Amended in Assembly June 27, 2013

Senate Bill No. 269

Introduced by Senator Hill

February 14, 2013

An act to amend and renumber Section 10167.9 of, to amend and repeal Sections 10167.5, 10167.13, and 10167.16 of, to amend, repeal, and add Sections 10167, 10167.2, and 10167.3 of, to repeal Sections 10167.4, 10167.7, 10167.8, and 10167.17 of, and to repeal and add Section 10167.6 of, the Business and Professions Code, relating to real estate.

LEGISLATIVE COUNSEL’S DIGEST

SB 269, as amended, Hill. Prepaid rental listing service.

The Real Estate Law provides for the begin insert licensure and end insert regulation begin delete and licensing end delete of prepaid rental listing services by the Real Estate Commissioner. Existing law prohibits a person from engaging in the business of begin insert a end insert prepaid rental listing begin delete services end delete begin insert service end insert unless licensed in that capacity or licensed as a real estate broker. A willful violation of these provisions is a crime.

This bill would prohibit the department from issuing a prepaid rental listing service license. begin delete This end delete begin insert The end insert bill, beginning January 1, 2015, would prohibit a person from engaging in that business unless begin insert the person is end insert licensed as a real estate broker begin insert or is licensed as a real estate salesperson and is acting under the supervision of a real estate broker end insert . The bill would also require a specified written notice about refunds to be provided begin delete to the provided end delete to the prospective tenant prior to the acceptance of a fee. begin insert Because a willful violation of these provisions would be a crime, this bill would impose a state-mandated local program. end insert The bill also would make related changes, including deleting provisions that pertain to prepaid rental listing service begin delete licensing end delete begin insert licensure end insert .

begin insert

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.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares that requiring
a real estate license to lawfully provide prepaid rental listing
services serves the valid governmental purposes of public
protection and victims’ compensation. The safeguards contained
in this legislation are intended to reduce the significant and
unacceptably large amounts of prepaid rental listing service fraud
perpetrated against unsuspecting, prospective tenants by persons
who lack real estate licenses. The safeguards in this bill will also
permit persons who may be harmed through prepaid rental listing
service fraud to seek compensation from the Consumer Recovery
Account, a remedy which is not available to persons who obtain
prepaid rental listing services through a person that does not hold
a real estate license.

SEC. 2.  

Section 10167 of the Business and Professions Code
is amended to read:

10167.  

The definitions used in this section shall govern the
construction and terms as used in this article:

(a) “Prepaid rental listing service” means the business of
supplying prospective tenants with listings of residential real
properties for tenancy, by publication or otherwise, pursuant to an
arrangement under which the prospective tenants are required to
pay an advance or contemporaneous fee (1) specifically to obtain
listings or (2) to purchase any other product or service in order to
obtain listings, but which does not otherwise involve the
negotiation of rentals by the person conducting the service.
“Prepaid rental listing service” does not include the business of
providing roommate referral information designed to assist persons
in locating a roommate who meets various selection criteria related
to the prospective roommate’s personal traits, characteristics, habits
or preferences, and selection criteria related to the residential real
property occupied by the prospective roommate.

(b) “Licensee” means a person licensed to conduct a prepaid
rental listing service or a person engaged in the business of a
prepaid rental listing service under a real estate broker license.

(c) “Location” means the place, other than the main or branch
office of a real estate broker, where a prepaid rental listing service
business is conducted.

(d) “Designated agent” means the person who is in charge of
the business of a prepaid rental listing service at a given location.

(e) “Fee” means the charge required by a licensee (1) to obtain
listings of residential real properties for tenancy or (2) to purchase
any other product or service in order to obtain listings.

(f) “Service charge” means the amount of the fee that a licensee
may retain if a prospective tenant finds housing through a source
other than the listings supplied by the licensee.

(g) This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

SEC. 3.  

Section 10167 is added to the Business and Professions
Code, to read:

10167.  

The definitions used in this section shall govern the
construction and terms as used in this article:

(a) “Prepaid rental listing service” means the business of
supplying prospective tenants with listings of residential real
properties for tenancy, by publication or otherwise, pursuant to an
arrangement under which the prospective tenants are required to
pay an advance or contemporaneous fee (1) specifically to obtain
listings or (2) to purchase any other product or service in order to
obtain listings, but which does not otherwise involve the
negotiation of rentals by the person conducting the service.
“Prepaid rental listing service” does not include the business of
providing roommate referral information designed to assist persons
in locating a roommate who meets various selection criteria related
to the prospective roommate’s personal traits, characteristics, habits
or preferences, and selection criteria related to the residential real
property occupied by the prospective roommate.

