BILL ANALYSIS Ó
SB 761
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Date of Hearing: June 30, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
SB
761 (Hall) - As Amended May 19, 2015
SENATE VOTE: 35-3
SUBJECT: ADVERTISING: INTERNET PRIVATE RESIDENCE RENTAL
LISTINGS: NOTICE
KEY ISSUE: SHOULD the operator of An online hosting platform
allowing persons to list their residences for short-term rental
be required to notify persons seeking to list their residences
for rent on the platform, immediately before the act of listing
their residences for rent, that if they are tenants, they should
check their rental contracts to determine whether renting a
residence on a short-term basis is a violation of the rental
contract?
SYNOPSIS
Internet-based companies such as AirBnb and VRBO have created
popular online marketplaces that allow people to list their
residential properties for rent on a short-term basis, primarily
to travelers and tourists, and facilitate communication between
the parties to make arrangements for short-term rental of the
properties. Many rental agreements, however, specifically
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forbid the tenant from subletting all or any part of the
premises without landlord approval, or using the premises for
any commercial purpose. According to the bill's sponsor, the
California Apartment Association (CAA), the majority of rental
leases in California contain a prohibition against subletting,
and under current law, landlords have the right to evict tenants
for subletting in violation of a lease agreement. There is
evidence that, in some cities, such as San Francisco for
example, the number of evictions associated with Airbnb rentals
is increasing.
Accordingly, this bill seeks to require operators of such
websites ("hosting platforms") to provide a specified notice to
tenants who use the platform, informing them that listing their
residence for short-term rental may be a violation of their
leases, and recommending that they check their lease before
listing the property on the platform for short-term rental.
According to the author, these hosting platforms are putting
unsuspecting tenants in a position where they may be subject to
eviction for violating their leases, and the bill is needed to
protect and educate tenants about the risks of listing their
rooms or units on short-term rental Web sites. In addition to
CAA, the bill is supported by the California Realtors
Association and the San Diego County Apartment Association.
Prior to amendments taken in Senate Judiciary Committee, the
bill was opposed by Airbnb. It is unknown whether Airbnb
continues to remain in opposition to the current version of the
bill. This bill was approved by the Senate by a 35-3 vote.
SUMMARY: Requires the operator of a hosting platform, as
defined, to provide a specified notice to tenants using the
platform that listing their residence for short-term rental may
be a violation of their lease. Specifically, this bill:
1)Defines a "hosting platform" to mean a marketplace that is
created for the primary purpose of facilitating the rental of
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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. Provides that the act of
"facilitating" includes, but is not limited to, allowing the
offeror of the residential unit to offer or advertise the
residential unit on the Internet Web site provided or
maintained by the operator.
2)Requires a hosting platform to provide any person listing a
residence for short-term rental on a hosting platform with the
following notice:
"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 of contract contains restrictions
that would limit your ability to list your room, home,
condominium, or apartment. Listing your home may be a
violation of your lease or contract, and could result in legal
action against you by your landlord, including possible
eviction."
3)Requires the above notice to appear 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.
4)Requires the above notice to be provided immediately before
the occupant lists each real property on the online platform
or Internet Web site, and that the occupant interacts with the
online platform Internet Web site to affirmatively acknowledge
that he or she has read the notice.
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EXISTING LAW:
1)Generally, 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. (Civil Code
Sections 1940 to 1951.4.)
2)Provides that a tenant is guilty of unlawful detainer when,
among other things, he or she continues in possession, in
person or by subtenant, after a neglect or failure to perform
certain conditions or covenants of the lease or agreement
under which the property is held, including any covenant not
to assign or sublet the premises. (Code of Civil Procedure
Section 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 of Civil
Procedure Section 1161(4).)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: In recent years, there has been an explosion in
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popularity of Internet-based companies that allow people to list
a room or their entire residence for rental on a short-term
basis. These companies, such as AirBnb, VRBO, and Homeaway,
have created online marketplaces which allow travelers and
tourists to peruse listings for properties in a destination
city, and then contact the listing party to make arrangements
for short-term rental of the property. Typically, the companies
hosting these online platforms make money through advertising
and by charging a fee on each listing (in the case of Airbnb,
typically a fee of 9% to 15% of the total amount paid for the
rental.) These companies generally make no distinction with
respect to who may list a property on the platform, allowing not
only property owners, but also tenants, to list their residences
for rent.
As the popularity of short-term rentals listed through Airbnb
and similar marketplaces has increased, so has the concern of
many landlords and property owners about safety and liability
issues associated with unauthorized use of rental property by
guests. According to the sponsor of the bill, the California
Apartment Association, "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."
Accordingly, this bill seeks to require that operators of such
websites ("hosting platforms") provide a specified notice to
tenants who use the platform, informing them that listing their
residences for short-term rental may be a violation of their
leases, and recommending that they check their leases before
listing their residences for rent.
Short-term rental of property to visitors by the tenant of the
property typically violates the rental contract or lease between
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the tenant and landlord/owner. A "sublease" is a rental
agreement between the original tenant and a subtenant to whom
the original tenant rents all or part of the rental unit. 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.
