New York City Removes Restrictions on Auction Houses

May 5th, 2022

In a bid to increase business in the wake of the devastating effects of the Covid-19 crisis, New York City authorities have reversed a policy meant to foster transparency in the world of art sales. As of June 15, auctioneers will no longer need to be licensed; additionally, auction houses having a stake in a given work for sale will no longer be required to notify buyers of this fact. Also of note, “chandelier” bidding—in which an auctioneer announces fictitious bids in an effort to whip up audience excitement and increase an object’s sale price—will now be allowed even after an item’s reserve price has been met; the practice was previously sanctioned only up until that point. Additionally eliminated is the rule preventing auction houses from presenting in a catalogue a price below that agreed upon by the consignor as the reserve price; this restriction was initially put in place to prevent false advertising that might lead buyers to believe they could obtain an object for a lower price than was actually possible.

The elimination of the rules comprising the policy was agreed upon by the city council last summer under then-mayor Bill de Blasio and is part of a larger reform aimed at stimulating the economy of the largest city in the United States. It accompanies the relaxing of laws in regard to sidewalk dining and the operation of laundries and arcades. The change comes as the auction industry finds itself under increasing scrutiny by the US government in relation to transparency and money laundering, with a recent US Treasury report concluding that no action is currently required.

According to the New York Times, which first published the news, representatives from major auction houses including Sotheby’s, Christie’s, and Phillips asserted that they were caught off-guard by the regulatory shift and that they had not clamored for it. Christie’s and Phillips revealed that they planned to continue to hew to the now-repealed rules for the time being. Doing so may be in their best interest. “Without the regulations, I think that’s a blow to the auction houses,” art attorney Jo Backer Laird of Patterson Belknap Webb & Tyler, who formerly served as general counsel to Christie’s, told the Times. “They may in the immediate aftermath think this gives them more freedom, but ultimately it leads to an erosion of trust which is why the regulations were there. If you don’t trust, then you don’t consign or buy there.”