I have written more than once about “commercially reasonable” auction standards. They are largely considered the highest standard required by an auctioneer — and legally required in some “forced sales.”
Here is our treatise from several years ago concerning “commercially reasonable” auctions regarding the state of Wisconsin: https://mikebrandlyauctioneer.wordpress.com/2014/06/23/commercially-reasonable-auctions/.
But what if an auctioneer is not conducting a forced sale? Does that mean he doesn’t have to concern himself (or herself) with manner, time, place, and terms being in line with “commercially reasonable” standards?
In other words, should we — as auctioneers — just do the minimum? I tend to think we should all endeavor to meet a high standard of care in regard to maximizing our client’s position even if the law doesn’t specifically require.
Relatedly, my state has a standard in real estate transactions involving licensees, that licensees disclose “all known material facts.” However, this same standard doesn’t specifically require disclosing stigmatizations such as haunted, recent murder, and the like.
In this regard, the top real estate license legal scholar in our state has said publically that such stigmatizations should be disclosed nonetheless, citing that we shouldn’t be doing merely the minimum … and I agree with her completely.
Her logic? You are bound by the legal minimum for licensing, but in a court of law, the question will undoubtedly be what you “should have done” and not merely what you “were legally required to do.” Similar to disclosing only what you know, instead of what you should know.
Auctioneers conducting any auction can conform to commercially reasonable standards and should. Simply put, advertise properly, give enough time for buyers to find out about the property while minimizing depreciation, be open for inspection prior and have reasonable bidder terms.
If you’re being told, “You don’t have to do that …” in this regard, that’s correct, you don’t have to, but you should, and certainly, I would guess that your client would want you to do all you could? What if you were the client? Would you want your auctioneer to do all he or she could for you?
Next time you as an auctioneer contract with a seller, see if it makes sense for to you do conduct a commercially reasonable auction. If not, maybe you aren’t the best auctioneer for that project? Or, if you proceed, be sure to let your client know the auction won’t be commercially reasonable.
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, and an Instructor at the National Auctioneers Association’s Designation Academy He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.