BILL NUMBER: AB 2039	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 21, 2014
	AMENDED IN SENATE  JUNE 24, 2014
	AMENDED IN SENATE  JUNE 9, 2014
	AMENDED IN ASSEMBLY  APRIL 21, 2014

INTRODUCED BY   Assembly Member Muratsuchi

                        FEBRUARY 20, 2014

   An act to amend Section 2079.23 of, and to add Section 1812.610
to, the Civil Code, relating to real property.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2039, as amended, Muratsuchi. Real property sales: auctions.
   Existing law regulates the activities of auctioneers and auction
companies and prohibits, with a certain exception, a person from
causing or allowing any person to bid at a sale for the sole purpose
of increasing the bid on any item or items being sold by the
auctioneer. Existing law defines an auction in this regard and
excepts from this definition a sale of real estate. A violation of
these provisions is a misdemeanor generally punishable by a fine of
up to $1,000, or by imprisonment for not more than a year, unless
another penalty is specified.
   This bill would,  on and after July 1, 2015,  with
respect to an auction that includes the sale of real property,
prohibit a person from causing or allowing any person to bid at a
sale for the sole purpose of increasing the bid on any real property
being sold by the auctioneer. The bill, however, would allow an
auctioneer or another person to place a bid on the seller's behalf
during an auction of real property if  prior notice has been
  notice, as specified, is  given that liberty for
that bidding is  reserved and   reserved. The
bill would also require in this regard that  the person placing
that bid contemporaneously  discloses   disclose
 to all auction participants that the particular bid has been
placed on behalf of the seller.  The bill would except from the
application of these provisions a credit bid made by a creditor with
a security interest in the property that is the subject of auction
when the credit bid can result in the transfer of title to property
to the creditor.  By expanding the scope of an existing crime,
this bill would impose a state-mandated local program.
   Existing law requires listing and selling agents, as defined, to
provide sellers and buyers in a residential real property transaction
with a disclosure form, as prescribed, containing general
information on real estate agency relationships. Existing law
authorizes a contract between a principal and agent, in this context,
to be modified to change the agency relationship at any time before
the performance of the act which is the object of the agency with the
written consent of the parties.
   This bill would prohibit a lender or an auction company that is
retained to control aspects of a residential real property
transaction from requiring, as a condition of receiving a lender's
approval of the transaction, a homeowner or listing agent to defend
or indemnify the lender or auction company from any liability alleged
to result from the actions of the lender or auction company and
would declare a clause, provision, covenant, or agreement in
violation of this prohibition to be against public policy, void, and
unenforceable.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1812.610 is added to the Civil Code, to read:
   1812.610.  (a) Notwithstanding Section 1812.601, for purposes of
this section, an auction includes the sale of real property and an
"auctioneer" means any individual who is engaged in, or who by
advertising or otherwise holds himself or herself out as being
available to engage in, the calling for, the recognition of, and the
acceptance of, offers for the purchase of real property at an
auction.
   (b)  A   Except as provided in subdivision
(d), a  person shall not cause or allow a person to bid at a
sale for the sole purpose of increasing the bid on any real property
being sold by the auctioneer, including, but not limited to, stating
any increased bid greater than that offered by the last highest
bidder when, in fact, no person has made an increased bid. However,
an auctioneer or another  authorized  person may place a bid
on the seller's behalf during an auction of real property, 
provided prior notice has been   if both of the
following are true: 
    (1)     Notice is  given  to all
auction participants, including all other bidders,  that liberty
for  such   that type of  bidding is
 reserved, and that the   reserved and that type
of bid will not result in the sale of the real property. 
    (2)     The  person placing 
such a   that type of  bid contemporaneously
discloses to all auction participants, including all other bidders,
that the particular bid has been placed on behalf of the seller. 

   (c) For the purpose of the conduct of online auctions of real
property, "notice" means a statement of the information required to
be given under paragraph (1) of subdivision (b) within the end user
license agreement, terms of service, or equivalent policy posted on,
or provided by, the operator of an Internet Web site, online service,
online application, or mobile application, and by conspicuously
posting the information required to be given under paragraph (1) of
subdivision (b) in any of the following ways:  
   (1) Upon the Internet Web page or its equivalent through which a
user directly interacts with the site, service, or application during
the online auction.  
   (2) With an icon that hyperlinks to an Internet Web page or its
equivalent upon which the required information is posted, if the icon
is located on the Internet Web page or its equivalent through which
a user directly interacts with the site, service, or application
during the online auction. The icon shall use a color that contrasts
with the background color of the Internet Web page or is otherwise
readily distinguishable.  
   (3) With a text link that hyperlinks to an Internet Web page or
its equivalent upon which the required information is posted, if the
text link is located on the Internet Web page or its equivalent
through which a user directly interacts with the site, service, or
application during the online auction. The text link shall be written
in capital letters that are in larger type than the surrounding
text, or shall be written in contrasting type, font, or color to the
surrounding text of the same size, or shall be set off from the
surrounding text of the same size by symbols or other marks that call
attention to the language. 
   (4) With any other functional hyperlink or its equivalent that is
displayed on the site, service, or application through which a user
directly interacts with the site, service, or application during the
online auction so that a reasonable person would notice it and
understand it to hyperlink to the required information.  
   (d) This section shall not apply to a credit bid made by a
creditor holding a deed of trust, mortgage, or other lien on the
property that is the subject of auction when the credit bid can
result in the transfer of title to property to the creditor. 

   (e) This section shall be operative on July 1, 2015. 
  SEC. 2.  Section 2079.23 of the Civil Code is amended to read:
   2079.23.  (a) A contract between the principal and agent may be
modified or altered to change the agency relationship at any time
before the performance of the act which is the object of the agency
with the written consent of the parties to the agency relationship.
   (b) A lender or an auction company retained by a lender to control
aspects of a transaction of real property subject to this part,
including validating the sales price, shall not require, as a
condition of receiving the lender's approval of the transaction, the
homeowner or listing agent to defend or indemnify the lender or
auction company from any liability alleged to result from the actions
of the lender or auction company. Any clause, provision, covenant,
or agreement purporting to impose an obligation to defend or
indemnify a lender or an auction company in violation of this
subdivision is against public policy, void, and unenforceable.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.