BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                        SB 761|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  SB 761
          Author:   Hall (D)
          Amended:  5/19/15  
          Vote:     21  

           SENATE JUDICIARY COMMITTEE:  4-1, 5/12/15
           AYES:  Jackson, Moorlach, Leno, Monning
           NOES:  Anderson
           NO VOTE RECORDED:  Hertzberg, Wieckowski

           SUBJECT:   Advertising:  Internet private residence rental  
                     listings:  notice

          SOURCE:    California Apartment Association

          DIGEST:  This bill requires a hosting platform to provide a  
          specific notice to individuals listing a residence for  
          short-term rental on the platform, as specified.  This bill  
          states that the notice must be provided immediately before an  
          individual lists real property on the hosting platform, and  
          requires the individual listing the property to interact with  
          the hosting platform to affirmatively acknowledge that he or she  
          has read the notice.


          Existing law:


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          1)Defines the rights and duties of landlord and tenants,  
            including presumptions regarding the terms of the hiring, the  
            lawful means of terminating a lease or rental agreements, and  
            the remedies available to the respective parties in the event  
            of a breach of a lease or rental agreement, including remedies  
            in the event of a tenant's wrongful assignment or sublet of a  
            lease.  Generally, the landlord may elect either to continue  
            the lease in effect or to terminate it and collect damages.   
            (Civ. Code Secs. 1940 et seq., 1951.4)  

          2)Provides that a tenant of real property, for a term less than  
            life, or the executor or administrator of his or her estate,  
            is guilty of unlawful detainer if he or she engages in certain  
            activity.  (Code Civ. Proc. Sec. 1161.)  Existing law defines  
            an unlawful detainer to include, among other things, a  
            situation where a tenant continues in possession, in person or  
            by subtenant, after a neglect or failure to perform conditions  
            or covenants of the lease or agreement under which the  
            property is held, including any covenant not to assign or  
            sublet.  Existing law provides that upon service of three  
            days' notice requiring the performance of such conditions or  
            covenants, the tenant, or any subtenant in actual occupation  
            of the premises, or any mortgagee of the term, or other person  
            interested in its continuance, may perform the conditions or  
            covenants of the lease and thereby save the lease from  
            forfeiture, except as provided.  (Code Civ. Proc. Sec.  
          3)Provides that a tenant who assigns, sublets, or commits waste  
            upon the premises contrary to the conditions or covenants of  
            the lease, or maintains, commits, or permits the maintenance  
            or commission of a nuisance upon the premises, or uses the  
            premises for an unlawful purpose, is guilty of an unlawful  
            detainer and may, upon service of three days' notice to quit,  
            be evicted from the premises by the landlord.   (Code Civ.  
            Proc. Sec. 1161(4).)

          4)Requires an operator of a commercial Internet Web site or  
            online service that collects personally identifiable  
            information through the Internet about individual consumers  
            residing in California who use or visit its commercial  
            Internet Web site or online service to conspicuously post its  


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            privacy policy on its Internet Web site.  (Bus. & Prof. Code  
            Sec. 22575 et seq.)  Existing law also limits advertising by  
            an operator of an Internet Web site, online service, online  
            application, or mobile application directed to minors, as  
            provided.  (Bus. & Prof. Code Sec. 22580 et seq.)  Existing  
            law also provides provisions that protect the privacy of  
            student's online personal information.  (Bus. & Prof. Code  
            Sec. 22584 et seq.)

          This bill:

          1)Defines "hosting platform" to mean a marketplace that is  
            created for the primary purpose of facilitating the rental of  
            a residential unit offered for occupancy for tourist or  
            transient use for compensation to the offeror of that unit,  
            and the operator of the hosting platform derives revenues,  
            including booking fees or advertising revenues, from providing  
            or maintaining that marketplace. 

          2)Requires a hosting platform to provide the following notice to  
            occupants listing a residence for short-term rental on a  
            hosting platform:

               If you are a tenant who is listing a room, home,  
               condominium, or apartment, please refer to your rental  
               contract or lease, or contact your landlord, prior to  
               listing the property to determine whether your lease or  
               contract contains restrictions that would limit your  
               ability to list your room, home, condominium, or apartment.  
                Listing your room, home, condominium, or apartment may be  
               a violation of your lease or contract, and could result in  
               legal action against you by your landlord, including  
               possible eviction.

          3)Specifies that the above notice shall be in a font size that  
            is equal to or greater than 100 percent of the standard font  
            size of the other paragraphs on the hosting platform's  
            Internet Web site or equal to the default font size on the  
            hosting platform's Internet Web site.


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          4)Provides that the above notice shall be provided immediately  
            before the occupant lists each real property on the hosting  
            platform's Internet Web site, and requires the occupant to  
            interact with the hosting platform's Internet Web site to  
            affirmatively acknowledge he or she has read the notice.


