New York Bill Would Tightly Regulate Auctions

by Betty Flood

More transparency in the world of New York auctions will result if legislation introduced in the state legislature is passed. The proposed law would require auctioneers to provide detailed information about any items sold as well as disclosure if there is a "reserve price." Under the proposed law, auction houses would have to send checks within 14 days in remittance to anyone entitled to proceeds of a sale, and whenever an estimated value of an item is posted, a description of the meaning and function of an estimate must also be provided.

The legislation, which has been introduced in prior years, has taken on a new life since Assemblyman Richard Brodsky (D-Westchester) made several amendments to make it more palatable for passage. According to Brodsky, except for minimal provisions, New York state law does not currently provide for regulation of auctions.

"This bill would provide statutory protections to auction participants," explained Brodsky. "The world's major auction houses are located in New York state and are an important source of economic activity and tourism. Thus, it is important that state law provide protections for all parties to auctions."

The sponsor went on to explain that the amended legislation "for the first time codifies and enhances in state law the safeguards and protections applicable in the city of New York. This legislation is the product of an in-depth study of the issues and has been developed with input from auction houses, regulators, art dealers, and others with interest in ensuring that New York state remains the world's premier auction center."

Specific provisions include:

o The consignor must warrant that he or she has complete and lawful right, title, and interest in property being auctioned;

o It must be disclosed if an auctioneer or auction house has certain financial interests in an article being auctioned;

o It must be disclosed if a consignor is to receive a rebate commission or when he or she will be allowed to bid upon and buy back his or her own article;

o The auctioneer will be held responsible for the truth of statements contained in any catalog, etc.;

o If there is no reserve price there shall not be any indication given that the item/lot is being sold at reserve;

o It must be disclosed if an auctioneer extends a loan to a purchaser;

o The auctioneer shall issue an invoice to each purchaser with specific information;

o Each auction sale must be advertised at least once in the seven days preceding the auction;

o Prospective purchasers must be allowed to inspect articles for sale;

o Except to implement the reserve price, no auctioneer, consignor, etc. shall make a bid unless their status as someone with inside information has been disclosed;

o Whenever an estimated value of an item is posted, a description of such estimate must also be provided;

o Any advertisement indicating an auction for a business liquidation must state the name of that business;

o If the reserve price is not bid, the auctioneer may withdraw a lot from sale;

o The auctioneer may open bidding on any lot by placing a bid on behalf of the seller;

o After the reserve price has been reached an auctioneer may not bid on behalf of the consignor;

o The reserve price shall not exceed the minimum estimated value of the lot;

o An auctioneer may not offer more than one article for sale at any time unless combining of articles/lots is indicated prior to the initial bid;

o An auctioneer may not represent a manufacturer's or owner's guarantee unless such guarantee accompanies the article;

o An auctioneer may not offer an article contained in a carton or package unless it is announced that the bidder can reject the item upon opening such package;

o Detailed information must be provided about any jewelry being sold.

The bill now goes to the New York State Senate for consideration.

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