This case centers around Stephen Dierickx, who placed the highest bid on a parcel of farmland listed for auction by DreamDirt Farm and Ranch Real Estate, LLC (“DreamDirt”). Tom Bradley and Jason Smith were agents of DreamDirt, and Harry Gatzionis was the individual who listed the property on behalf of the seller. Following the auction, DreamDirt sent an email to Dierickx stating “congrats” and that he was the winning bidder, noting that ten percent earnest funds were due upon the seller’s acceptance of the bid. The dispute arose over whether this communication created a binding contract for the sale of the property.
The same email also explained that the sellers reserved the right to take up to four hours after bidding ended to accept the final bid and that “[b]eing the high bidder does not form a contract until the auctioneer announces the property sold and you are notified the seller has accepted your bid.” Two hours after the auction concluded, DreamDirt informed Dierickx that the seller had rejected the bid and was making a counteroffer. Dierickx declined the counteroffer. The seller subsequently sold the property to Vail Holdings, LLC, which became involved in this case after Dierickx filed suit seeking title to the property and monetary damages. The district court granted summary judgment and dismissed all claims, and Dierickx appealed.
Dierickx’s argument relied on the assertion that the nature of the auction itself created a binding contract, and that by submitting the winning bid, he became the rightful purchaser of the property. Contained in the email confirming his “winning bid” were terms that were consistent with those listed publicly on DreamDirt’s website, including:
- "Immediately upon the conclusion of the auction the high bidder(s) will enter into a real estate purchase agreement which is a legally binding contract and deposit with DreamDirt Farm and Ranch Real Estate LLC or other approved holding account the proper non-refundable earnest deposit.”
- “Buyer agrees to sign all documents immediately using electronic means and in a reasonable amount of time wire any necessary earnest funds using bank wire.”
- “All bids are legally binding offers for real estate.”
- “The seller reserves the right to accept or reject any and all bids.”
- “Sellers reserve the right to take up to 4 hours after bidding ends to accept the final bid.”
- “Being the high bidder does not form a contract until the auctioneer announces the property sold and you are notified the seller has accepted your bid.”
When reviewing the case, the Iowa Court of Appeals took time to restate the established law governing auctions in Iowa. There are generally two types of auctions: with reserve and without reserve. In a sale with reserve, which is the default rule under Iowa law, the seller retains the right to withdraw the property from sale at any point before the auctioneer announces that the item is sold. The contract is formed once the auctioneer manifests acceptance, such as by declaring the property “sold.” In a sale without reserve, the opposite applies. Once bidding begins, the property cannot be withdrawn, and the seller must sell to the highest bidder when the auctioneer closes the bidding.
The Court of Appeals emphasized that sellers may go a step further than the standard with reserve model and expressly reserve additional rights or conditions beyond those typical to such auctions. Iowa courts have long recognized that these additional terms, when clearly stated and made available to all bidders, are enforceable. This case is an example of that principle. Here, the seller not only held the standard with reserve rights, but also explicitly reserved the additional right to take up to four hours after the auction ended to decide whether to accept the high bid. Because this extra privilege was clearly written into the auction terms and communicated to bidders, it was enforceable.
Applying that reasoning, the Court found that the “congrats” email was not sufficient to form a binding agreement when read alongside the rest of the message and the terms on DreamDirt’s website. The high bid was merely an offer, and no acceptance ever occurred within the four-hour window. Once the Court determined that no contract existed, Dierickx’s related claims of fraud and misrepresentation against DreamDirt and Vail Holdings were also dismissed. Since Vail Holdings purchased the property only after Dierickx’s bid was rejected, there was no basis for claims against it.
The takeaway from this case is clear. Before placing a bid, buyers must understand not only whether an auction is with or without reserve, but also whether the seller has reserved additional rights beyond the standard rules. In Iowa, such reservations are permitted if clearly written. Knowing these distinctions can prevent confusion over when, and if, a winning bid actually becomes a binding contract.