BILL NUMBER: AB 2039 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 26, 2014
PASSED THE ASSEMBLY AUGUST 27, 2014
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, 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 notice, as specified, is given that liberty for that
bidding is reserved. The bill would also require in this regard that
the person placing that bid contemporaneously 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.
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) 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, if both of the following are true:
(1) Notice is given to all auction participants, including all
other bidders, that liberty for that type of bidding is reserved and
that type of bid will not result in the sale of the real property.
(2) The person placing 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.