Auction Laws in the U.S.A.

In the U.S., there is no federal law regulating auctions (Thank goodness). Regulation is left up to individual states, as this is how the U.S. Constitution was intended. States have differing requirements on licensing, education, bonding, fees and other aspects of conducting an auction. While, not all states require licensing, most states do have laws and/or regulations covering the auction industry. The Uniform Commercial Code (U.C.C.) was the original basis for auction laws in all states, except Louisiana which only enacted part of the Code.

The Uniform Commercial Code is often quoted when people talk about auction laws, but the U.C.C. is not actually law. A group of lawyers worked on drafting the Uniform Commercial Code for over 10 years (1941-1951) to complete the proposed statute and get it approved by the American Bar Association. The U.C.C. is just a general “code of commerce” that has become a precedent of law, but the Uniform Commercial Code has no legal significance, except that 49 states have drafted most of the U.C.C. into their own laws. The first state to adopt it was in 1951 and the 49th state to adopt it was in 1967. Why only 49 states? Louisiana law is typically based Napoleonic law, while the other 49 are based on English law. (So, Louisiana just has their own way of doing things.)

You can see what the Uniform Commercial Code says in regards to auctions at: U.C.C. § 2-328. Sale by Auction

In addition to the basic Uniform Commercial Code (or parts of it) in each state’s business law, each state may have their own additional laws, modifications or administrative rules that also govern auctions and may also vary somewhat from the actual U.C.C., as originally drafted. You can find a list of State Auction Laws & Auctioneer Licensing Information in the top menu & right-hand column of this page.

If there is no link to your state, then your state may not have state licensing requirements for auctioneers. However, this doesn’t mean that your state does not have laws regulating auctions. If you have information or links to webpages outlining the laws, let me know and I will update the information after verifying the information.

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12 Responses to Auction Laws in the U.S.A.

  1. harriet says:

    I have a questions about auction regulations in Santa Fe, NM, specific to a lien on property auctioned by the lienholder’s attorney himself. Do you know where I could locate an answer this question? Thank you.

  2. Will Matney says:

    Hello, on an online auction, can the auction company refuse to allow a buyer to pay with any form of legal payment such as personal checks, credit cards, money orders, and cashiers checks? In other words, can they force the buyer into a single form of payment, and that payment option be controlled by the auction company such as ebay owning paypal?

    I just noticed the change in ebay this January 2009, in that now, the only way you can pay is to be forced to take a paypal account, and pay through it.

    Ebay started first by saying that sellers were no longer allowed to accept money orders or cashiers checks. If they did, they could be banned from ebay. After that, one could still easily pay by credit or debit card through paypal, but you did not have to have a paypal account. Now, you can not do this, and you are forced to sign up to take a paypal account, where additional charges have to be paid besides the ones on your credit or debit card. In other words, you can no longer simply pay by credit card, without having a paypal account, and paying them to become verified, and pay them for additional charges.

    Thanks,

    Will

  3. Auction Law says:

    Will
    While this blog is primarily concerning the world of Live Auctions, I’ll offer my thoughts on the subject anyway. In short, it doesn’t matter whether it’s online or not, the owner can set forth the terms of sale, which includes acceptable methods of payment. In other words, if you don’t agree with the seller’s terms, you don’t have an agreement. You can’t force anyone to sell their item or mandate how you will pay for the item. It’s their item/business/store/etc. and it is at their sole discretion, to determine the operation of their business. The only exceptions are based on race, sex, handicap or other such discriminatory laws and the form of payment doesn’t fall under any of those.

    Now, concerning PayPal… It doesn’t cost a buyer anything to use PayPal. The costs are born by the Seller. So, unless you are a seller, you can sign up with PayPal without any additional costs associated with the transaction. Of course, with the number of online scams (by buyers and sellers), PayPal offers an excellent service which helps to decrease the risks associated with online payment. So, while it costs the seller a small percentage of their sales, it does provide a level of protection for them, as well as their buyers.

