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,begin insert on and after July 1, 2015,end insert 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 ifbegin delete prior notice has beenend deletebegin insert notice, as specified, isend insert given that liberty for that bidding isbegin delete reserved andend deletebegin insert reserved. The bill would also require in this regard thatend insert the person placing that bid contemporaneouslybegin delete disclosesend deletebegin insert discloseend insert
to all auction participants that the particular bid has been placed on behalf of the seller.begin insert 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.end insert 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 1812.610 is added to the Civil Code, to
2read:
(a) Notwithstanding Section 1812.601, for purposes
4of this section, an auction includes the sale of real property and an
5“auctioneer” means any individual who is engaged in, or who by
6advertising or otherwise holds himself or herself out as being
P3 1available to engage in, the calling for, the recognition of, and the
2acceptance of, offers for the purchase of real property at an auction.
3(b) begin deleteA end deletebegin insertExcept as provided in subdivision (d), a end insertperson shall not
4cause or allow a person to bid at a sale for the sole purpose of
5increasing the bid on any real property being
sold by the auctioneer,
6including, but not limited to, stating any increased bid greater than
7that offered by the last highest bidder when, in fact, no person has
8made an increased bid. However, an auctioneer or another
9begin insert authorizedend insert person may place a bid on the seller’s behalf during an
10auction of real property,begin delete provided prior notice has beenend deletebegin insert if both of
11the following are true:end insert
12begin insert(1)end insertbegin insert end insertbegin insertNotice isend insert givenbegin insert
to all auction participants, including all
13other bidders,end insert that liberty forbegin delete suchend deletebegin insert that type ofend insert bidding isbegin delete reserved, begin insert reserved and that type of bid will not result in the sale
14and that theend delete
15of the real property.end insert
16begin insert(2)end insertbegin insert end insertbegin insertTheend insert person placingbegin delete such aend deletebegin insert
that type ofend insert bid contemporaneously
17discloses to all auction participants, including all other bidders,
18that the particular bid has been placed on behalf of the seller.
19(c) For the purpose of the conduct of online auctions of real
20property, “notice” means a statement of the information required
21to be given under paragraph (1) of subdivision (b) within the end
22user license agreement, terms of service, or equivalent policy
23posted on, or provided by, the operator of an Internet Web site,
24online service, online application, or mobile application, and by
25conspicuously posting the information required to be given under
26paragraph (1) of subdivision (b) in any of the following ways:
27(1) Upon the Internet Web page or its equivalent through which
28a user directly interacts
with the site, service, or application during
29the online auction.
30(2) With an icon that hyperlinks to an Internet Web page or its
31equivalent upon which the required information is posted, if the
32icon is located on the Internet Web page or its equivalent through
33which a user directly interacts with the site, service, or application
34during the online auction. The icon shall use a color that contrasts
35with the background color of the Internet Web page or is otherwise
36readily distinguishable.
37(3) With a text link that hyperlinks to an Internet Web page or
38its equivalent upon which the required information is posted, if
39the text link is located on the Internet Web page or its equivalent
40through which a user directly interacts with the site, service, or
P4 1application during the online auction. The text link shall be written
2in capital letters that are in larger type than the surrounding
text,
3or shall be written in contrasting type, font, or color to the
4surrounding text of the same size, or shall be set off from the
5surrounding text of the same size by symbols or other marks that
6call attention to the language.
7(4) With any other functional hyperlink or its equivalent that is
8displayed on the site, service, or application through which a user
9directly interacts with the site, service, or application during the
10online auction so that a reasonable person would notice it and
11understand it to hyperlink to the required information.
12(d) This section shall not apply to a credit bid made by a creditor
13holding a deed of trust, mortgage, or other lien on the property
14that is the subject of auction when the credit bid can result in the
15transfer of title to property to the creditor.
16(e) This section shall be operative on July 1, 2015.
end insertSection 2079.23 of the Civil Code is amended to read:
(a) A contract between the principal and agent may
19be modified or altered to change the agency relationship at any
20time before the performance of the act which is the object of the
21agency with the written consent of the parties to the agency
22relationship.
23(b) A lender or an auction company retained by a lender to
24control aspects of a transaction of real property subject to this part,
25including validating the sales price, shall not require, as a condition
26of receiving the lender’s approval of the transaction, the
27homeowner or listing agent to defend or indemnify the lender or
28auction company from any liability alleged to result from the
29actions of the lender or auction company. Any clause, provision,
30covenant, or agreement
purporting to impose an obligation to
31defend or indemnify a lender or an auction company in violation
32of this subdivision is against public policy, void, and unenforceable.
No reimbursement is required by this act pursuant to
34Section 6 of Article XIII B of the California Constitution because
35the only costs that may be incurred by a local agency or school
36district will be incurred because this act creates a new crime or
37infraction, eliminates a crime or infraction, or changes the penalty
38for a crime or infraction, within the meaning of Section 17556 of
39the Government Code, or changes the definition of a crime within
P5 1the meaning of Section 6 of Article XIII B of the California
2Constitution.
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