201 KAR 3:080. Absolute auction.
RELATES TO: KRS 330.110
STATUTORY AUTHORITY: KRS 330.110(2), (3), (8), (10), (11)
NECESSITY, FUNCTION, AND CONFORMITY: To prohibit misrepresentation and fraudulent advertising designed to bait the public and then not sell at true absolute auction.
Section 1. No auction shall be advertised as "absolute" nor shall any advertising contain the words "absolute auction" or the word "absolute" or words with similar meaning nor shall any licensee offer or sell any "goods" as defined in KRS 330.020(4) at "absolute auction" unless:
(1) There are no liens or encumbrances on the goods (excepting current tax obligations, easements or restrictions of record) in favor of any person, firm or corporation other than the seller, or unless each and every such holder of each and every such lien and encumbrance, by execution of the auction listing contract, or otherwise furnishing to the auctioneer written evidence of a binding commitment therefor, shall have agreed to the unqualified acceptance of the highest bid for the property, without regard to the amount of the highest bid or the identity of the high bidder; or, alternatively, that a financially responsible person, firm or corporation, by execution of the auction listing contract or by otherwise furnishing to the auctioneer written evidence of a binding commitment therefor, shall have absolutely guaranteed the forthwith and complete discharge and satisfaction of any and all such liens and encumbrances immediately after the sale, without regard to the amount of the highest bid received, or the identity of the high bidder.
(2) There is the bona fide intent at the time of the advertising and at the time of the auction sale, to transfer ownership of the goods, regardless of the amount of the highest and last bid, to the high bidder, such intent existing without reliance on any agreement that any particular bid or bid level must be made or be reached, below which level the goods would not be transferred to the high bidder.
(3) The auction listing contract contains a binding requirement that the sale be conducted without reserve, by specific inclusion of an acknowledgment by the seller that the seller, or anyone acting upon behalf of the seller, may not and shall not bid at the auction, or otherwise participate in the bidding process.
Section 2. Compliance with this administrative regulation shall not prohibit:
(1) A secured party or other lienholder not the seller from bidding at the auction sale, providing that such bidding does not constitute, nor is it tantamount to the direct or indirect establishment or agreement to the establishment of a reserve price on the goods by the seller or by the auctioneer, or by anyone aiding or assisting, or acting upon behalf of, the seller or the auctioneer.
(2) Any individual party to the dissolution of any marriage, partnership or corporation from bidding as an individual entity apart from the selling entity, on goods being sold at auction pursuant to such dissolution.
(3) The inclusion of nonmisleading advertising of certain goods to be sold at "absolute auction" and the nonmisleading advertising of certain goods to be sold at auction with reserve, within the same advertisement, or for sale at the same date and place, providing said advertisement shall make clearly apparent, through equal or appropriate emphasis, which goods are being sold by each method.
Section 3. Violation of any section or sections of this administrative regulation shall constitute a violation of one (1) or more of subsections (2), (3), (8), (10) and (11) of KRS 330.110. (14 Ky.R. 2244; eff. 8-5-88.)