    So, what I see, Ebay is trying to decrease the complaints of fraudulent activities. While I certainly haven’t agreed with some of the new policies (especially their new feedback policy), it is still the largest and most established online marketplace and provides the largest number of buyers to the online seller. I have to give them credit for their efforts to keep it reasonably secure, to keep the buyers coming, which will keep the sellers wanting to do business. All in all, the terms of selling and buying on their marketplace is their decision. In the long run, I doubt that their new policy changes will make much difference, as they do have a strong market of buyers. This of course, will keep the sellers coming back to tap into that market.

  4. Frank Ceresi says:

    Is it lawful for the principal owners of an auction house to consign items in their own live and/or internet auction?

    Is it lawful for the principals in an auction house to bid in their own live or internet auction?

    Frank Ceresi

  5. Auction Law says:

    Frank
    I’m not aware of anything unlawful with an auction house selling items they have purchased to resell. Why should it be? This is how most resellers operate in the first place, from flea markets to major department stores, whether they sell used or new goods. I don’t understand why anyone would consider this to be an unacceptable practice. Please elaborate on your reasons that might indicate this to be inappropriate.

    Now, your next question requires a little clarification. Of course, while the laws can vary from state to state, I would also recommend that you carefully read the laws for your particular state to determine any variances from most other state laws. So, keep in mind, my following comments are for majority of state laws, but there could be the possibility that a few may indicate otherwise.

    In most states, the seller or their agent (which can certainly include the auctioneer) may be allowed to bid on behalf of any minimum reserve prices set by the seller, as long as “SUCH BIDDING IS DISCLOSED” to the bidders.

    This disclosure may be in the form of written “Terms and Conditions” posted or made available to the bidders or may be statements made during the “Opening Statements” of the auction, which is why it is always a good idea to be present and the beginning of an auction and listen closely to everything the auctioneer says at that time. If you arrive late, you are still bound by those oral statements, even though you may not have actually heard them being made. This falls under the same basis as you’ve probably heard before, concerning the your responsibilities to know the law prior to any actions you take… “ignorance is no excuse”. So, if they have written terms and conditions, you should read them carefully, in their entirety. However, there is no requirement that the terms must be written and the auctioneer is also allowed to set forth the conditions of each sale as an item is being offered, which may also superceed any previous statements made.

    The key point is “DISCLOSURE”. If the auctioneer has not disclosed that such bidding may be allowed, then it would be considered “shilling” and would be considered fraudulent bidding.

    As a side note, I would also like to note that the auctioneer is not required to state that any item has a reserve or not, much less how much the minimum reserve price may be for any item. In fact, at most auctions, any reserve is kept secret and is not disclosed. There are several reasons for this and experience has certainly born out a couple of those most prominently… one is that it “sets a maximum price in the mind of the buyer” and we all know that an item is worth what the highest bidder is willing to pay on a particular day.

    This is not to say that the item may not bring more on a different day, with different buyers and the seller is not required to sell their item for less than they are willing to accept. This goes back to the definition of “Fair Market Value” which is “the price a willing buyer and willing seller agree on”.

    Another reason why most auctioneers don’t disclose reserves, is due to another element of human nature… if the minimum amount is disclosed, most won’t even offer a starting bid at the reserve price. It’s as though they automatically deem the price to be “too high”. However, from experience, if the item has a “reasonable” reserve, the bidders will usually meet or exceed it, if there are two or more truly interested bidders and they are allowed to start the bidding where ever they wish and bid accordingly. Of course, if there is only one interested bidder, the seller’s agent may bid against them until it reaches the reserve (if such bidding was properly disclosed, as discussed above).

    Unfortunately, one of the myths that many people have about auctions, is that “everything must sell regardless of price” and they go looking for a “steal of a deal”. While there are often plenty of great deals to be had, there is no requirement that everything must be sold regardless of price. The U.C.C. states that “all auctions are considered to be WITH Reserve, UNLESS stated to be Absolute”. Therefore, the auctioneer may still cancel the sale of any item prior to announcing ‘sold’, if he/she feels that the item has not met a reasonable value, even if it does not have a minimum reserve price. However, the ethical auctioneer would not bid against you in such cases (since there is no specific reserve), but only ‘pass’ the item if a reasonable value was not reached.

