We would like to post an advertisement for a repossessed vehicle on our Facebook page with the following statement: “Sealed bids will be accepted until (date). Bank has right to accept or reject any bids.” Do we need to include any other language?

We are not aware of any requirement to include additional language when advertising the sale of a repossessed vehicle. Your primary federal regulator, the OCC, has issued an Installment Lending booklet (linked to below) that generally refers to the need to dispose of repossessed collateral “as promptly and profitably as possible,” without going into any detail on the advertising of such sales.

When selling repossessed loan collateral, the Uniform Commercial Code obligates your bank to conduct the sale, and any advertising of the sale, in a “commercially reasonable” manner. When reviewing sales of repossessed collaterals, courts look to the ultimate purchase price and other factors, such as where advertisements are placed, to determine whether the sale was commercially reasonable. Keeping that general obligation in mind, we recommend reviewing the advertisement in its entirety to ensure that it is commercially reasonable and particularly checking whether the vehicle should also be advertised elsewhere, as the audience of potential buyers on Facebook may be limited.

For resources related to our guidance, please see:

OCC Comptroller’s Handbook, Installment Lending, pages 43–44 (“Disposition management is a key function in indirect lending. When a loan defaults and the collateral is repossessed, the bank’s challenge is to dispose of that collateral as promptly and profitably as possible. The bank may involve the originating dealer in this process or it may attempt to sell the collateral on its own. In the largest operations, repossessions are routinely sold at auction, and repossessed collateral may even be transported to auctions in other states if the recovery rates are significantly higher. . . .”)

Uniform Commercial Code, 810 ILCS 5/9-610(b) (“Commercially reasonable disposition. Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable. If commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.”)

Ford Motor Credit Co. v. Jackson, 126 Ill.App.3d 124, 128 (3d Dist. 1984) (“[A] creditor’s failure to conduct a commercially reasonable sale creates a rebuttable presumption that the value of the collateral is equal to the amount of the debt which the creditor seeks to recover in the deficiency action. A creditor is then required to prove that the value of the collateral is equivalent to its sale price before the creditor may recover damages.”)

Boender v. Chicago N. Clubhouse Ass’n, 240 Ill.App.3d 622, 630–631 (1st Dist. 1992) (“It is well established that the secured party is required to exercise due diligence to sell the collateral for the best price obtainable and to have a reasonable regard for the debtor’s interest. . . . In the present case, the quality of the advertisement is questionable given the alleged surrounding circumstances. This case is closely analogous to Kobuk Engineering & Contracting Services, Inc., 568 P.2d 1007. In that case, the court held a sale commercially unreasonable where the secured party, which was the sole bidder at public auction, purchased equipment for $10,000 and then resold it six weeks later for $25,000. The secured party had posted notices of the sale in public offices. The court closely scrutinized the sale because the secured party there had the opportunity for self-dealing. The court also held that the limited scope of notice of the public sale was of particular importance because the secured party itself purchased the collateral at the UCC sale.”)