(b) “Licensee” means a person engaged in the business of a
prepaid rental listing service under a real estate begin delete broker end delete license.

(c) “Location” means the place, other than the main or branch
office of a real estate broker, where a prepaid rental listing service
business is conducted.

(d) “Designated agent” means the person who is in charge of
the business of a prepaid rental listing service at a given location.

(e) “Fee” means the charge required by a licensee (1) to obtain
listings of residential real properties for tenancy or (2) to purchase
any other product or service in order to obtain listings.

(f) “Service charge” means the amount of the fee that a licensee
may retain if a prospective tenant finds housing through a source
other than the listings supplied by the licensee.

(g) This section shall become operative on January 1, 2015.

SEC. 4.  

Section 10167.2 of the Business and Professions Code
is amended to read:

10167.2.  

(a) It is unlawful for any person to engage in the
business of a prepaid rental listing service unless licensed in that
capacity or unless licensed as a real estate broker.

(b) (1) The requirements of this article apply only to the
provision of listings of residential real properties for tenancy by
prepaid rental listing services. Except if expressly provided
otherwise in this article, the requirements of this article do not
apply to any other goods or services sold by a prepaid rental listing
service as long as the purchase of those goods or services is not
required to obtain those listings, and as long as the purchase of
those goods or services is not included in the same contract as the
contract to provide those listings, and as long as the contract to
provide those listings clearly specifies that the purchase of any
other goods and services is optional, and as long as the price
charged for any other goods and services is fair and reasonable.

(2) In an action alleging that the price charged for any other
goods and services is not fair and reasonable, the burden shall be
on the commissioner to demonstrate that the price charged
unreasonably exceeds the fee customarily charged for the same or
comparable goods or services in the community in which the
prepaid rental listing service operates. The fact that the price
charged for goods or services exceeds the cost incurred by the
prepaid rental listing service shall not render the price charged for
the goods or services to be unfair or unreasonable, so long as the
price charged does not unreasonably exceed the fee customarily
charged for the same or comparable goods or services in the
community in which the prepaid rental listing service operates.

(3) This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

SEC. 5.  

Section 10167.2 is added to the Business and
Professions Code, to read:

10167.2.  

(a) It is unlawful for any person to engage in the
business of a prepaid rental listing service unless begin insert the person is end insert
licensed as a real estate broker begin insert or is licensed as a real estate
salesperson and is acting under the supervision of a real estate
broker end insert .

(b) (1) The requirements of this article apply only to the
provision of listings of residential real properties for tenancy by
prepaid rental listing services. Except if expressly provided
otherwise in this article, the requirements of this article do not
apply to any other goods or services sold by a prepaid rental listing
service as long as the purchase of those goods or services is not
required to obtain those listings, and as long as the purchase of
those goods or services is not included in the same contract as the
contract to provide those listings, and as long as the contract to
provide those listings clearly specifies that the purchase of any
other goods and services is optional, and as long as the price
charged for any other goods and services is fair and reasonable.

(2) In an action alleging that the price charged for any other
goods and services is not fair and reasonable, the burden shall be
on the commissioner to demonstrate that the price charged
unreasonably exceeds the fee customarily charged for the same or
comparable goods or services in the community in which the
prepaid rental listing service operates. The fact that the price
charged for goods or services exceeds the cost incurred by the
prepaid rental listing service shall not render the price charged for
the goods or services to be unfair or unreasonable, so long as the
price charged does not unreasonably exceed the fee customarily
charged for the same or comparable goods or services in the
community in which the prepaid rental listing service operates.

(c) This section shall become operative on January 1, 2015.

SEC. 6.  

Section 10167.3 of the Business and Professions Code
is amended to read:

10167.3.  

(a) A separate application for a license as a prepaid
rental listing service shall be made in writing for each location to
be operated by a licensee other than a real estate broker. Each
application shall be on forms provided by the department, shall be
signed by the applicant, and shall be accompanied by a one hundred
dollar ($100) application fee for the first location, and a twenty-five
dollar ($25) application fee for each additional location of the
applicant.

Applications to add or eliminate locations during the term of a
license shall be on forms prescribed by the department. A
twenty-five dollar ($25) application fee for the remainder of a
license term for each location to be added shall accompany the
application.

