10.2 Commission Structures, Seller Expense Advances & Converting a Pitch into a Compliant Agreement

10.2 Commission Structures, Seller Expense Advances & Converting a Pitch into a Compliant Agreement

Winning the consignment is the soliciting half. Papering it correctly is where Chapter 468 takes over. This section covers how Florida auctioneers get paid and how the pitch becomes an agreement that survives a DBPR file review.

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How Florida Auctioneers Are Compensated

Florida does not fix, cap, or regulate the level of auction commissions. Compensation is a negotiated commercial term. What Florida regulates is that the terms or conditions on which the licensee receives the property for sale and remits the sales proceeds to the owner must appear in the written agreement — F.S. 468.388(1)(c).

[!CAUTION] Guarantee and net-return deals invert the conflict. Under a net-return arrangement, every dollar above the seller's net belongs to the house, so the auctioneer's interest in a low hammer aligns against the consignor's. The structure is lawful, but it must be disclosed in plain language in the written agreement. Presenting a net deal as though it were an ordinary commission consignment is conduct demonstrating bad faith or dishonesty under F.S. 468.389(1)(e) — one of the paragraphs F.S. 468.391 makes a third-degree felony.

The Buyer's Premium Is Not Free Money

A buyer's premium is economically borne by the consignor, because informed bidders reduce their hammer bids by roughly the premium. It also carries three separate Florida duties:

1. Announced at the beginning of the auction and conspicuously displayed or distributed at the site — F.S. 468.388(6).
2. The percentage amount included in advertising; omitting it makes the advertising false, deceptive, misleading, or untruthful — F.S. 468.388(11)(b)8.
3. Disclosed to the consignor as part of the remittance terms if it affects what the seller nets — F.S. 468.388(1)(c).

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Seller Expense Advances: The 468.388(10)(d) Default

This is the highest-yield financial rule in the soliciting subject area, because the statute sets a default that runs against the auctioneer unless a prior written agreement changes it.

F.S. 468.388(10)(d) provides that unless otherwise provided by written agreement executed prior to the auction, funds received by a licensee from the seller or the seller's agent for expenses, including advertising, must be:

• expended for the purposes advanced, or
• refunded to the seller at the time of final settlement;

and any such funds must be maintained in an escrow or trust account in an insured bank or savings and loan association located in this state. The subsection expressly does not prohibit advanced payment of a flat fee.

+-------------------------------------------------------------------------+
|  SELLER ADVANCES $6,000 FOR ADVERTISING                                  |
+-------------------------------------------------------------------------+
|  Must be held in the escrow / trust account.        468.388(10)(d)      |
|  Actual advertising spend                $4,300                          |
|  Unspent balance                         $1,700                          |
|      -> refunded to seller at final settlement, UNLESS a written         |
|         agreement executed BEFORE the auction says otherwise.            |
+-------------------------------------------------------------------------+
|  Keeping the $1,700 with no such prior written agreement:                |
|    468.388(10)(d) violation  +  failure to account/return under          |
|    468.389(1)(c)  ->  THIRD-DEGREE FELONY under 468.391                  |
+-------------------------------------------------------------------------+

The Companion Default: Interest

F.S. 468.388(10)(c) sets the matching rule for interest: any interest which accrues to sale proceeds on deposit is the property of the seller for whom the funds were received, unless the parties have agreed otherwise by written agreement executed prior to the auction.

Both defaults share the same structure, and it is worth memorizing as a single pattern: the seller wins by default; only a written agreement made before the auction can change it. A post-auction agreement is too late.

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Converting the Pitch into a Compliant Agreement

F.S. 468.388(1) requires that prior to conducting an auction in this state, the auctioneer or auction business shall execute a written agreement with the owner, or the agent of the owner, of any property to be offered for sale. There is no oral-consignment exception and no post-auction cure.

The three required contents are narrow, and the exam tests exactly this list:

F.S. 468.388(2) then adds the distribution and retention duty: the auctioneer or auction business shall give the owner one copy of the agreement and shall keep one copy for 2 years after the date of the auction.

[!IMPORTANT] Do not inflate the statutory list. Commission rates, buyer's premium terms, sale date, and absolute-versus-reserve status are all sound contract practice and each is governed somewhere in Chapter 468 — but only (a), (b), and (c) are enumerated contents of 468.388(1). Commission reaches the statute through the remittance terms in (c); buyer's premium is announced under (6) and advertised under (11)(b)8; absolute-versus-reserve is announced under (7) and advertised under (11)(b)7; expense advances and interest are defaulted under (10)(c)-(d).

Timeline From Pitch to Settlement

  PITCH  ->  WRITTEN AGREEMENT  ->  ADVERTISING  ->  AUCTION  ->  SETTLEMENT
              |  F.S. 468.388(1)      |               |            |
              |  must precede the     |  name + FL    |  opening   |  proceeds to
              |  auction              |  licence no.  |  announce- |  escrow within
              |  copy to owner;       |  of AU and AB |  ments     |  2 working days
              |  keep 2 years  (2)    |  (11)(a)      |  (5)-(7)   |  (10)(a)
              |                                                     |
              |                              account for / pay / return
              |                              within 30 days   468.389(1)(c)

The 30-Day Settlement Clock

F.S. 468.389(1)(c) makes it a ground for discipline to fail "to account for or to pay or return, within a reasonable time not to exceed 30 days, money or property belonging to another which has come into the control of an auctioneer or auction business through an auction." Because paragraph (c) is one of the five paragraphs enumerated in F.S. 468.391, a settlement failure is not merely an administrative matter — it carries third-degree felony exposure punishable under s. 775.082 or s. 775.083.

Note the two-part construction: the outer limit is 30 days, but the standard is a reasonable time not to exceed 30 days. On a simple single-consignor sale with cleared funds, a licensee who sits on the money for 29 days has not automatically complied.