Thread: Interesting auction incident? What would you do?

We had a very interesting incident this week at an auction. A tenant was called and told about the auction. She was also told about how much she owed. The tenant decided to attend the auction to possibly purchase her space for less than she owed us. The tenant was qualified by our auctioneer as a bidder and given a bid card. When her unit came up, she began bidding and bid right up to how much she owed, turned to me and said "I want to pay you what I owe right now!" I turned to the auctioneer who said "Sorry lady, the bidding has begun, your a bidder, if you want the unit you will have to bid along with everyone else." The other bidders at the auction continued to bid. She eventually won the bid, but she finally bid well over $1,000 over and above what she owed us. She is threatening to sue us, the auctioneer, the other bidders, etc.

My question is: Should we have accepted her offer midstream and allowed her to pay us the outstanding lien amount?

Never had this happen before, never seen it happen before, never heard of it happening before.

I would have...because I don't think the sale is final til the bidding is over.

However, don't you return anything to her that is over and above what is owed on the unit? So basically, no matter how high the unit was bid up, if she won it, she only owes you what she owes you. If she owes you $500, and won the unit for $5000, you have to give the other $4500 back to her anyway.

If you are are deducting the auctioneers cut though, I would think she has a case.

Originally Posted by Jughead

My question is: Should we have accepted her offer midstream and allowed her to pay us the outstanding lien amount?

This is the wrong question to be asking. You should be asking yourself why the **** you allowed her to participate in the bidding process in the first place.

Once a customer is at lien, he/she should be allowed on your property for one reason, and one reason only - to pay their past due bill on their unit, prior to it being the subject of a finalized sale. Anything else that you allow, other than that simple and well defined act, only muddies an otherwise clean sale.

I don't know how it works in California, but in other states, if you have to hold a public sale, then it must be just that ... a public sale...open to all members of the public, including the tenant.

We have had tenants show up to bid in Florida and Alabama, and the auctioneers said we were required to let them bid, as long as they did not become disruptive and as long as they followed all the rules.

Everytime that's happened though, the experienced buyers seemed to be able to "sniff out" the fact that a tenant was in their midst, and the bidding went skyhigh.

We have also had a tenant send a friend over to bid on their unit, which we did not find out until after the sale was complete and the tenant's friend was emptying the unit.

And actually I think the far more important question is "Why would you not accept the tenant's offer and stop the auction?"

It is always preferable to have the tenant's belongings returned to them, especially if you are getting payment in full. No lawsuits to contend with and you have your money.

I do think the auctioneer was out of place in his response...he should have remembered that he was working for you and asked you what you wanted to do. Every auctioneer I have used in the past would have done so.

Originally Posted by Lisa T

I don't know how it works in California, but in other states, if you have to hold a public sale, then it must be just that ... a public sale...open to all members of the public, including the tenant.

The fact that an event is "public" does not trump the rights of a facility to restrict attendance based on legitimate reasoning. As a case in point, a customer who has been legally denied the right of access to the facility due to their tenancy being terminated by a perfected lien. Or, auction buyers who have previously caused problems, or disruptive first timers, or...

Get the point?

There is no reason that a person who has been denied entry into a facility other than to make good on their debts, should be allowed to have access to the facility in a brazen attempt to reduce that liability. Especially when it runs the risk of creating a lawsuit. Bad management decisions make for lawsuits. Lawsuits have a tendency to bring forth bad (for our industry's benefit) case law that we all have to deal with.

I'm not trying to make a personal attack here, but Jughead's and his auctioneer's decision was, in my opinion, poorly thought through and the tenant should have been barred from participating in the bidding on her unit, or from even being on the premises unless she was actively paying for the unit in the facility office.

I would check with a lawyer for my state before denying a tenant from bidding. I have had 2 professional auctioneers, in 2 states tell me we couldn't deny a tenant unless they were disruptive or not complying with our standard auction rules that all bidders must follow. One of the auctioneers has been doing storage auctions for 20 years and it is their specialty. Storage managers tend to take such things personally, however as I posted previously, you wouldn't know if the tenant sent a friend or family member over to bid on their unit.

We have attempted this previously (allowing a tenant to attend an auction) - it has never ended well. Due to that we have instituted the policy - if a tenant is in Lien they are not allowed on the property.

Yes, they can send a friend to bid on their behalf, and as long as they follow all the rules and don't cause problems it's fine.

As for Jughead (and his auctioneer) IMHO - bad decision! This will probably come back to bite you in the butt!

Once again, this is a case of a manager and auctioneer getting greedy when the goal of an auction should be to empty the unit not line your pockets.

good luck on this, I hope it works out for you.

Originally Posted by Jughead

My question is: Should we have accepted her offer midstream and allowed her to pay us the outstanding lien amount?

Never had this happen before, never seen it happen before, never heard of it happening before.

Short Answer; Yes and yes, It's happened and a sale is not completed until all parties have agreed. As a standard auction practice, if the auctioneers hammer has not fallen or the auctioneer has not declared sold, it not a completed sale.

Long answer Very thin ice, I would cross my fingers and hope the issue goes away.
1) That the occupant's right to use the storage space has terminated. It does not say property/facility. You accepted the tenants’ right to bid or be on the property, they have a right to be there. These two are contradictory, so where do you go? Do you have a No Trespass clause?
2) The sale was not completed. See short answer above
3) Prior to the sale any person claiming a right to the goods may pay the amount necessary to satisfy the lien and the reasonable expenses. Check your state statues
4) Excess proceeds from the sale may be reclaimed by the occupant or must be turned over to the state as abandoned property.

We use to restrict delinquent tenants from the auctions, not anymore. It’s their stuff, and the regulars are quick to figure out what’s going on and will bid them up just because. Now, where you’re selling piece-by-piece, and some items are sold and some not, I don’t know where you can safely draw the line for the tenant to claim or pay for their goods.

I wish you the best of luck.

I'm interested in seeing a response to this by one of our legal experts.

I would also like to see a response from Jughead on what was the point of continuing the auction past the rent due amount, since anything over that would have to go back to the tenant anyway, so she should have been in no danger from bidding over the rent due amount. She really shouldn't have any reason to sue, because she got her stuff for exactly what she owed on it, unless you made her pay the amount she bid over what was due on the unit, which would have been pointless since you had to turn around and give it right back to her. The only person who benefitted from letting the bidding run up past the amount due was the auctioneer.