1.3 Auctioneer Education and Recovery Fund
Key Takeaways
- The Auctioneer Education and Recovery Fund is a comptroller-held trust fund used for eligible claims against auctioneers licensed at the time of the transaction.
- A consumer begins the statutory process by filing a complaint with TDLR; a prior civil judgment and unsuccessful execution are not prerequisites.
- Actual damages exclude attorney fees, speculative damages, and lost profits.
- Payment is capped at $15,000 to one aggrieved party for claims from one auction and $100,000 for all claims against one auctioneer from one auction.
- An auctioneer must reimburse paid amounts with 8% annual interest, and the Commission may revoke and may probate a revocation order.
1.3 Auctioneer Education and Recovery Fund
Current-law alert: The recovery-fund provisions were materially amended in 2023. Use the current Chapter 1802 amounts and administrative claim process, not an older judgment-and-execution model or a $30,000 aggregate figure.
What the Fund Is
Occupations Code § 1802.151 creates the Auctioneer Education and Recovery Fund as a trust fund with the comptroller for payment of qualifying claims against licensed auctioneers. TDLR manages the fund and maintains its books and records.
The fund protects consumers from certain contract violations; it is not general insurance for every disappointing auction result. Section 1802.202 requires a person who dealt with the auctioneer and was aggrieved by the auctioneer's action resulting from a violation of a contract made with the auctioneer. The auctioneer must have been licensed at the time of the transaction. A claim arising solely from conduct of an unlicensed operator is not payable from this fund.
How a Claim Starts
The aggrieved person initiates the claim by filing a complaint with TDLR. The department investigates and determines the amount owed. If the auctioneer disputes the determination, the matter is referred to the State Office of Administrative Hearings. A party may appeal the Commission's contested-case decision under the Administrative Procedure Act.
This is a direct administrative process. The current statute does not make a final civil judgment, a writ of execution, or a sheriff's nulla bona return a prerequisite to filing the fund claim. Those features belong to older descriptions and should not be selected on the current exam.
If the department's amount is not disputed, TDLR pays the claim subject to the statutory limits. After a hearing, TDLR pays the actual damages determined by the administrative law judge, again subject to those limits.
Recoverable Damages and Payment Limits
Section 1802.205 expressly excludes three items from “actual damages” paid by the fund:
- attorney fees;
- speculative damages; and
- lost profits.
Section 1802.206 then imposes two distinct ceilings:
| Limit | Current amount |
|---|---|
| One aggrieved party, all claims from one auction | $15,000 |
| All claims against one auctioneer arising from one auction | $100,000 |
Apply both. If one seller proves $22,000 in eligible actual damages from a sale, that seller's payment cannot exceed $15,000. If eight eligible sellers each prove $15,000 from the same auction against the same auctioneer, the claims total $120,000, but the auction-wide cap is $100,000.
If the fund temporarily lacks enough assets, TDLR records the time and date the payment order was received and pays recorded consumers as money becomes available in that order. The statute does not promise immediate payment from another state account.
Funding Mechanism
An applicant entitled to a license pays the fund fee before issuance. In addition, § 1802.153 uses an August 31 balance test: if the fund balance is below $350,000, each license holder at the next renewal pays an additional amount equal to the greater of $50 or a pro rata share needed to restore the fund to $350,000. The fund assessment is tied to the statutory balance condition.
Consequences for the Auctioneer
When TDLR pays a claim, § 1802.207 requires the auctioneer to reimburse the fund immediately or agree in writing to an approved repayment schedule. The auctioneer must also pay any remaining amount due to the aggrieved party immediately or under an approved written schedule. These obligations accrue interest at 8% per year beginning on the date TDLR pays the claim.
TDLR becomes subrogated to the consumer's rights against the auctioneer to the extent of the fund payment. Repayment does not erase separate disciplinary authority.
A payment does not produce an automatic permanent revocation. Under § 1802.252, the Commission may revoke the license after a fund payment and may probate the revocation order. A person is not eligible for a new license until the full fund payment and interest are repaid. The permissive word “may” and the repayment condition are both testable.
Worked Example and Memory Chain
An auctioneer licensed on the transaction date violates four sellers' consignment contracts at one auction. Each proves $18,000 in actual loss. Each individual claim is capped at $15,000, so the total payable is $60,000—below the $100,000 auction-wide cap. Attorney fees are not added. Once TDLR pays, the auctioneer owes reimbursement with 8% annual interest and can face separate discipline.
Use Complaint → investigation → possible SOAH hearing → capped actual-damage payment → reimbursement plus 8%.
Keep the numbers together: $350,000 fund trigger; $15,000 one party; $100,000 one auction; 8% reimbursement interest.
How does an aggrieved consumer initiate a current Chapter 1802 recovery-fund claim?
What are the current recovery-fund payment limits for claims arising from one auction?
Which item may be included in a qualifying recovery-fund payment?