:Home to flagship names like Christie's and Sotheby's, New York State has more than 300 brick and mortar auction houses conducting sales, according to data by the National Auctioneers Association (NAA). Until now, these businesses have been largely unregulated in terms of consumer protections. If Westchester assemblyman Richard Brodsky prevails, however, both the mom and pop operations throughout the state as well as the Big Apple houses will have to become a lot more "transparent" with regard to buyers and sellers.
Brodsky, who since the 1990s has championed consumer protections for the art and auction markets, has reintroduced a bill (A1730C) that proposes to 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 would also have to be provided.
Brodsky said that the amended legislation would provide statutory protections to auction participants. "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," he said.
The bill, which passed through the assembly on January 26 and now goes to the New York State Senate for consideration, includes the following provisions:
•The consignor must warrant that he or she has complete and lawful right, title and interest in property being auctioned.
•It must be disclosed if an auctioneer or auction house has certain financial interests in an article being auctioned.
•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.
•The auctioneer will be held responsible for the truth of statements contained in any catalog, etc.
•If there is no reserve price, there shall not be any indication given that the item/lot is being sold at reserve.
•It must be disclosed if an auctioneer extends a loan to a purchaser.
•The auctioneer shall issue an invoice to each purchaser with specific information.
•Each auction sale must be advertised at least once in the seven days preceding the auction.
•Prospective purchasers must be allowed to inspect articles for sale.
•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.
•Whenever an estimated value of an item is posted, a description of such estimate must also be provided.
•Any advertisement indicating an auction for a business liquidation must state the name of that business.
•If the reserve price is not bid, the auctioneer may withdraw a lot from sale.
•The auctioneer may open bidding on any lot by placing a bid on behalf of the seller. After the reserve price has been reached, however, an auctioneer may not bid on behalf of the consignor.
•The reserve price shall not exceed the minimum estimated value of the lot.
•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.
•An auctioneer may not represent a manufacturer's or owner's guarantee unless such guarantee accompanies the article.
•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.
•Detailed information must be provided about any jewelry being sold.
Speaking on behalf of the NAA, Chris Longly said that there are many components of Brodsky's bill that make sense. "We believe in strong consumer protection," said, Longly, "but at the same time, we also want to be mindful that we don't overregulate auction houses out of business." He said he is uneasy about the provision requiring auction houses to send checks to consignors within 14 days, an onerous task for a small firm, for example, that might conduct an estate sale comprising thousands of items.
"Another concern we have is who's going to watch the auctioneers?" said Longly, who favors setting up an auction commission or similar agency to enforce the provisions. "A lot of key points are missing. We need exams for auctioneers, and currently there is no provision requiring a bond or recovery fund for use in case of fraud."
He added that the NAA will watch the progress of legislation closely as it advances.