(b) A real estate broker may provide a prepaid rental listing
service at a licensed office for the conduct of his or her real estate
brokerage business if the business at the office is conducted under
the immediate supervision of the broker or of a real estate
salesperson licensed to, and acting on behalf of, the broker.

(c) This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

SEC. 7.  

Section 10167.3 is added to the Business and
Professions Code, to read:

10167.3.  

(a) A real estate begin delete broker end delete begin insert licensee end insert may provide a
prepaid rental listing service at begin delete a licensed office for the conduct
of his or her real estate brokerage end delete begin insert any location where end insert business begin delete if
the business at the office end delete is conducted under the immediate
supervision of begin delete the end delete begin insert a end insert broker or of a real estate salesperson licensed
to, and acting on behalf of, the broker.

(b) This section shall become operative on January 1, 2015.

SEC. 8.  

Section 10167.4 of the Business and Professions Code
is repealed.

SEC. 9.  

Section 10167.5 of the Business and Professions Code
is amended to read:

10167.5.  

The business at a location licensed pursuant to
subdivision (a) of Section 10167.3 shall be conducted under the
immediate supervision of the licensee or a designated agent who
is not a designated agent at any other location. Whenever a
designated agent ceases permanently to be a designated agent at
any location because of death, termination of employment, or any
other reason, the licensee, within five days thereafter, shall give
written notice to the department. A license issued for a particular
location shall automatically expire 60 days after the time the
business conducted at such location ceases for any reason to be
under the charge of and managed by the designated agent of record
with the department, unless within such 60-day period the licensee
submits written notice of the new designated agent to the
department.

A designated agent of the licensed service may serve as
designated agent for the location in question as well as for the
location for which he or she is the designated agent of record during
the period of 60 days.

This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

SEC. 10.  

Section 10167.6 of the Business and Professions
Code is repealed.

SEC. 11.  

Section 10167.6 is added to the Business and
Professions Code, to read:

10167.6.  

Prior to the acceptance of a fee, and in addition to the
contract required pursuant to Section 10167.4 a licensee shall
provide the prospective tenant with the following written notice,
in a type size of at least 12-point type:

YOU MAY BE ENTITLED TO A REFUND IF YOU DO NOT
RECEIVE THE SERVICES YOU HAVE BEEN PROMISED.
COMPLETE TERMS AND CONDITIONS GOVERNING THE
REFUND TO WHICH YOU MAY BE ENTITLED ARE
CONTAINED IN YOUR CONTRACT. THE FOLLOWING IS
A SIMPLIFIED SUMMARY OF SOME OF THE RIGHTS
DESCRIBED IN YOUR CONTRACT:

If (name of licensee) does not provide you with at least three
available rental properties meeting the specifications of your
contract within five days after you pay the fee charged by (name
of licensee), you are entitled to a full refund. To obtain this refund,
you must request it from (name of licensee) in writing within 15
days of paying your fee.

If you do not obtain a rental through the services of (name of
licensee) during the term of your contract, you are entitled to a
refund of your fee, minus a service charge, which may not exceed
____ dollars ($____). To obtain this refund, you must provide
(name of licensee) with written documentation or a signed
statement that you obtained a rental without the assistance of (name
of licensee) or that you did not move. This documentation or signed
statement must be provided to (name of licensee) with a written
request for refund, within 10 days following the expiration of your
contract.

If (name of licensee) fails to refund your money, as required by
your contract, you may sue (name of licensee) in a small claims
court. The court may award you the refund you failed to receive,
plus additional damages, up to $1,000.

If you wish to file a complaint about (name of licensee) or if you
cannot collect on a court award, you should contact the begin delete Department end delete
begin insert Bureau end insert of Real Estate at 1-877-373-4542 or www.dre.ca.gov.

SEC. 12.  

Section 10167.7 of the Business and Professions
Code is repealed.

SEC. 13.  

Section 10167.8 of the Business and Professions
Code is repealed.

SEC. 14.  

Section 10167.9 of the Business and Professions
Code is amended and renumbered to read:

10167.4.  

(a) Prior to the acceptance of a fee, a licensee shall
offer the prospective tenant a written contract, either on paper or
in electronic form, which shall include at least the following:

(1) The name and license number of the licensee and the
begin delete addresses end delete begin insert address end insert and telephone begin delete numbers end delete begin insert number end insert of the principal
office or location of the licensee begin delete and of the location, or branch
office of a real estate broker, end delete providing the listing to the prospective
tenant.

(2) Acknowledgment of receipt of the fee, including the amount.

