The auction had been due to take place on Friday in the Bush Hotel in Carrick on Shannon, Co Leitrim. Owner Joe Dolan cancelled it when he became aware of the nature of the event.
In comments captured in a video posted to facebook, Joe addressed locals who had assembled in opposition to the sale.
He said he was not aware until the previous evening of the nature of the event. He said he was "very embarrassed...and I apologise to my community".
To applause, Joe, who has run the hotel since 1991, added: "We're a long time here serving the community...A lot of my neighbours, friends, colleagues, suppliers, employees and former employees are in this room. You're very welcome, but not under these circumstances.
"Such events might be commonplace in the Shelbourne Hotel, but they are not in the Bush Hotel and never will be."
Joe said that as a business person, he was aware of his contractual obligations regarding room hire and so on, but that he considered the room over-full and so was cancelling the event "on health and safety grounds".
After more applause from the floor, Joe went on to invite attendees upstairs for tea and sandwiches.
In a follow-up interview posted to the Reality Ireland YouTube channel, Joe said the owners of the family farm which had been due for sale "are from my parish (and) are well known to me. They are my neighbours and friends and their daughter is a former employee.
"They are from the same parish, the same church and part of the same GAA club that my sons are involved in."
"I was very uncomfortable about the whole issue." He described the proposed land sale as "a very emotive event".
Joe added: "We're very much part of our community (and) our community are very good to us.
"It's a small, rural community and we look out for each other. we share each other's pain, we share each other's happiness and we all work together to one common goal.
"Life is too short to be otherwise."
Some of those opposing the land sale were members of the recently reformed and self-titled Land League, which advocates for people in danger of eviction from their homes.
The group has previously intervened in the evictions of families from their homes in Meath and Kildare, Dublin and Galway.