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Stambovsky v. Ackley, 169 A.D.2d 254 (N.Y. App. Div. 1991) was a case in New York where the seller of a home previously held as “haunted” was sold without otherwise disclosure of this fact and the buyer was able to rescind the contract in light of nondisclosure.

The court held:

Where, as here, the seller not only takes unfair advantage of the buyer’s ignorance but has created and perpetuated a condition about which he is unlikely to even inquire, enforcement of the contract (in whole or in part) is offensive to the court’s sense of equity. Application of the remedy of rescission, within the bounds of the narrow exception to the doctrine of caveat emptor set forth herein, is entirely appropriate to relieve the unwitting purchaser from the consequences of a most unnatural bargain.

I would call your attention to the gist of the court’s opinion: “unfair advantage … is offensive to the court’s sense of equity.” Equity? Fairness? Contracts, and the like, should be equitable and not unfair? Indeed, and I see it again, and again, and again in my work as an expert witness.

If you as an auctioneer are unlucky enough to be in court — to try and prove what you thought you could do is legally possible — that might not be the deciding factor. What’s legal isn’t always ethical and what’s even technically ethical might not be viewed as fair or equitable.

Judges and particularly juries are encouraged by plaintiff’s attorneys to view cases from a “How would this have felt if it happened to me” standpoint. Of the most basic instincts, fairness and equity are deeply rooted in [most of] our psyche.

Further, what auctioneer doesn’t routinely say, “You’re buying ‘as-is’ and ‘where-is’ today …” in other words, “caveat-emptor.” Doesn’t that make everything okay? In this case, somewhat narrowly, it didn’t.

When auctions were the sensible choice when compared to going to a store 25 miles away or waiting 6-8 weeks for shipping, bidders and buyers largely accepted somewhat seller-favorable terms and conditions.

Today, bidders/buyers have a myriad of easier, quicker, more friendly choices than auctions while a few attorneys and others continue to push to make auctions even less buyer-friendly. As we’ve previously noted, auctions can and will be lonely events without any buyers.

What’s the solution? Auctioneers disclosing all known material facts about what they are selling, having liberal preview opportunities and standing behind any expressed warranties of concerning the subject property. It seems to us such puts us at the bare minimum to compete in today’s economic world.

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.