Title of Regulation: 18VAC25-21. Regulations of the Virginia Auctioneers Board (amending 18VAC25-21-150).

Statutory Authority: § 54.1-602 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comments: Public comments may be submitted until 5 p.m. on September 2, 2009.

Effective Date: October 1, 2009.

Agency Contact: Marian H. Brooks, Regulatory Board Administrator, Auctioneers Board, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-8514, FAX (804) 527-4294, or email auctioneers@dpor.virginia.gov.

Basis: Section 54.1-602 of the Code of Virginia authorizes the board to promulgate regulations for a regulatory system. While the board is mandated to establish regulations, the content of the regulations is up to the discretion of the board.

Purpose: The purpose of the regulation is to allow the necessary time for the transfer of credit card funds to avoid possible violation of the regulations. The amendment would clarify the acceptance of payment by credit cards.

Rationale for Using Fast-Track Process: There will be no adverse impact on the public and no opposition is anticipated. In addition, the amended regulation negates a possible violation to the board's current requirements.

Substance: The amendment to 18VAC25-21-150 allows the necessary time for the transfer of funds and to avoid possible violation to the regulations. The amendment clarifies the acceptance of payment by credit cards.

Issues: The public and the Commonwealth are better served with the anticipated amendment to the regulations. There are no anticipated disadvantages to the public or the Commonwealth.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Auctioneers Board (Board) proposes to amend its regulations so that auctioneers are able to accept credit (debit) card payments.

Result of Analysis. The benefits likely exceed the costs for this proposed change.

Estimated Economic Impact. Current regulations require that the proceeds of all personal property auctions, not immediately dispersed to the owner of that personal property, be put into an auction escrow account not later than the next business day after the action. This requirement is, however, problematic for winning bids that would be paid with a credit card. Credit card payments typically take several days to process so the proceeds from these payments would likely not be available to deposit into an escrow account the next business day after they are made.

The board proposes to amend these regulations so that credit card payments may be deposited in the required escrow account as soon as the credit card issuer releases these funds. This proposed change will benefit auctioneers who will no longer have to either refuse credit card payments or be in violation of the law. Buyers at auctions will also benefit from the greater flexibility to pay for their purchases with credit cards. Because this amendment will facilitate credit card payments, but will not require that auctioneers accept these payments, no affected entities are likely to incur costs on account of these proposed regulations.

Businesses and Entities Affected. These proposed regulations will affect any auctioneers who would like to legally accept credit card payments. The Department of Professional and Occupational Regulation (DPOR) reports that the Board currently oversees 1,425 auctioneers and 223 auction houses.

Localities Particularly Affected. No locality will be particularly affected by this proposed regulatory action.

Projected Impact on Employment. This regulatory action will likely have no impact on employment in the Commonwealth.

Effects on the Use and Value of Private Property. This regulatory action will likely have no effect on the use or value of private property in the Commonwealth.

Small Businesses: Costs and Other Effects. Small businesses in the Commonwealth are unlikely to incur any costs on account of this regulatory action.

Small Businesses: Alternative Method that Minimizes Adverse Impact. Small businesses in the Commonwealth are unlikely to incur any costs on account of this regulatory action.

Real Estate Development Costs. This regulatory action will likely have no effect on real estate development costs in the Commonwealth.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: Concur with the approval.

Summary:

The existing regulations require proceeds of a personal property auction not disbursed to the owner on auction day to be deposited the next business day, which is unattainable if paying by credit card, therefore, causing possible violations for regulants. The amendment clarifies the existing regulation by providing that proceeds that are paid via credit cards shall be deposited into an auction escrow account upon receipt from the credit card issuer.

18VAC25-21-150. Escrow funds.

A. Proceeds of a personal property auction not disbursed to the owner on auction day shall be deposited in an auction escrow account by the auctioneer/auction firm no later than the next banking day following the date of auction or sale of the goods, whichever occurs first.

B. Notwithstanding the provisions of subsection A of this section, for proceeds that are paid via credit card, the payment of such proceeds from the credit card issuer shall be deposited into an auction escrow account upon receipt from the credit card issuer.

B. C. Auctioneers/auction firms shall use federally insured depositories in the Commonwealth of Virginia.

C. D. Proceeds due from the sale of goods other than real property shall be disbursed to the owner no later than 30 days after the date of each auction.

D. E. Funds from a real estate auction shall be held in escrow until settlement in accordance with the agreement of sale.

E. F. If the owners' goods are not sold in a single auction, proceeds due shall be disbursed to the owner within 30 days after each auction for goods other than real property, or in accordance with the agreement of sale for the sale of real property. Notice must be given to the owner of tentative date of auction, or date of return to the owner, of the remaining goods.

F. G. The auction escrow account shall be used solely for the preservation and guarantee of auction proceeds until disbursed at settlement. Funds for any other purpose shall not be commingled with the auction escrow account. Contingency accounts established to guarantee checks accepted on the owner's behalf shall not be considered commingling of funds. Moneys due to the licensee shall not be withdrawn from the auction escrow account until final settlement is made with the owner.

G. H. The balance in the escrow accounts shall be sufficient at all times to account for all funds that are designated to be held by the licensee. A licensee shall not disburse or cause to be disbursed moneys from an escrow account unless sufficient money is on deposit in that account to the credit of the individual client or property involved.

H. I. Funds to be deposited in the escrow account may include moneys that shall ultimately belong to the licensee for incidental expenses per the terms of the contract. Such moneys shall be separately identified in the escrow account records and shall be paid to the licensee by a check drawn on the escrow account when the funds become due to the licensee. The fact that an escrow account contains money that may ultimately belong to the licensee does not constitute "commingling of funds" provided that there are periodic withdrawals of said funds at intervals of not more than six months, and that the licensee can at all times accurately identify the total funds in that account that belong to the licensee.

I. J. On funds placed in an account bearing interest, written disclosure in the contract of sale or lease at the time of contract or lease writing shall be made to the principals to the transaction regarding the disbursement of interest.