BILL ANALYSIS
SB 109
Page 1
SENATE THIRD READING
SB 109 (Ron Calderon)
As Amended June 8, 2009
Majority vote
SENATE VOTE :24-13
BUSINESS & PROFESSIONS 7-2 JUDICIARY 7-3
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|Ayes:|Hayashi, Eng, Hernandez, |Ayes:|Feuer, Brownley, Evans, |
| |Nava, | |Jones, |
| |John A. Perez, Ruskin, | |Krekorian, Lieu, Monning |
| |Hill | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Smyth |Nays:|Tran, Knight, Silva |
| | | | |
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APPROPRIATIONS 12-3
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|Ayes:|De Leon, Nielsen, | | |
| |Ammiano, | | |
| |Charles Calderon, Coto, | | |
| |Davis, Duvall, Fuentes, | | |
| |Hall, John A. Perez, | | |
| |Skinner, Torlakson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Miller, Audra | | |
| |Strickland | | |
| | | | |
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SUMMARY : Revises the definition of "auction" to include real
estate sales, revises notification requirements, and requires
the return of deposits and fees within certain timeframes, as
specified. Specifically, this bill :
1)Deletes the general exemption of real property sales under the
definition of "auction," except judicial and nonjudicial
foreclosure sales, as specified, and sales in which an
obligation secured by a security interest in personal property
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or fixtures is also secured by an interest or an estate in
real property.
2)Includes real property in the definition of "goods."
3)Permits an auctioneer or auction company to satisfy the
signage requirement for an electronic auction by requiring any
person who wishes to bid to acknowledge electronically that
the auction is being conducted in compliance with relevant law
before being allowed to bid.
4)Requires an auctioneer or auction company to post or
distribute to the audience:
a) The terms, conditions, restrictions, and procedures
whereby goods will be sold at the auction, and a
description of all fees, both refundable and nonrefundable,
that will be levied as a condition of bidding, and announce
any changes to those terms, conditions, restrictions,
procedures, and fees prior to the beginning of the auction
sale; and,
b) With respect to auctions of real property, during which
one or more properties will be auctioned with reserve, a
clear explanation of the terms "auctioned with reserve" and
"sale subject to seller confirmation, approval, or
acceptance," and the procedures and timelines to be used in
connection with sales that are subject to these
requirements.
5)Requires an auctioneer or auction company to return, or cause
to be returned, all deposits and fees collected from the
bidder in connection with an auction as follows:
a) If a buyer did not purchase goods at the sale, within
two working days after an auction;
b) After an auction sale of real property sold subject to
seller confirmation, approval, or acceptance:
i) Within five working days after the high bidder's
offer is rejected; or,
ii) Within 15 working days after the high bidder's offer
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is made and the seller fails to respond to the offer.
c) In the case of an auction sale of real property sold
subject to beneficiary or mortgagee confirmation, approval,
or acceptance, if the property is proposed to be sold for
less than the full amount owed the beneficiary or
mortgagee:
i) Within five working days after the high bidder's
offer is rejected by the beneficiary or mortgagee; or,
ii) Within five working days after a request by the high
bidder, if the beneficiary or mortgagee fails to respond
to the offer and more than 15 working days have passed
since the date of the auction.
6)Permits an auction company or auctioneer to satisfy the refund
requirements by instructing the escrow agent to return all
funds placed on deposit by the bidder, and permits an auction
company to act as the agent of the seller, beneficiary, or
mortgagee for this purpose.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor, if any, nonreimbursable local incarceration
costs as this bill expands an existing crime.
COMMENTS : According to the author's office, "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. It does so by removing the
exemptions for sales of real estate that currently exist within
the Auctioneer and Auction Companies Law (Civil Code Sections
1812.600 et seq.). Removing the exemption will require those
who auction real property to post a bond with the Secretary of
State; require auction companies and auctioneers to provide
bidders for real property the terms, conditions, restrictions,
and procedures by which the property will be sold at auction
prior to the beginning of the auction sale; disclose the
existence and amount of any liens or other encumbrances on the
property, if any exist; return, in a timely manner, the blank
check or deposit of each bidder whose bid is not accepted by the
seller; and, subject auction companies and auctioneers of real
property to specified fines for failure to comply with the law."
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Public auction of land by the government is strictly regulated
by various code sections, but there is no specific authority
governing auctions of homes by private individuals and entities.
Due to the rise of foreclosures, the auction market is growing
as an efficient way to sell properties that would otherwise sit
on the traditional market for months. According to the National
Auctioneers Association, the national market for real estate
live auctions grew about 5.3% in 2007 to $16.8 billion, and a
total of about $58.4 billion worth of all types of real estate
was sold in live auctions during 2007.
Although the perception exists that items sold at auction go to
the highest bidder, sometimes real estate is sold by "reserve
auction," in which property may not go to the highest bidder if
the reserve price, which may not be disclosed during the
auction, is not reached.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0001810