We wrote about a week ago about a case litigated in Kansas and the citing of the basic tenets of commercially reasonable sales in such. That analysis can be read here: https://mikebrandlyauctioneer.wordpress.com/2020/06/17/westgate-state-bank-v-clark-642-p-2d-961-kan-1982/.
In particular the tenet concerning the reasonable opportunity to inspect was authored by Barkley Clark from his publication The Law of Secured Transactions Under the Uniform Commercial Code (1980.)
One of the most important elements of commercial reasonableness is the duty to surround the sale with publicity sufficient to attract a “lively concourse of bidders.” In publicizing a foreclosure sale, the exact time, place, and terms of a public sale should be published. A number of cases hold that if the collateral is equipment, individual consumer goods, or farm goods, there is a duty to provide prior inspection of the collateral for interested purchasers. Failure to allow prior inspection may influence the court to conclude in a particular case that the sale was not commercially reasonable.
We would hold that if you are held to a commercially reasonable standard — or if you are not — that these guidelines would be prudent nonetheless. What possible reason would any auctioneer have to deny a reasonable opportunity to inspect?
If you don’t want bidders inspecting the subject property prior, our only guess would be that there’s some issue or problem for which you want bidders/buyers to be unaware. It seems likely the problems will begin when those buyers do become aware.
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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.
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