BILL ANALYSIS                                                                                                                                                                                                    






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          |SENATE RULES COMMITTEE            |                       SB 1092|
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                                   THIRD READING 


          Bill No:  SB 1092
          Author:   Monning (D) 
          Amended:  4/21/16  
          Vote:     21 

           SENATE JUDICIARY COMMITTEE:  6-0, 5/3/16
           AYES:  Jackson, Moorlach, Anderson, Leno, Monning, Wieckowski
           NO VOTE RECORDED:  Hertzberg

           SUBJECT:   Advertising:  Internet private residence rental  
                     listings:  notice


          SOURCE:    Association of California Insurance Companies


          DIGEST:  This bill requires residential hosting platforms to  
          provide a notice warning individuals to review any restrictions  
          on coverage under their homeowners' or renters' insurance policy  
          related to short-term rental activities to ensure that there is  
          appropriate insurance coverage in the event of a loss arising  
          out of those activities.


          ANALYSIS:  


          Existing law:


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








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            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.  (Bus. & Prof. Code  
            Sec. 22592.)





          2)States 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.  Existing law specifies that the  
            notice shall be provided immediately before the occupant lists  
            each real property on the hosting platform's Internet Web  
            site, and shall require the occupant to interact with the  
            hosting platform's Internet Web site to affirmatively  
            acknowledge that he or she has read the notice.  (Bus. & Prof.  
            Code Sec. 22594.)


          3)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.  (Bus. & Prof. Code Sec.  
            22590.)


          This bill:


          1)Requires a hosting platform to provide the following notice to  







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            offerors listing a residence for short-term rental on a  
            hosting platform:


            You should review any restrictions on coverage under your  
            homeowners' or renters' insurance policy related to short-term  
            rental activities to ensure that there is appropriate  
            insurance coverage in the event that a person sustains an  
            injury or loss for which you are responsible, a person damages  
            or causes loss to your personal or real property, or a claim  
            or lawsuit is made against you or otherwise arises out of  
            activities related to this hosting platform.


          2)Makes other technical and conforming changes.


          Background
          
          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 speaking,  
          homesharing consists of 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.  Service providers  
          like "Airbnb," "FlipKey," and "VRBO," advertise homes offered  
          for temporary rental and facilitate connecting renters with  
          offerors for a fee.

          According to the National League of Cities, "[s]haring economy  
          businesses have been growing in cities, and presenting a new set  
          of challenges and opportunities for policy makers and city  
          leaders.  While the sharing economy represents new and exciting  
          possibilities offered by technology platforms, cities are  
          finding that these innovative services also present a new set of  
          safety, taxing and business challenges."  (DuPuis and Rainwater,  
          The Sharing Economy: An Analysis of Current Sentiment  
          Surrounding Homesharing and Ridesharing, National League of  
          Cities (2014)  
           
                                                                    Page  4


          Last year, the Legislature addressed a concern that tenants  
          subletting their rented accommodations through a homesharing  
          service provider could place themselves at risk of eviction if  
          such activity violated their rental or lease agreement.  SB 761  
          (Hall, Chapter 239, Statutes of 2015) directed homesharing  
          service providers - termed "hosting platforms" - to provide a  
          specified notice to offerors that would make them aware of  
          possible restrictions in their rental agreements and leases that  
          could subject them to eviction should they offer their unit for  
          short-term rental.


          This bill directs a hosting platform to provide a similar notice  
          to homesharing hosts that warns them to review their insurance  
          coverage to ensure that they are adequately covered for losses  
          arising in connection with short-term rental activities.


          Comments


          The author writes:


            Many homeowners and renters list their residences for short  
            term rental on internet hosting platforms, such as Airbnb,  
            HomeAway, and Vacation Rentals by Owner. Unfortunately, many  
            are unaware of the insurance ramifications if damage to  
            property or injury at the property occurs during the rental  
            period.  Some homeowners or renters policies may provide  
            coverage when a "guest" is injured or when the "guest" breaks  
            or damages an item in the home or apartment.  Many current  
            insurance policies allow some period of limited commercial  
            use, but the terms can vary significantly based on the  
            insurance company.  If the activity is explicitly excluded by  
            the policy, the homeowner or tenant may be liable for injuries  
            or property loss.


            It is important for homeowners and renters who make their  
            properties available through internet hosting platforms to  
            understand their insurance coverage and whether it will  
            protect them in the event that something unfortunate occurs  
            during the short term rental of their property.  SB 1092  







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            requires internet hosting platforms to provide a disclosure to  
            homeowners and renters that they should check their  
            homeowners' or rental insurance policies to find out if they  
            are covered before engaging in home sharing activity.


          Related/Prior Legislation


          AB 2881 (Committee on Judiciary, 2016) adds mobilehomes to the  
          types of residences listed for short-term rental on a hosting  
          platform that would be subject to existing notice and disclosure  
          requirements.


          SB 761 (Hall, Chapter 239, Statutes of 2015) required hosting  
          platforms to provide a notice to hosts listing a residence for  
          short-term rental stating that if the occupant is a tenant,  
          listing the residence may violate their lease or contract and  
          could result in legal action by their landlord, including  
          possible eviction.  The bill specified that the notice must be  
          provided immediately before an occupant lists each real property  
          on an online platform or Internet Web site, and must require the  
          occupant to interact with the online platform Internet Web site  
          to affirmatively acknowledge that he or she has read the notice.


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


          SUPPORT:   (Verified5/3/16)


          Association of California Insurance Companies (source)
          California Apartment Association
          CSAA Insurance Group
          National Association of Mutual Insurance Companies
          Pacific Association of Domestic Insurance Companies


          OPPOSITION:   (Verified5/3/16)









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          None received

          Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
          5/6/16 14:26:27


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