Also known as: private dispositions · private sale
Written by attorneys · grounded in primary & secondary sources — see below
A method of selling or leasing property through private negotiation without public bidding or auction. The method requires commercial reasonableness in secured transactions and prudent execution by a trustee when managing trust assets.
Carlos serves as trustee of a family real estate trust holding five rental homes. Horizon Capital LLC offers to purchase all five homes in a single bulk transaction for cash at a quick private closing. Carlos accepts the offer after determining it serves the beneficiaries' interests. The private disposition transfers the properties without any public auction or listing.
Sky Clinic repossesses MRI and CT scanners from Midnight Hospital after default. Sky Clinic leases the scanners directly to Imperial Med for five years at a below-market rate without marketing or a public auction. Midnight Hospital later attempts to redeem the equipment but finds the redemption right extinguished by the completed private disposition.
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A private disposition occurs through direct negotiation between the secured party and a buyer without public bidding. A public disposition requires advertisement and a meaningful opportunity for competitive bidding by members of the public. The choice between the two must itself be commercially reasonable.
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Yes. A trustee may acquire or sell trust property for cash or on credit at either a public or private sale when the trust instrument is silent. The power exists by default and applies equally to real or personal property.
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A secured party may purchase at a private disposition only if the collateral is customarily sold on a recognized market or is the subject of widely distributed standard price quotations. Otherwise the purchase requires a public disposition.
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Yes. Redemption rights end once the secured party enters a contract for disposition of the collateral. A binding lease constitutes such a contract even though title has not yet passed.
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