Calif. Civil Code §§2079.23 and 1812.610
Added and amended by A.B. 2039
Effective date: July 1, 2015

Bidders at a real estate auction are prohibited from increasing their bids solely to inflate the auction price of the real estate.

An auctioneer or other authorized person is permitted to bid on behalf of a seller if:

  • notice is given to all participants that such bidding is allowed in the auction; and
  • the person bidding for the seller discloses to all participants that the bid has been placed on the seller’s behalf.

If an auction takes place online, the above notice is to be included in the end user license agreement, terms of service or equivalent policy posted on the web site or online/mobile application. The notice is also required to be available:

  • directly on the auction website the bidder interacts with during the auction;
  • through a distinguishable link or icon taking the bidder to a webpage with the required information.

Text links are to be in capital letters and distinguishable from the surrounding text.

These regulations do not apply to a credit bid made by a mortgage holder bidding to acquire the real estate subject to the mortgage.

Additionally, beginning January 1, 2015, a lender or auction company retained by a lender to control aspects of a real estate transaction is prohibited from requiring the homeowner or seller’s agent to release the lender or auction company from any liability resulting from the lender’s or auction company’s actions as a condition for the lender’s approval of the sale. Any provision or agreement in violation of this is void and unenforceable.