BILL ANALYSIS Ó
SB 761
Page 1
SENATE THIRD READING
SB
761 (Hall)
As Amended July 9, 2015
Majority vote
SENATE VOTE: 35-3
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Judiciary |10-0 |Mark Stone, Wagner, | |
| | |Alejo, Chau, Chiu, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Cristina Garcia, | |
| | |Holden, Maienschein, | |
| | |O'Donnell | |
| | | | |
| | | | |
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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:
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1)Defines a "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. 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% 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
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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.
5)Clarifies that this affirmative acknowledgement may be
accomplished by the inclusion of a statement in the notice
prescribed by this bill that the occupant acknowledges reading
the notice before proceeding to list a real property with the
hosting platform's Internet Web site.
FISCAL EFFECT: None
COMMENTS: In recent years, there has been an explosion in
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, Vacation Rentals by
Owner (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 this bill, the California
Apartment Association (CAA), "Tenants in apartments who list
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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
Web sites ("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
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 Assembly
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Judiciary 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. (See, e.g., "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 this bill as follows: "By
providing no information to prospective tenants, short-term
rental websites are putting unsuspecting tenants in a position
where they 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."
Importantly, 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
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file for eviction. Instead, the required notice simply provides
factually accurate information to the tenant and warns of
potential consequences.
This bill requires that the notice is provided immediately
before the person lists the property on the hosting platform's
Web site, and also requires the person to interact with the Web
site to affirmatively acknowledge reading the notice. Recent
amendments to this bill clarify that this affirmative
acknowledgement may be accomplished by the inclusion of a
statement in the prescribed notice that the occupant
acknowledges reading the notice before proceeding to list a real
property with the hosting platform's Internet Web site.
Analysis Prepared by:
Anthony Lew / JUD. / (916) 319-2334 FN: 0001177