Personal Property, Consignments, and Liens
Consignments
Personal property auctions often run on consignment. Use a written consignment agreement identifying the owner, property, reserve, commission, insurance, storage, minimum bid, and return of unsold items. The consignor should warrant title and authority to sell. The auctioneer is a bailee of the goods and owes reasonable care. Proceeds belong to the consignor less authorized charges and are trust funds.
Liens and title
Check for secured liens under UCC Article 9, mechanics' or storage liens, and title-brand issues. A consignor's promise that goods are 'free and clear' is not proof. Obtain lienholder written authorization and payoff terms before advertising a lien-free sale. A sale can transfer only the interest the seller has unless the lien is released or the sale is conducted under legal process.
Sales tax and documentation
North Carolina sales tax generally applies to tangible personal property sales, and the buyer's premium is typically part of the taxable sales price. Collect and remit correctly; do not assume the auctioneer's commission is the only taxable amount. Issue bills of sale and keep consignor settlements.
Worked example
A consignor delivers a tractor and signs a statement that it is lien-free. A UCC search reveals a bank lien. If the auctioneer sells without payoff or disclosure, the bank may claim the tractor or proceeds, and the buyer may demand rescission. The auctioneer should obtain a payoff and release before the sale, or disclose the lien sale.
Traps that cost marks
Do not rely on the consignor's oral title warranty. Do not assume a bill of sale defeats a perfected lien. Do not tax only the commission. Do not treat unsold consigned goods as abandoned without following the agreement and law.