Current through Register Vol. 49, No. 9, September, 2024
SECTION 15.
REAL ESTATE AUCTION DEFINITIONS AND REQUIREMENTS.
15.1
Definitions.
(a) Absentee bid means a procedure that
allows a bidder to participate in the bidding without being physically
present.
(b) Absolute Auction means
an auction where the real estate is sold to the highest qualified bidder with
no minimum bid or limiting conditions. The seller may not bid personally or
through an agent, unless the seller is a party to the dissolution of any
marriage, limited liability company, partnership, or corporation, and is
bidding as an individual apart from the selling entity. Also known as an
auction without reserve.
(c)
Auction means a method of selling real estate in a public forum through open
and competitive bidding.
(d)
Auction agreement means the same as a written listing agreement or written
agency agreement for the purposes of this section.
(e) Auction With Reserve means an auction of
real estate in which the seller or his agent reserves the right to establish a
disclosed or undisclosed minimum bid, to accept or reject any and all bids, and
to withdraw the real estate at any time prior to announcement of the completion
of the sale by the auctioneer. Also known as reserve auction or as an auction
subject to confirmation.
(f)
Auctioneer means any individual who holds an active Arkansas Real Estate
license pursuant to ACA §
17-42-101 et
seq. [and an active Arkansas Auctioneer license pursuant to ACA §
17-17-101 et
seq.], who offers, attempts, or agrees to auction real estate or participate in
a real estate auction.
(g) Bid
means a prospective buyer's indication of offer of a price the prospective
buyer is willing to pay to purchase real estate at auction.
(h) Buyer's premium means an advertised
percentage of the high bid or flat fee added to the high bid to determine the
total contract price to be paid by the buyer.
(i) Internet auction means an auction in
which a prospective buyer bids using electronic media. The term also includes
an auction in which the auctioneer conducts the auction using electronic
media.
(j) Rafter Bid or Puffing of
a Bid means a fictitious bid used to increase the final sales price.
(k) Reserve means the minimum price that a
seller is willing to accept for a property to be sold at auction.
(l) Shill means a person who falsely pretends
to have no association with the auctioneer or seller and gives the impression
of being an enthusiastic bidder by puffing of a bid.
15.2
Nature of auction and written
auction agreement.(a) Auction shall be
with reserve, unless the real estate is offered without reserve using explicit
terms such as "absolute" or "without reserve." In an auction "with reserve,"
the auctioneer may withdraw the real estate at any time until he/she announces
completion of the auction. In an "absolute" auction or auction "without
reserve," after the auctioneer calls for bids on real estate, that real estate
cannot be withdrawn unless no bid is made within a reasonable time.
(b) The auctioneer shall have a written
auction agreement with the owner stating the parties' agreement regarding the
terms and conditions of the auction, including whether the auction will be an
absolute auction or auction with reserve and the terms of reserve or conditions
on the sale; whether a buyer's premium will be charged the buyer and who will
receive the buyer's premium collected, and whether the auctioneer or others on
the auctioneer's behalf may bid on or purchase the subject real estate at the
auction. The auction agreement shall include the address of the property; the
compensation to be received by the auctioneer; and the signatures of all
parties. At the time of securing the auction agreement, the auctioneer who
obtains it shall give the person or persons signing the agreement a true copy
of the agreement. In those cases where the auction is an absolute auction or
auction without reserve, the auction agreement or an addendum thereto must
include the following statement in 14 point bold-faced type.
"SELLER ACKNOWLEDGES AND AGREES THAT THE PROPERTY OF SELLER (OR
PORTION THEREOF IF CONSPICUOUSLY NOTED ON THIS AGREEMENT BETWEEN AUCTIONEER AND
SELLER) IS TO BE SOLD AND CONVEYED TO THE HIGHEST BIDDER AT THE AUCTION SALE
REGARDLESS OF PRICE AND WITHOUT SELLER HAVING ANY AUTHORITY OR LEGAL RIGHT TO
REFUSE TO CONVEY THE PROPERTY (OR PORTION THEREOF) TO SUCH HIGH BIDDER. SELLER
IS STRONGLY ADVISED TO VISIT WITH AN ARKANSAS LICENSED ATTORNEY WITH REGARD TO
THE DIFFERENCE IN AN AUCTION WITHOUT RESERVE (SUCH AS THAT INTENDED BY AND TO
OCCUR PURSUANT TO THIS AGREEMENT) AND AN AUCTION WITH RESERVE. SELLER IS ALSO
STRONGLY ENCOURAGED TO VISIT WITH ANY LIENHOLDER OR SELLER PURSUANT TO ANY
INSTALLMENT LAND SALE (OR SIMILAR) CONTRACT WITH REGARD TO THE NATURE OF THIS
AUCTION AGREEMENT."
(c) A
bidder may retract a bid prior to the auctioneer's announcement of completion
of the auction, but a bidder's retraction does not revive any previous
bid.
