Continue reading »]]> In April of 2007, I was involved in a six-car pileup on the freeway. I was car five of six. Emergency services were required for the driver of the vehicle in front of me. The remainder of the individuals involved were able to walk or drive away from the accident. As you’d imagine with an accident of this nature, there was much wrangling with insurance companies. Except for the driver behind me – she didn’t have car insurance. As a result, damages to my car, which was totaled, were not covered. I won a judgment against the driver in the car behind me, and had the opportunity to obtain restitution. But, “blood from a turnip” was a piece of advice that stuck with me. My insurance company covered damages to the vehicle immediately in front of me, and the claims were closed in the middle of 2007. Or so I thought.

Fast forward two years to April of 2009. I receive correspondence addressed to “whom it may concern” from the local municipality that provided emergency services. The correspondence explains Minnesota Statute § 415.01, subd 2, allows cities to charge for emergency services to non-residents if they pass a city ordinance authorizing such action. If payment is not received within 30 days, Minnesota Statute § 366.011 provides a city may use lawful means to collect the debt, and Minnesota Statute § 366.012 provides a city can certify unpaid amounts against real property owned by the debtor. The correspondence goes on further to explain that such an ordinance was passed by the city in January of 2007 and provides that each party in an accident shall pay $350 per hour per fire department vehicle. Within the correspondence is a bill for $350 for a “Fire Service Billing” and a suggestion to submit a claim to my insurance company.

Needless to say, I was not happy. I didn’t yell or scream, rather I took the high road and wrote a letter to the city fire chief explaining my position. I did this within a week of receipt of the initial correspondence. I explained that I received no emergency services, and that in fact, I was not approached or assisted by the fire department, and that I suffered no injuries in the accident, and my vehicle was not at risk of fire. I also explained my belief that billing over two years after an accident was not fair nor equitable governance by the city, and that the suggestion to submit a claim to my insurance company two years after the claim was laughable. I further suggested that six vehicles times $350 per vehicle resulted in $2,100 collected for a six vehicle accident that involved no fire, no threat of fire, and a single injury (read back surgery aggravated). I explained I found it difficult to understand how the fee was equitable when the fire department provides similar services and often more services to most in the city through annual property taxes of less than $2,100.00 per year alloted to fire services.

I did not hear from the city, and believed they had reviewed my correspondence and decided that my position was correct, and I should not be assessed the $350. Imagine my surprise this morning, when I received notice that the city would be increasing the fee to $510, and assessing the full amount against the real estate where I live. I immediately wrote to the fire chief and the city administrator via email expressing my disbelief that they did not reply to my correspondence, and instead increased the fee and were going to assess the property where I live. I also explained that they were assessing property that I did not own, but rather were assessing property in which I am a tenant. Interestingly enough, the property is owned by a local law firm [imagine the letter they wanted to send to the city]. The fire chief responded to my email and said that they city’s position is that even though over two years passed, there was not a statute of limitations and I was a party at the scene and “it was determined by the responders through a visual observation or verbal contact with you that you were ok, however we did respond, we did check on you, and the city incurred an expense providing a response.” My thought: I’m glad that you responded, but to send me a bill for $350.00 to visually observe me standing in the ditch of a freeway (they didn’t get within 50 feet of me), and mentally note I looked okay seems excessive. The position of the city is that I received a service (they looked at me apparently from 50 feet away), and thus am responsible for payment of the fee.

In reading the Minnesota Statutes and the City Ordinances, the city is correct in their position. I did receive the service (if you call visual observation from over 50′ away service), and they are within their rights to charge me a fee for this service. I have since written to the finance director of the city to arrange removal of any assessment against real estate not owned by me (interestingly, the city assumed that since I live in a house, I must own the property), to arrange a reduction in the fee to the $350 (which was increased by my non-payment predicated by their non-response to my dispute), and to arrange my payment.

I’m still quite perturbed by this situation, and still am tossing around the idea of taking the city to small claims court. It seems a person can get in an accident, be seen from a distance at the scene of the accident by emergency personal, and receive a bill for services rendered in the amount of $350. To make matters better, it’s all within the rights of the city. However, it sure seems like a financial fishing trip by the city. If I would have received the invoice within a timely manner (say 90 days), I certainly would have been more willing to make full payment. However, two years later? If I pulled a stunt like that in our business, I’d be out of business in no time at all.

