case the price (Section 2-709);
    (f) cancel.

Summarizing UCC § 2-703, the remedies that become available for the seller include suing for damages, resell and recover damages and/or canceling the contract.

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.