When buyers buy anything at auction — particularly “AS IS and WHERE IS” — we would propose the buyer accepts the property in its current condition and location. So what if an auctioneer sells an automobile and the next day the engine fails?
Prior, we wrote about “reasonable wear and tear” in regard to some baked goods, which would be expected with almost anything sold at auction: https://mikebrandlyauctioneer.wordpress.com/2014/06/25/as-is-with-the-emphasis-on-is/.
Our observation today is, that an engine in a car will work … until it doesn’t. So, if the buyer accepts the car with a working engine, “AS IS,” and then drives it and the next day it fails, does she have a claim? Maybe, but maybe not.
If the buyer can show that some defect (latent) was not disclosed, then possibly she would be due a refund. Yet, if there wasn’t any indication of an engine issue on the day of the auction, the auctioneer could argue that’s all he warranted.
Most personal property continuously depreciates in condition and functionality. Real property improvements, fixtures, and attachments tend to constantly depreciate as well. Could some “material” depreciation occur only 24 hours after the auction? Certainly, as it could occur at any time.
Does “it runs good” today imply it will run good tomorrow or the next day? What about a week later? Month later? It would seem as soon as the buyer has title and possession, the warranty would be ineffective unless the auctioneer concealed some material information.
I remember an auctioneer noting something was “working when it was parked in the garage a year ago,” and the buyer noting it didn’t work the next day — which is something the auctioneer didn’t express, although possibly implied. Of course, a buyer should rightly expect something “sitting for a year” might need some maintenance.
What if I sold real property with a residential improvement, noting this was a “brand new home only a year ago?” A buyer could not expect a year later that the home would be in identical condition. Most advertising for real property auctions notes the year improvements were built — certainly not suggesting identical conditions the day of the auction.
Two great ideas for auctioneers — disclose all you know (or should know) about what you are putting up for auction, and provide a very reasonable opportunity for inspection. In this way, you better insulate yourself from claims the property isn’t what it was — or is now different.
Lastly, remember that when you don’t disclose known (or should have known) material facts, the other (buyer) side will often claim you should have: https://mikebrandlyauctioneer.wordpress.com/2019/02/11/as-is-and-should-have-known/.
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 formerly at 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 Auction 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.
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