New York Self Storage Association Wary of Proposed Auction Regulations
Copyright 2014 by Virgo Publishing.
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Posted on: 07/06/2010



 

The New York Self Storage Association (NYSSA) and the national Self Storage Association (SSA) hope to exclude self-storage from a bill being considered by the state legislature that would add regulation to auction procedures. The bill’s purpose is to prohibit acceptance of “sham” or “chandelier” bids by auctioneers without disclosure. The existing state law doesn’t regulate the use of sham bids by auction houses.
 
S4313B, “An Act to Amend the General Business Law, in Relation to Auction Requirements,” grew out of an 18-month investigation into auction practices in the art world. The study uncovered sham bids were allegedly being used by some auction houses to obtain fake bids that met or exceeded some items’ reserve prices. A sham or chandelier bid is any bid for which there is no bona fide offer or bidder.
 
Provisions of S4313B include:

  • The auctioneer will be held responsible for the truth of statements contained in any catalogue.
  • It must be disclosed if an auctioneer or auction house has any interest in an article being auctioned.
  • If there is a reserve price, it must be disclosed that the item/lot is being sold subject to reserve.
  • Detailed information must be provided about any jewelry being sold.
  • 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.
  • If the reserve price is not bid, the auctioneer may withdraw a lot from sale.

The NYSSA and SSA have offered an amendment that has been adopted into the bill. The modification protects self-storage lien activities where safeguards are already in place. It reads:
 
Notwithstanding any other provision of law, this section shall not apply to auction sales conducted pursuant to an order of a court of competent jurisdiction, including an order of a bankruptcy judge or trustee, or a sale of secured property pursuant to the uniform commercial code, or the sale of property which is subject to a lien or assignment pursuant to the laws of the state of New York.
 
To read more about S4313B, visit http://open.nysenate.gov/legislation/bill/s4313B.

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