(3) A description of the service to be performed by the licensee,
including significant conditions, restrictions, and limitations where
applicable.

(4) The prospective tenant’s specifications for the rental
property, including, but not limited to:

(A) Type of structure, including, but not limited to, detached
single-family home, apartment, or duplex.

(B) Location by commonly accepted residential area name, by
designation of boundary streets, or by any other manner affording
a reasonable means of identifying locations acceptable to the
prospective tenant.

(C) Furnished or unfurnished.

(D) Number of bedrooms required.

(E) Maximum acceptable monthly rental.

(5) The contract expiration date, which shall not be later than
90 days from the date of execution of the contract.

(6) A clause setting forth the right to a full or partial refund of
the fee paid as provided in Section 10167.10.

(7) The signature and printed full name of the licensee begin delete or of the
designated agent, real estate salesperson, or employee acting on
behalf of the licensee end delete . The signature of any person, including any
signature required by the terms of the contract to be provided by
the prospective tenant, may be provided in any electronic form
that provides a reasonable method of indicating that the individual
whose signature is required authorized the contract to be signed
in that electronic form.

(8) A clause in bold type letters outlining the small claims court
remedy available to the prospective tenant.

(9) A clause in boldface type letters clearly stating that the
purchase of any goods and services other than the provision of
listings of residential real properties for tenancy is optional.

(b) (1) The original of each contract, any separate contracts for
required goods or services, refund claims, receipts and any other
relevant documents shall be retained by the licensee for a period
of not less than three years from the date of termination of the
contract during which time the contract shall be subject to
examination by a duly authorized representative of the
commissioner. Any records retained pursuant to this subdivision
that are stored in the ordinary course of business in digital media
shall, upon request of a duly authorized representative of the
commissioner, be provided on diskette, CD-ROM or similar
portable digital storage medium. For purposes of this subdivision,
the “original” of a contract executed in electronic form shall be
either the copy of the contract stored in digital media or a paper
printout of that contract.

(2) Any licensee, or employee thereof, shall dispose of the
documents required to be kept pursuant to paragraph (1) by
shredding or other appropriate means so that the identity of the
prospective tenant may not be determined from the disposed
information alone or in combination with other publicly available
information.

(c) The form of contract proposed to be used by a licensee to
effect compliance with this section shall be filed with the
department prior to use. Any modification of a form previously
filed with the department, including a change in the name or
business address of the licensee, shall also be filed prior to use.
The department shall withhold the issuance or renewal of a license
until the department has approved the contract. If a proposed
modification to a contract has not been approved or disapproved
within 15 working days of being filed with the department, the
proposed modification shall be deemed approved. If a proposed
modification or contract provision is disapproved, the department
shall communicate that disapproval in writing to the licensee within
15 working days of being filed with the department, accompanied
by a written justification of why the modification or contract
provision is contrary to the requirements of this article.

(d) Notwithstanding any other provision of law, a contract for
prepaid rental listing services executed in electronic form, and
signed in any electronic form that provides a reasonable method
of indicating that the individual whose signature is required
authorized the contract to be signed in electronic form, shall be
valid to the same extent as an executed written contract. Upon
request by the customer, the licensee shall deliver an executed
paper copy to the customer within five working days of receiving
the request.

SEC. 15.  

Section 10167.13 of the Business and Professions
Code is amended to read:

10167.13.  

(a) A prepaid rental listing service license issued
by the department shall be for a period of two years. An application
and fee for renewal filed with the department before midnight of
the last day of the period for which a previous license was issued
entitles the licensee to continue operating at all locations specified
in the previous license for which a renewal fee is paid.

(b) On and after January 1, 2014, the department shall not issue
a prepaid rental listing service license.

(c) This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

SEC. 16.  

Section 10167.16 of the Business and Professions
Code is amended to read:

10167.16.  

(a) A person or corporation licensed pursuant to
this article and not engaging in acts for which a real estate license
is required under Article 1 (commencing with Section 10130) of
Chapter 3 of Part 1 of Division 4, shall be subject, in addition to
the provisions of this article, to the provisions of Chapter 1
(commencing with Section 10000) and Chapter 2 (commencing
with Section 10050) of Part 1 of Division 4, and to Sections 10450,
10452, 10453, and 10454.

(b) This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

SEC. 17.  

Section 10167.17 of the Business and Professions
Code is repealed.

begin insert

begin insert SEC. 18. end insert   

No reimbursement is required by this act pursuant
to Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert