BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2136|
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THIRD READING
Bill No: AB 2136
Author: Daly (D)
Amended: 3/24/14 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-0, 6/10/14
AYES: Jackson, Anderson, Lara, Leno, Monning, Vidak
NO VOTE RECORDED: Corbett
ASSEMBLY FLOOR : 78-0, 5/15/14 (Consent) - See last page for
vote
SUBJECT : Contracts: statute of frauds
SOURCE : California Association of Realtors
DIGEST : This bill exempts electronic messages of an ephemeral
nature from the requirement imposed on real estate brokers to
retain specified records and transactions for three years from
the date of the closing of a transaction.
ANALYSIS :
Existing law:
1.Provides that, in order to be valid, certain contracts must be
in writing and signed by the party to be charged. These
contracts include:
A. An agreement that cannot, by its terms, be performed
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within a year;
B. A promise to answer for the debt of another, as
specified;
C. An agreement involving or for the sale of real property;
D. An agreement that, by its terms, cannot be performed
during the life of the promisor; or
E. A contract, loan or undertaking to loan more than
$100,000.
1.Requires a real estate broker to retain for three years copies
of all listings, deposit receipts, canceled checks, trust
records, and other documents in connection with any
transactions for which a real estate broker license is
required.
This bill:
1.Provides that an electronic message of an ephemeral nature
that is not designed to be retained or to create a permanent
record, including a text message or instant message, is
insufficient to constitute a contract to convey real property,
in the absence of a written confirmation sufficient to
indicate that a contract has been made.
2.Exempts electronic messages of an ephemeral nature, such as
text messages or instant messages, from the above requirement.
Background
Under the statute of frauds, certain contracts, such as a
conveyance of real estate or an agreement that cannot be
completed within a year, must be evidenced in a signed writing
in order to be enforceable. Thus, an oral conveyance of real
estate generally has no legal effect. The concept of the
statute of frauds is borrowed from English common law and grew
from the belief that requiring a signed writing would limit
attempts to enforce unfounded and fraudulent claims against the
real estate of another. The statute reflects a recognition that
the higher the stakes in a transaction, the greater the
incentive to fabricate or distort an agreement, and therefore,
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the greater the need for requiring a signed writing.
There are a number of exceptions to the statute of frauds,
including an exception based on the concept of ratification.
Under this exception, even if the original contract was oral and
unenforceable, if the party against whom enforcement is sought
later acknowledges the existence of the contract by a signed
writing, the acknowledgment can constitute a ratification of the
oral agreement and provide a legal basis for enforcement.
The courts and Legislature have adapted the statute of frauds to
apply to modern communication as technology evolves. Today,
electronic transactions are routine. Communication by email,
somewhat novel 15 years ago, is now part of our daily lives.
Although cases involving electronically delivered contract terms
have been challenging courts beginning in the 1990s, statutory
law now makes clear that a contract cannot be denied enforcement
solely because it is in electronic form or signed
electronically. (See Uniform Electronics Transaction Act (UETA)
7A U.L.A. 211 (2002) and the Electronic Signatures in Global and
National Commerce Act (E-Sign), Pub. L. No. 106-229, 114 Stat.
464 (2000).)
In 1998, California updated the Civil Code to ensure that a
contract that is valid in all other respects is not invalid for
lack of a writing, provided there is sufficient evidence to
indicate that a contract has been made by telephone, exchange of
electronic messages, or otherwise. (SB 1865, Maddy, Chapter 78,
Statutes of 1998.)
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/11/14)
California Association of Realtors (source)
California Mortgage Association
Orange County Association of Realtors
ARGUMENTS IN SUPPORT : According to the author, "Existing law
pertaining to the retention of documents is out-of-date and thus
problematic for real estate brokers. Short-lived communications
such as texts, tweets, etc. are not designed or formatted for
long time retention. Existing law fails to reflect modern
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technology and does not include real estate conversations or
transactions taking place via social media. Absent an updating
of the law, real estate brokers will be required to preserve
printouts of entire conversations via social media, as official
records."
ASSEMBLY FLOOR : 78-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Mansoor, Vacancy
AL:e 6/12/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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