    Hope this helps.

  6. [...] House Bidding & Selling By Auction Law In the comments on the article Auction Laws in the U.S.A., a couple of great questions have been asked by Frank [...]

  7. Christopher spencer says:

    I worked for a man who said he was in the auction business. He started up a cash for gold business, and said (in Florida) that with a auction licence you don’t have to hold jewelry ANY amount of time (like a pawn shop). If this is true , how wouls I go about getting such a licence to purchase gold ?

    • Auction Law says:

      I might question such claims, unless I’ve looked up the laws. Of course, such laws may vary from state to state and even cities may have their own ordinances that may require you to report any jewelry you purchase from others to the local police.

      I would recommend going to the Florida State website and start searching for the laws or talk to a lawyer.

  8. Hervé says:

    I’ve discovered your blog this morning. Find it very instructive. I’m very interesting in creating an auction business. Originally I wanted to set it up in my country, but it looks like very hard to do so, because of a too strong auctioneer protectionism and legal constraints.
    Years ago (2001) I lived 2 years in Portland Oregon. I’m thinking, considering, dreaming (maybe) coming back in Portland and setting up that kind of business over there.
    I might, no I will for sure need help to understand U.S auction laws.
    Are they that simple from what I read in this article? (http://www.law.cornell.edu/ucc/2/2-328.html) It looks too easy to be true!?
    Also if I understand well, there would be no license if I would settle in Portland, Or. Am I right?
    Anyway I’m asking myself lots of questions which remain unsolved. Despite the quality of your blog and clearness of your explainations, I would definitely love to have your help to clear of undergrowth the path to auctions.
    Can we continue in private?
    Regards.

    • Auction Law says:

      Herve
      The link provided is only the basis for auction laws drafted by the different states. While it provides the basis for most states, some states have modified the UCC version and there are many other laws that an auctioneer must also be familiar with, even if the state doesn’t have a licensing requirement.

      So, while Oregon doesn’t currently have an Auctioneer licensing requirement, you might want to do some additional research on the other laws. It is always recommended that you enroll in one of the Auctioneer Training schools, as well.

      Here are some additional links on Oregon laws and auctions, just for starters:

      http://www.oregonauctioneers.org/reference.php

      http://www.leg.state.or.us/ors/698.html

      http://www.oregon.gov/

      http://www.leg.state.or.us/ors/

      http://licenseinfo.oregon.gov/index.cfm?fuseaction=license_seng&link_item_id=13881

      http://www.oregon.gov/OSMB/BoatLaws/salvageboats.shtml

      http://www.foreclosurelaw.org/Oregon_Foreclosure_Law.htm

      These are just a few of the various laws that can effect an auctioneer in the State of Oregon, even though they don’t have an Auctioneer Licensing law. Of course, there may be other business licensing or regulations that may also apply.

      Now, in answering your last question. I am not an attorney, nor do I currently practice auctioneering in Oregon. This website is for general information purposes relating to auctions and a result of my own research, but I don’t guarantee complete accuracy, although I try to offer as much as I can find without overwhelming time consuming efforts. Individual and/or Private efforts in assisting you to obtain additional in-depth information would only be considered on a fee based arrangement… of course, being an auctioneer, the arrangement would be full of stipulations, such “As-Is, Where-Is, No Warranties or Guarantees Expressed or Implied” and my efforts would only be considered a research service to locate additional information you might need.

      So, as I indicated previously, you might want to enroll in one of the auction schools, first. Then, if you still need assistance in determining additional requirements, you can contact me for my terms and fees.

  9. Auction Law says:

    Comments on this page have been Closed. A new page has been setup for Questions & Comments.

    If you have Questions or Comments, please post them on the Questions & Comments page.

    You will also find the link to the Questions & Comments page in the right-hand column.

    Thanks

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