The bad news is that I’m going to be $350 lighter thanks to the city. The good news is that I’m now familiar with this practice, and have vowed that I will do something about it. My plan is to work directly with my State Representative and State Senator to get the statute amended to include language that claims for emergency services rendered must be made within 90 days by the agency providing said services. I’m not sure what the results will be, but it’s ridiculous that a city can send an invoice for an accident that occurred over two years ago.

Continue reading »]]> In the State of Minnesota the sale of real estate is regulated by the Minnesota Department of Commerce. Specifically, Minnesota Statutes Chapter 82 Real Estate Brokers and Salespersons speaks to the sale of real estate. In Minnesota, auctioneers are allowed to sell real estate at auction without being a licensed real estate salesperson or broker. This power is provided in Minnesota Statutes § 82.23 Exceptions which states in part:

Unless a person is licensed or otherwise required to be licensed under this chapter, the term real estate broker does not include:
…
(h) any person who acts as an auctioneer bonded in conformity with section 330.02, when that person is engaged in the specific performance of duties as an auctioneer, and when that person has been employed to auction real estate by a person licensed under this chapter or when the auctioneer has engaged a licensed attorney to supervise the real estate transaction;

Based on the statute, in the sale of real estate at auction, you are allowed only to engage in the specific performance of duties as auctioneer (i.e. calling bids to find a high bid), and may only do so when employed by a real estate broker or salesperson or the transaction is supervised by an attorney. Any activities beyond this would need licensure as a real estate sales person or broker.

In conjunction with the above, I was recently asked by another state to clarify the state’s position on bidding for the seller. In Minnesota, auctioneers are regulated by the Uniform Commercial Code which has been codified in state law as Minnesota Statutes § 336.2-328 Sale by auction which states in part:

(4) If the auctioneer knowingly receives a bid on the seller’s behalf or the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may either avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This subsection shall not apply to any bid at a forced sale.

The statute is very clear that before making or procuring such a bid, notice must be given that liberty for such bidding is reserved. Without notice, there are severe complications. Our company does not bid for the seller in real estate auctions. We present the highest and best offer to the seller, and if not satisfactory, enter into a closed negotiation with the high bidder and the seller. Far too often, we have experienced sellers that prior to auction were firm in their reserve price, but upon the conclusion of the auction are much more willing to accept the high bid even though lower than their reserve price.

In fact, within the past several years there was litigation brought against an auctioneer by a bidder at auction. The auctioneer was bidding on the property on his own behalf without disclosure or notice that liberty for such bidding was reserved. The auctioneer was the high bidder, and purchased the property. However, the back-up bidder won a judgment in excess of $400,000 against the auctioneer for not reserving the right to bid. There are deeper legal implications in a situation where an auctioneer bids on his own behalf at auction (i.e. auctioneer acting as agent for seller, yet buying on his/her own behalf (possibly construed as self dealing)) that I’ll address at a later time.

Simply put, an auctioneer is not required to a be a licensed real estate broker or salesperson in the State of Minnesota. However, to best serve and fully represent his/her client, it is recommend practice that an auctioneer selling real estate in Minnesota be a licensed real estate broker or salesperson.

Continue reading »]]> The sale of motor vehicles in the State of Minnesota is regulated by Minnesota Statutes § 168.27 and Chapter 7400 of the Minnesota Administrative Rules.  The statute is clear on the requirements of an auctioneer concerning the sale of motor vehicles. Minnesota Statute § 168.27 indicates in part:

Subdivision 1a. (b): No person shall engage in the business of selling used motor vehicles or shall offer to sell, solicit, deliver, or advertise the sale of used motor vehicles without first acquiring a used motor vehicle dealer license.

This is very clear, and takes all auctioneers (and all persons) out of the business of selling used motor vehicles.  There are exceptions that allow the sale of motor vehicles without licensure that come later in the statute.

Subdivision 1a. (h): No person shall engage in the business of auctioning motor vehicles for more than one owner at an auction or shall offer to sell, solicit or advertise the sale of motor vehicles without first acquiring a motor vehicle auctioneer license.

This is very clear that no auctioneer can sell, solicit or advertise the sale of motor vehicles for more than one owner at auction.

Subdivision 5a: No person may solicit, accept, offer for sale, or sell motor vehicles for consignment sale unless licensed as a new or used motor vehicle dealer, a motor vehicle wholesaler, or motor vehicle auctioneer.  This requirement does not apply to a licensed auctioneer selling motor vehicles at an auction if, in the ordinary course of the auctioneer’s business, the sale of motor vehicles is incidental to the sale of other real or personal property.  Incidental means up to a total of ten but no more than ten percent of the items in the posted auction bill are motor vehicles.

In this subdivision lies the loophole. This statute exempts an auctioneer from Subd. 1a.(h) (which states an auctioneer shall not sell, solicit or advertise the sale of motor vehicles for more than one owner at auction) provided no more than ten percent of the items on the auction are motor vehicles.

While the letter of the law indicates by selling ten times the number of smaller items as compared to the motor vehicles, an auctioneer is exempt from motor vehicle licensure.  I believe the spirit of the law would preclude an auctioneer from doing so.  In addition, many auctioneers (many of whom are auto dealers and many who are not) have commonly held that you may not sell for more than one seller at any given time.  This statute seems to go against that belief.  That said, I am familiar with enforcement actions against auctioneers for selling for more than one seller, and for selling more than ten vehicles at a large one-owner auction.

It is quite easy to take the exception from this subdivision at its surface value.  However, when reviewed in the entire scope of the statute, I believe the court would hold that an auctioneer conducting a large consignment auction with 50 vehicles, and 500 other lots, would be subject to licensure, as the spirit of the law in several places appears to preclude an auctioneer from doing so.  However, as you notice, the letter of the law can be read quite different.  Furthermore, my understanding is the State of Minnesota dealer licensure division is interpreting the exception to the letter of the law saying you may sell a number of motor vehicles up to ten percent of the total items on the auction bill, rather than to the spirit of the law.

Subdivision 8. (b) in part: Isolated or occasional sales or leases of new or used motor vehicles are exempt from this section…. “Isolated or occasional sales or leases” means: … (3) sales by a licensed auctioneer selling motor vehicles at an auction if, in the ordinary course of the auctioneer’s business, the sale of motor vehicles is incidental to the sale of other real or personal property.

Again, the exemption granted in Subd. 5a. is stated.  Previously the definition of incidental was given – up to a total of ten but no more than ten percent of the items in the posted auction bill being motor vehicles.

However, I again argue, the spirit of the law should be considered.  While one may argue that the letter of the law allows 50 vehicles from 50 different sellers so long as there are 500 other non-motor vehicle items to be sold and listed on the auction bill, I do not believe the intent of the law was for such an event to occur.

I have also reviewed the applicable Minnesota Administrative Rules and there does not seem to be any further clarification.  A call to motor vehicle licensure department confirmed that the letter of the law is being enforced in many instances, rather than the spirit of the law.

While this loophole exists, and I believe it needs to be closed, I have mixed feelings on the matter.

I.    If the motor vehicle licensure department is indicating the auctioneer seeking consignments, and selling motor vehicles is acting within the letter of the law so long as no more than ten percent of the items are motor vehicles, should we as an association be pushing for closure of the loophole?

II.    I believe the auctioneer is not acting in good faith, or within the spirit of the law. When reading the statute, it seems clear the intention was to disallow auctioneers from conducting regular consignment auctions of vehicles without being subject to the dealer license laws.  This makes sense to me on several levels including matters of liability, bonding, sales and transfer taxes, and insurance.

III.    I do not believe the board or executive committee can act without the direction of a majority of the membership. To lobby for a law change when the state is accepting of the position is not, in my opinion, within the board’s power. That said, if legislation were proposed or the membership desired the loophole closure, the association would need to take a position on the topic, and could then begin the necessary lobby efforts.  This is a reactive approach and quite the opposite of how I would like to proceed. I would much prefer to head off any troubles prior to them beginning.  However, it is best either to wait for legislation from outside the structure of the association, and to respond at that time, or to pursue closure of the loophole at the direction of the membership.

IV.    I am aware of many auctioneers in the State of Minnesota who also hold their motor vehicle dealer license.  They are acting in good faith, and should not be subject to competition from others who are not acting in good faith and are circumnavigating the intent of the statute.

V.    I believe revision of the definition of incidental from “Incidental means up to a total of ten but no more than ten percent of the items in the posted auction bill are motor vehicles” to “Incidental means up to a total of ten motor vehicles” would sufficiently remove the loophole.