BILL ANALYSIS
SB 109
Page 1
Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 109 (Calderon) - As Amended: June 8, 2009
Policy Committee: Business and
Professions Vote: 7 - 2
Judiciary 7 - 3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill revises the definition of "auction" to incorporate
specified types of real estate auctions into existing
regulations of auction companies, revises applicable
notification and disclosure requirements, and requires the
return of deposits and fees to bidders within certain
timeframes. Specifically, this bill:
1)Deletes the exemption for real property sales under the
definition of auction, with the exception of judicial and
nonjudicial foreclosure sales.
2)Permits an auctioneer to satisfy the signage requirements for
an electronic auction by requiring a person wanting to bid to
acknowledge electronically that the auction is being conducted
in accordance with applicable laws.
3)Specifies the information that an auctioneer or auction
company must distribute prior to an auction.
4)Specifies the timeframes within which an auction company must
return all deposits and fees collected from a bidder in
connection with an auction.
FISCAL EFFECT
Minor, if any, nonreimbursable local incarceration costs as this
bill expands an existing crime.
SB 109
Page 2
COMMENTS
Purpose . The intent of this legislation is to require auction
companies and auctioneers, for the first time, to follow many
existing regulations of auction procedures when they conduct
auctions of certain types of real property. The bill revises
the definition of "auction" to remove an exemption under
existing law that previously excused auction companies and
auctioneers from following certain procedural requirements for
auctions of real property.
According to the author, "SB 109 protects Californians who bid
on real estate during real property auctions, such as those
which have become popular among banks to dispose of foreclosed
homes." The author points out that although there can be a
significant benefit to these auctions, California lacks any laws
to govern the practices of auctioneers of real property, and to
protect bidders who seek to purchase properties during these
auctions.
California does have a law intended to establish rules for
auctioneers who auction other types of property, but sales of
real estate are explicitly exempted from existing law
requirements. As a result, there are no laws that protect
consumers who bid at these auctions.
The author notes that frustrated bidders have reported "winning"
the auction on a property, only to be informed after the auction
that their bid did not meet the bank's reserve, and that, for
that reason, they may not purchase the property for the amount
of their winning bid.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081