According to CAA, the majority of rental leases in California
contain a prohibition against subletting. Under current law,
landlords have the right to evict tenants for subletting in
violation of the lease agreement. Despite these prohibitions,
many tenants are apparently still incentivized to rent out their
homes to short-term guests because of the potential windfall
involved, particularly in rent-controlled jurisdictions. (See
"Airbnb sublets in S.F. land some renters in the doghouse," S.F.
Chronicle (March 18, 2014).)
The author contends that many tenants are unaware of these
prohibitions on subletting and using rental property for
commercial purposes, or have not reviewed their leases in detail
because of their length and complexity. While the Committee
does not have statewide data about the prevalence of eviction
actions for illegal subletting associated with short-term
rentals on sites like Airbnb, there is some evidence that the
number of such evictions is on the rise, particularly in San
Francisco. According to a recent article in the S.F. Examiner:
Bigger than the Ellis Act and more disruptive than
condominium conversions, San Francisco-based Airbnb is
playing a major role in city evictions. A total of 145
eviction notices filed with the Rent Board that
specifically mention the short-term rental website or
violations of The City's rules on short-term occupancy
were filed over a 12-month period that ended in
February, records show. Attorneys for tenants and
landlords agree there could be many, many more
Airbnb-related evictions that go unreported.
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"There are hundreds of cases" that involve Airbnb,
said tenant attorney Joseph Tobener, who has defended
several individuals in Airbnb-related eviction cases.
"It's insane." [According to] Daniel Bornstein, a
prominent landlord attorney who handles hundreds of
evictions every year, Airbnb "has emerged as a
fundamental core of my law practice [within] the last
12 to 18 months."
Tenants can be evicted for using Airbnb and other
websites to rent out their units in a variety of ways
under San Francisco's Rent Ordinance: for "illegal
use," breaching provisions of the lease that ban
guests or subtenants or causing a "nuisance." More
than 1,100 just-cause eviction notices that cite one
of the three reasons above were filed between March 1,
2014, and Feb. 28, 2015, according to the Rent Board.
Overall, evictions filed with the Rent Board did
increase 7 percent, from 1,977 to 2,120, from the
previous 12-month period, records show. And it appears
Airbnb played a role in that. While Ellis Act
evictions dropped year over year, notices citing
"illegal use of unit" and "breach of rental agreement"
went up for the fifth straight year. (See
"Airbnb-related Violations Cited More and More in SF
Evictions," S.F. Examiner (April 23, 2015).)
In light of reports that Airbnb-related evictions are on the
rise, the author states the need for the bill as follows:
Short-term rental Web sites provide little or no
disclosure to prospective hosts 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
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can face eviction. 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.
Factual notice warning of possible lease violations for listing
property. This bill requires a specified notice to be provided
by the hosting platform (as defined) to tenants seeking to list
their residences on the platform for short-term rental. The
notice reads as follows: "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 of contract
contains restrictions that would limit your ability to list your
room, home, condominium, or apartment. Listing your home may be
a violation of your lease or contract, and could result in legal
action against you by your landlord, including possible
eviction."
The notice consists of a statement urging those who are tenants
to consult the rental contract for restrictions that would limit
the tenant's ability to list the property, followed by a simple
warning of possible consequences if the rental violates the
contract. The notice does not presume that every rental
contract prohibits subletting, nor that the response of every
landlord to instances of unauthorized subletting would be to
file for eviction. Instead, the required notice simply provides
factually accurate information to the tenant and warns of
potential consequences.
The bill requires that the notice is provided immediately before
the person lists the property on the hosting platform's website,
and also requires the person to interact with the website to
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affirmatively acknowledge reading the notice. According to the
author, this interaction is intended to be accomplished by
having the website ask the user to check a box before proceeding
further, similar to what many websites already do when they
require users to check a box acknowledging having read and
agreed to the terms of service for using the website or opening
an account with the company.
ARGUMENTS IN OPPOSITION: The Committee did not receive any
opposition letters to this bill subsequent to the bill being
referred to this Committee on June 11, 2015. Nevertheless, the
author did share with the Committee a copy of a letter, dated
May 7, 2015, reflecting Airbnb's "Oppose Unless Amended"
position when the bill was pending a hearing by the Senate
Judiciary Committee. In that letter, Airbnb stated:
We understand [the author's] intentions with the
proposed disclosure and have been working with his
office to craft language that achieves his goal. We
are concerned, however, that the currently proposed
disclosure implies that all leases in California are
constructed identically. Indeed, there is no standard
lease language utilized across the State of
California, and the proposed disclosure should clearly
and adequately alert hosts, as Airbnb already does, of
the importance of checking their lease and
understanding their rights. Internet platforms like
Airbnb cannot play the role of interpreting private
contractual arrangements or mediating disputes that
might arise between private parties.
According to the Senate Judiciary bill analysis, amendments were
taken in that committee that largely addressed the objections
and requests by Airbnb. It is unknown whether Airbnb continues
to oppose the current version of the bill, or whether the
amendments taken in Senate Judiciary were sufficient to address
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all of Airbnb's concerns.
REGISTERED SUPPORT / OPPOSITION:
Support
California Apartment Association (CAA) (sponsor)
California Association of Realtors
San Diego County Apartment Association
Opposition (to previous version of the bill)
Airbnb
Analysis Prepared by:Anthony Lew / JUD. / (916)
319-2334
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