(d) Each sale at auction is
complete and considered legally binding upon the person making the final
winning bid at the moment the auctioneer announces the completion of the sale
by the fall of the hammer or in any other customary manner.
15.3
Auctioneer/Seller
bidding or purchasing auctioned real estate.
(a) Auctioneer bidding.
(1) The auctioneer shall not bid or otherwise
purchase the real estate being auctioned, or permit others to do so on his
behalf, unless he has disclosed that he may bid or may purchase the real estate
as provided herein.
(2) In a
reserve auction, the auctioneer may bid on behalf of the seller after giving
notice pursuant to section c below.
(b) Seller bidding.
(1) In an absolute auction, the auctioneer
shall not knowingly permit the seller or others on the seller's behalf to bid
on the seller's real estate being auctioned, unless the seller is a party to
the dissolution of any marriage, limited liability company, partnership, or
corporation, and is bidding as an individual apart from the selling entity and
disclosure as required herein has been made to those in attendance at the
auction.
(2) In a reserve auction,
the auctioneer shall not knowingly permit the seller or others on the seller's
behalf to bid on the seller's real estate being auctioned unless the auctioneer
has disclosed that the seller or others on the seller's behalf may bid on the
real estate being auctioned as provided herein.
(c) Notices.
Immediately prior to opening the bidding on the subject real
estate, the auctioneer shall announce to all of those in attendance at the
auction, the terms and conditions of the auction, and announce if the seller
and/or auctioneer, or others on their behalf may bid on or purchase the real
estate being auctioned.
15.4
Auction Advertisements.
An auctioneer who advertises real estate shall comply with the
following requirements:
(1) Auction
advertisements that include real estate must disclose the name of the real
estate firm and auctioneer licensed with that firm who will be conducting the
auction;
(2) Advertising real
estate for sale at which some parcels will be auctioned with reserve and some
parcels will be auctioned without reserve shall clearly and conspicuously
indicate this fact to the public.
(3) An auctioneer shall disclose the
existence of any buyer's premium to be charged to a buyer at an auction sale.
Such disclosure shall be made in all published advertising and disclosed prior
to the start of an auction.
15.5
Internet auction sale procedure
and absentee bids.
In an Internet auction sale or in an auction that allows for
absentee bids, the auctioneer must validate a buyer's capability to participate
in the sale by obtaining the buyer's name, address, e-mail address, phone
number, and ability to legally enter into a contract. In addition, the
auctioneer shall obtain an agreement to the terms of the auction procedure from
any buyer wishing to participate in the sale.
15.6
Auctioneer to maintain
records.(a) The Principal Broker of
the real estate firm with which the auctioneer is licensed must maintain for a
period of three years copies of all agreements, listing contracts, handbills,
advertisements, and other pertinent records, including signed closing
statements and any auction recordings whether audio, video, or audiovisual if
the auction was recorded. The records are subject to review by the
commission.
(b) For all auctions
that an auctioneer advertises as absolute, a copy of the closing statement
signed by the seller and buyer for the real property that was the subject of
the absolute auction must be maintained by the principal broker for a period of
three years. In the event deed does not transfer for real estate advertised for
inclusion in an absolute auction, the transaction file must include a detailed
explanation as to why the property was not sold.
15.7
Certain acts prohibited.
Prohibited acts include the following:
(1) Knowingly receiving or using a rafter
bid, puffing of a bid, or any type of bid rigging such as utilizing the
services of a shill;
(2) Knowingly
permitting an unlicensed individual to participate in a real estate
auction;
(3) Knowingly and
intentionally misleading the seller, buyer, or bidders in the advertising,
conduct, and closing of an auction.
(4) A continued and flagrant course of
misrepresentation or making false promises, either by the auctioneer, an
employee of the auctioneer, or by someone acting on behalf of and with the
auctioneer's consent.
(5) Failure
to properly make any disclosures or to provide documents or information
required by this section.
(6)
Establishing a pattern of practice of advertising auctions that include real
estate as "absolute" when the auctioneer knew or should have known that a
minimum bid or limiting conditions existed for the properties to be
sold.
(7) Establishing a pattern of
practice of advertising auctions that include real estate as "absolute" then
subsequently cancelling the auctions or converting the auctions to an Auction
with Reserve type auction.
(8) Any
other conduct, whether of the same or a different character from that specified
in this section, whereby the real estate licensee falsely bids or knowingly
receives false bids on the property to be sold only for the purpose of raising
the price for the seller or auctioneer.
15.8
Unlicensed real estate
activity.
Any unlicensed person who participates in a real estate auction;
or who makes or offers to make a rafter bid; or who engages in or offers to
engage in puffing of a bid; or who acts or offers to act as a shill is prima
facie evidence that the person is performing activities listed in Arkansas Code
Annotated Section
17-42-103(9)
and is thereby engaged in unlicensed real estate activity and as such is
subject to the civil penalties set out in Arkansas Code Annotated Section
17-42-109.