          It is not uncommon for a tenant with a lease to need to move out  
          before the lease ends, or require assistance in paying their  
          rent.  In these situations, the tenant may want to sublease  
          their rental unit or assign the lease to another tenant;  
          however, the tenant cannot sublease a rental unit or assign the  
          lease unless the terms of the lease allow the tenant to do so.   
          A "sublease" is a separate rental agreement between the original  
          tenant and a new tenant to whom the original tenant rents all or  
          part of the rental unit.  In contrast, an "assignment" is a  
          transfer of person's rights as a tenant to someone else.  The  
          tenant might use an assignment if he or she has a lease and  
          needs to move permanently before the lease ends.  Many rental  
          agreements, however, specifically forbid the tenant from  
          subletting all or any part of the premises without landlord  
          approval, or using the premises for any commercial purpose.  

          In recent years, California has seen a rise in what is known as  
          the "sharing economy," with the influx of ridesharing businesses  
          such as "Lyft" and "Uber" and homesharing businesses such as  
          "Airbnb," "FlipKey," and "VRBO."  Generally, homesharing is  
          recognized as an agreement between two parties, in which one  
          party rents out all or part of his or her home to another party  
          on a temporary, one-time basis (i.e. Airbnb and HomeAway)."   
          (DuPuis and Rainwater, The Sharing Economy: An Analysis of  
          Current Sentiment Surrounding Homesharing and Ridesharing,  
          National League of Cities (2014)  [as of May 7, 2015].) 

          With the increasing popularity of short-term vacation rentals  
          made available through Internet Web sites such as Airbnb and  
          VRBO, among others, however, questions have arisen as to whether  


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          tenants (as opposed to homeowners) of rentals are in violation  
          of their rental agreements if they list their rental unit on  
          these platforms for short-term rent.  According to some, "[w]ith  
          an Airbnb rental, the tenant is using the premises for an  
          illegal commercial purpose, and is often creating a nuisance and  
          substantial interference with the comfort, safety or enjoyment  
          of the other building occupants by allowing strangers access who  
          have not been screened by the landlord.  These are grounds for  
          terminating tenancy." (See San Francisco Apartment Association,  
          SF Apartment: August 2014, Legal Q&A  
           [as of May 7,  
          2015].)  Moreover, while the tenant could be subject to eviction  
          for those activities, there is debate over whether the tenant  
          must first be offered a three day right to cure.  "Short-term  
          rental, like other forms of subletting, falls into a gray area.   
          Some argue that it is curable simply by stopping any future  
          subletting.  Others argue that the subletting, having already  
          occurred, is no longer curable."  (Id.)  

          While questions may linger, it is clear that a tenant could be  
          at risk of eviction if not careful, and that many are not even  
          aware of the possibility of this risk as they participate in  
          this relatively new economy.  This bill requires hosting  
          platforms that facilitate short-term rentals to provide a  
          specified notice to listing tenants that would make them aware  
          of the potential restrictions in their rental agreement that  
          could subject them to eviction.

          According to the author: 

            Over the past few years, there has been significant growth in  
            online Web site companies that allow people to rent a room or  
            their entire unit on a short-term basis.  These companies  
            include AirBnb, VRBO, Homeaway, Flipkey, and others.  They  
            allow not only property owners to list, but tenants who rent  
            apartments as well.  Unlike homeowners, however, tenants who  
            list their rooms or units, create a host of potential problems  
            for the property owner and neighboring tenants, while at the  
            same time, they jeopardize their own tenancy.  

            In California, the majority of rental leases contain a  
            prohibition against subletting.  Under current law, landlords  


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            have the right to evict tenants for subletting and for  
            violating the rental agreement.  Unfortunately, many tenants  
            are not aware of these prohibitions.   Standard leases include  
            many legally required disclosures that can make the lease as  
            long as 25 pages and many tenants may not have reviewed their  
            lease in years. 

            Short-term rental Web sites provide little or no disclosure to  
            prospective tenants who list their rooms or units for rent.   
            By providing no information to prospective tenants, short-term  
            rental websites are putting unsuspecting tenants in a position  
            where they can face eviction.  Short-term rental websites are  
            great and valuable tools, but they must be used responsibly in  
            accordance with existing laws and contractual agreements.   
            Tenants in apartments who list with short-term rental Web  
            sites can create significant safety issues for their neighbors  
            and the community.  Short-term guests have had no screening or  
            background checks, and keys or gate codes are given by the  
            listing tenant to the short term guests.  The risk of  
            liability is significant for both tenants and owners.

            SB 761 is intended to protect and educate tenants about the  
            risks of listing their room or unit on short-term rental Web  
            sites.  It will simply require short-term rental companies to  
            disclose very clearly and openly that listing a room or unit  
            may be a violation of the lease and may subject the tenant to  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No

          SUPPORT:   (Verified5/12/15)

          California Apartment Association (source)
          San Diego County Apartment Association

          OPPOSITION:   (Verified5/12/15)



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          Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
          5/21/15 9:40:53

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