Ethics, Fiduciary Duties, and Escrow/Closing Responsibilities
Fiduciary duty
The auctioneer is the seller's agent and owes loyalty, obedience to lawful instructions, disclosure of material facts, confidentiality, reasonable care, and a full accounting. When the auctioneer also acts for the buyer, disclose it in writing and obtain consent. Never take an undisclosed commission from both sides.
Escrow
Buyer deposits and sale proceeds are trust funds. Place them in a separate escrow/trust account, never in the operating account, and never commingle. Disburse only as the contract authorizes-after funds clear, liens are addressed, and the bill of sale or closing statement is delivered. If a sale fails, return the deposit according to the contract and law, not by keeping it.
Closing
Confirm title and authority to sell, handle sales tax where applicable, and arrange delivery. Provide the seller a written settlement statement showing gross proceeds, commission, premium, expenses, and net.
Traps
Using escrow money to cover business payroll; paying the seller before the buyer's check clears; “borrowing” a deposit; failing to account for a deposit when the high bidder defaults; representing both sides without disclosure.
Worked example
A buyer gives a $5,000 deposit, and the auctioneer deposits it in the business account “to hold it.” That is commingling-discipline territory. It belongs in trust.
Rule of thumb: other people's money never touches your operating account.