Auction Bill Introduced in California Senate
-Bill Would Remove Real Estate Exemption-

Legislation has been introduced in the California State Senate that would remove the exemption for Real Estate in the auction section of the Civil Code.  Trustee sales or judicial foreclosure sales would not be exempt.

The legislation would negatively impact trustees conducting nonjudicial foreclosure sales as well as negatively impact posting & publishing companies.  UTA will work to add an exemption to the bill for anyone who processes and conducts a trustee’s sale pursuant to Civil Code §§ 2924 et seq.

The legislation, SB 109, introduced by Senator Ron Calderon, the Chairman of the Banking, Finance & Insurance Committee, appears to be directed to REO auctions conducted by private companies after the secured properties have reverted to the lender through a nonjudicial foreclosure.  Apparently, consumers have complained about various aspects of these REO auctions

“The changes that SB 109 would make to the Civil Code are clearly intended for traditional auctions, not foreclosure sales,” said Rande Johnsen, Trustee Corps, President of UTA.  “Unfortunately, the language may unintentionally cover trustees and others processing nonjudicial foreclosures.  In addition, SB 109 removes the exclusion allowing trustees to conduct unified sales of real and personal property,” said Phil Adleson, Esq., Adleson, Hess & Kelly, UTA’s Corporate Counsel. 

“Unlike traditional or REO auctions, in foreclosure sales, until a final bid is accepted, no deposit is collected and there are rarely conditions placed on bidding, i.e. a reserve bid.  Unlike public REO auctions, a nonjudicial foreclosure sale, the sale is final at the fall of the hammer; the full purchase price is tendered by the successful bidder at the trustee’s sale and title is perfected shortly thereafter when the trustee’s deed is delivered and recorded.  There is no escrow, deposits held or delays as there are in REO auctions,” said Adleson.

Several REO companies who hold private auctions after foreclosure have been accused of abuses, including retaining deposits of buyers at the auction.  UTA is not aware of any reported abuses regarding trustees conducting foreclosure under a power of sale relating to deposits.  The bill summary, included in the bill’s introduction on January 28th, noted that “Existing law defines auction in this regard and excepts from this definition a sale of real estate or a sale of real estate with personal property or fixtures or both in a unified sale  ... the bill would remove the exception provided for real estate from the definition of auction for the purposes described above, thereby bringing real property auctions within those provisions.”

“We have excellent rapport with Senator Calderon and his staff and we are hopeful that we’ll be able to work this out,” said Mike Belote, California Advocates, UTA’s California lobbyist, based in Sacramento.

Senator Calderon, the author of SB 109, will be the dinner speaker at UTA’s dinner event held immediately following UTA’s California lobby day, on March 18th.

Register now for UTA’s lobby day and dinner event in Sacramento

Read SB 109