BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 761|
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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.
ANALYSIS:
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.
1161(3).)
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.
Background
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.
Comments
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
eviction.
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)
Airbnb
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Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
5/21/15 9:40:53
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