SENATE BILL 78

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

Timothy M. Keller and Georgene Louis

AN ACT

RELATING TO AUCTIONS; REQUIRING DISCLOSURES AND PERMITTING INSPECTIONS WITH RESPECT TO AUCTIONS OF FINE ART; PROVIDING FOR ATTORNEY GENERAL ENFORCEMENT; PRESCRIBING PENALTIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] REGULATION OF FINE ART AUCTIONS.--

          A. Prior to an auction of fine art, the auction house shall permit prospective purchasers to inspect each lot of fine art to be offered for sale at auction. 

          B. An auction house engaged in the sale of fine art at auction shall disclose in connection with any description of the lot contained in the auction catalogue or in other printed material:

                (1) any interest of the auction house, direct or indirect, in the lot, including a guaranteed minimum, other than the selling commission; and

                (2) the existence and amount of any reserve to which the lot is subject.

          C. Where printed material is not provided in connection with the auction, an auction house shall identify in writing:

                (1) any lot of fine art in which the auction house has an interest; and

                (2) the existence and amount of any reserve to which the lot is subject.

          D. The identification required by Subsection C of this section shall be made available to prospective purchasers during the required inspection period.

          E. Immediately before the auction of fine art, the auctioneer shall orally announce that the lots of fine art in which the auction house has an interest have been disclosed in the auction catalogue or other printed material or have been disclosed in the manner prescribed by Subsection C of this section.

          F. The requirements of this section do not apply to:

                (1) an auction conducted pursuant to an order of a court of competent jurisdiction, including an order of a bankruptcy judge or trustee; a sale of secured property pursuant to the Uniform Commercial Code; or the sale of property that is subject to a lien or assignment pursuant to the laws of the state; or

                (2) an auction conducted as part of a fundraising event by a nonprofit corporation, formally recognized as tax exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, where the proceeds of such fundraising event benefit the nonprofit corporation.

          G. Whenever the attorney general has reasonable belief that a violation of this section has occurred, the attorney general may bring an action in the name of the state alleging such violation. The action may be brought in the district court of the county in which the auction house resides or in which the auction house's principal place of business is located or in the district court of the county in which the violation occurs.

          H. In any action filed pursuant to this section, the attorney general may petition the district court for temporary or permanent injunctive relief and restitution.

          I. The attorney general acting on behalf of the state shall not be required to post bond when seeking a temporary or permanent injunction in such action.

          J. Whenever the court shall determine that a violation of this section has occurred, the court may impose a civil penalty of not more than one thousand dollars ($1,000) for each violation.

          K. As used in this section:

                (1) "auction" means a sale, conducted by means of oral or written bids, to the highest bidder; 

                (2) "auction house" means any person, partnership, corporation, association or group engaged for profit primarily in the business of conducting auctions at which it acts as agent for any seller of works of fine art;

                (3) "fine art" means any original work of visual or graphic art of any media, including any painting, print, drawing, sculpture, craft, object, photograph, hologram or any combination of such media of recognized quality;

                (4) "guaranteed minimum" means a minimum selling price above which the seller and auction house agree to share any amount in excess;

                (5) "lot" means an item or group of items that are offered for sale at auction as a single unit; and

                (6) "reserve" means a fixed price below which a lot will not be sold.

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