I was testifying in an auction case, and told the presiding judge that “Anyone can bid at an absolute auction except the seller unless it’s a forced sale, where anyone can bid.” Of course, anyone can bid, but in certain instances, the buyer would have recourse including voiding the sale or taking the property at the “last good faith bid.”
This involved a person bidding at an absolute auction where he was a sole member of a limited liability company that owned the property. We held if the sole member (member) bid to take title for himself, that was permitted in an absolute auction. If, however, this member bid for the limited liability company, that would be forbidden in an absolute auction.
Similarly, you might have heard that “George W. Bush” sold “his” 2018 Chevrolet Carbon 65 Edition Corvette at auction, where actually this car was generously donated by General Motors to the George W. Bush Institute Military Service Initiative. Only 650 of these special vehicles were produced, and this one sold for $1.4 million.
We wrote previously about who is “not the seller” https://mikebrandlyauctioneer.wordpress.com/2017/02/16/at-an-auction-whos-not-the-seller/ and it’s generally anyone who is not “in complete title.” For instance, a husband and wife own a house (as tenants in common or other fractional interests) and sell it absolute; the husband can bid for himself, and the wife can bid for herself, but the marriage can’t bid.
There seems to be an abundance of confusion on this topic, including among those in the legal profession. Law Professor Drew Kershen‘s analysis addresses this issue: https://mikebrandlyauctioneer.wordpress.com/auction-publications/drew-l-kershen-horse-tradin/.
Interestingly, the judge disagreed with me regarding the sole member of a limited liability company, and of course, I respected his opinion but remained convinced if the sole member was bidding for himself, and not the LLC, it was permitted. If he became the high bidder (which he didn’t) then the property would have transferred from the seller (LLC) to him personally.
Another often misunderstood circumstance involves selling “Estate” property. When the Estate owns it, then anyone else can bid including the kids, grandchildren, other family, heirs, and any other beneficiaries … just not the Estate. This would include someone bidding for the Estate to keep title unchanged.
The seller can really matter when the subject property is of special interest, such as the President John F. Kennedy November 22, 1963 ambulance which sold at auction — was this President Kennedy’s actual ambulance or an alternate ambulance? Contagion explains the magic that is tied to certain properties: https://mikebrandlyauctioneer.wordpress.com/2011/03/11/contagion-encourages-auction-purchases/.
So, if you’ve been following along, who’s the seller? (1) the limited liability company (2) the George W. Bush Institute Military Service Initiative (3) the marriage (4) the Estate. It’s not the member, George W. Bush, the husband or wife, or any of the family or beneficiaries.
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, Brandly Real Estate & Auction, 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 and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.