Some questions are easier than others to answer. We think our subject question today is academic — can a lot be unsold at auction? I suppose it depends upon what you think unsold means.
Items are put up for auction in the United States and around the world every second of every day. In the United States alone, millions of lots (properties) sell every day at auction, but some don’t sell and remain unsold.
In this case, the seller remains in title as the lot (property) is unsold for want (lack) of bidders. This isn’t unusual at all, in that a seller/auctioneer could put up any sort of thing and receive no bids, or alternately the bidding doesn’t reach the seller’s reserve.
However, another maybe better question is … can a lot (property) be un-sold (a verb, rather than an adjective) … for example, could an auctioneer say, “Sold!” and then void this contract between the seller and buyer, and the property remain unsold?
As most of us know the UCC 2-328 allows the auctioneer to reopen the bidding as described here: “Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.”
We also know that some auctioneers have chosen to modify this basic treatise (per UCC 1-302) allowing them to reopen the bids otherwise, although doing such from what we’ve seen in court and otherwise exposes these auctioneers to the good possibility that these terms will be deemed manifestly unreasonable, which would void such customization.
We have written about this troublesome disclaiming numerous times including here: https://mikebrandlyauctioneer.wordpress.com/2017/07/28/the-integrity-of-the-bidding-process/ and here: https://mikebrandlyauctioneer.wordpress.com/2015/12/01/ucc-2-328-ucc-1-302/.
Nonetheless, could an auctioneer say, “Sold!” and then void this contract? The UCC 2-328 says if the auctioneer says, “Sold!” and then wants to void that contract, the choice is to reopen the bidding, not leave the property unsold. I can assure everyone reading this bidders (buyers) would consider “Sold!” to be binding unless the bidding was continued …
Bidders gain equity when bidding — and such equity likely provides for them the opportunity to bid again and have the opportunity to buy. Of course, auctioneers/sellers have the choice to essentially say, “no sale” and not sell the property, bid last for the seller and say “pass …” (could you say, “Sold!” here?) or otherwise withdraw the property in a with reserve auction.
On the contrary, in a without reserve auction, once the lot is put up for auction, and a bid is received within a reasonable time, the lot cannot be withdrawn. Auctioneers withdrawing property with a bid in a without reserve auction should just drive over to their county courthouse and ready for the lawsuit.
In regard to saying, “Sold!” when the seller remains in title is a subject of debate — and in at least one United States jurisdiction such is deemed illegal: https://mikebrandlyauctioneer.wordpress.com/2015/04/29/can-an-auctioneer-say-sold-and-not-mean-it/). As a result, it’s probably better to use the word, “Sold!” when you mean it, and some other word when you don’t.
Can property or lots be un-sold? Yes, if the bidding is continued largely. Can lots or property remain unsold? Yes, generally if the word, “Sold!” is not used.
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, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.