Bill Text: CA SB269 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Prepaid rental listing service.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-09-30 - Chaptered by Secretary of State. Chapter 436, Statutes of 2013. [SB269 Detail]

Download: California-2013-SB269-Introduced.html

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BILL NUMBER: SB 269	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hill

                        FEBRUARY 14, 2013

   An act to amend and renumber Section 10167.9 of, to amend and
repeal Sections 10167.5, 10167.13, and 10167.16 of, to amend, repeal,
and add Sections 10167, 10167.2, and 10167.3 of, to repeal Sections
10167.4, 10167.7, 10167.8, and 10167.17 of, and to repeal and add
Section 10167.6 of, the Business and Professions Code, relating to
real estate.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 269, as introduced, Hill. Prepaid rental listing service.
   The Real Estate Law provides for the regulation and licensing of
prepaid rental listing services by the Real Estate Commissioner.
Existing law prohibits a person from engaging in the business of
prepaid rental listing services unless licensed in that capacity or
licensed as a real estate broker. A willful violation of these
provisions is a crime.
   This bill would prohibit the department from issuing a prepaid
rental listing service license. This bill, beginning January 1, 2015,
would prohibit a person from engaging in that business unless
licensed as a real estate broker. The bill would also require a
specified written notice about refunds to be provided to the provided
to the prospective tenant prior to the acceptance of a fee. The bill
also would make related changes, including deleting provisions that
pertain to prepaid rental listing service licensing.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares that requiring a
real estate license to lawfully provide prepaid rental listing
services serves the valid governmental purposes of public protection
and victims' compensation. The safeguards contained in this
legislation are intended to reduce the significant and unacceptably
large amounts of prepaid rental listing service fraud perpetrated
against unsuspecting, prospective tenants by persons who lack real
estate licenses. The safeguards in this bill will also permit persons
who may be harmed through prepaid rental listing service fraud to
seek compensation from the Consumer Recovery Account, a remedy which
is not available to persons who obtain prepaid rental listing
services through a person that does not hold a real estate license.
  SEC. 2.  Section 10167 of the Business and Professions Code is
amended to read:
   10167.  The definitions used in this section shall govern the
construction and terms as used in this article:
   (a) "Prepaid rental listing service" means the business of
supplying prospective tenants with listings of residential real
properties for tenancy, by publication or otherwise, pursuant to an
arrangement under which the prospective tenants are required to pay
an advance or contemporaneous fee (1) specifically to obtain listings
or (2) to purchase any other product or service in order to obtain
listings, but which does not otherwise involve the negotiation of
rentals by the person conducting the service. "Prepaid rental listing
service" does not include the business of providing roommate
referral information designed to assist persons in locating a
roommate who meets various selection criteria related to the
prospective roommate's personal traits, characteristics, habits or
preferences, and selection criteria related to the residential real
property occupied by the prospective roommate.
   (b) "Licensee" means a person licensed to conduct a prepaid rental
listing service or a person engaged in the business of a prepaid
rental listing service under a real estate broker license.
   (c) "Location" means the place, other than the main or branch
office of a real estate broker, where a prepaid rental listing
service business is conducted.
   (d) "Designated agent" means the person who is in charge of the
business of a prepaid rental listing service at a given location.
   (e) "Fee" means the charge required by a licensee (1) to obtain
listings of residential real properties for tenancy or (2) to
purchase any other product or service in order to obtain listings.
   (f) "Service charge" means the amount of the fee that a licensee
may retain if a prospective tenant finds housing through a source
other than the listings supplied by the licensee. 
   (g) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date. 
  SEC. 3.  Section 10167 is added to the Business and Professions
Code, to read:
   10167.  The definitions used in this section shall govern the
construction and terms as used in this article:
   (a) "Prepaid rental listing service" means the business of
supplying prospective tenants with listings of residential real
properties for tenancy, by publication or otherwise, pursuant to an
arrangement under which the prospective tenants are required to pay
an advance or contemporaneous fee (1) specifically to obtain listings
or (2) to purchase any other product or service in order to obtain
listings, but which does not otherwise involve the negotiation of
rentals by the person conducting the service. "Prepaid rental listing
service" does not include the business of providing roommate
referral information designed to assist persons in locating a
roommate who meets various selection criteria related to the
prospective roommate's personal traits, characteristics, habits or
preferences, and selection criteria related to the residential real
property occupied by the prospective roommate.
   (b) "Licensee" means a person engaged in the business of a prepaid
rental listing service under a real estate broker license.
   (c) "Location" means the place, other than the main or branch
office of a real estate broker, where a prepaid rental listing
service business is conducted.
   (d) "Designated agent" means the person who is in charge of the
business of a prepaid rental listing service at a given location.
   (e) "Fee" means the charge required by a licensee (1) to obtain
listings of residential real properties for tenancy or (2) to
purchase any other product or service in order to obtain listings.
   (f) "Service charge" means the amount of the fee that a licensee
may retain if a prospective tenant finds housing through a source
other than the listings supplied by the licensee.
   (g) This section shall become operative on January 1, 2015.
  SEC. 4.  Section 10167.2 of the Business and Professions Code is
amended to read:
   10167.2.  (a) It is unlawful for any person to engage in the
business of a prepaid rental listing service unless licensed in that
capacity or unless licensed as a real estate broker.
   (b) (1) The requirements of this article apply only to the
provision of listings of residential real properties for tenancy by
prepaid rental listing services. Except if expressly provided
otherwise in this article, the requirements of this article do not
apply to any other goods or services sold by a prepaid rental listing
service as long as the purchase of those goods or services is not
required to obtain those listings, and as long as the purchase of
those goods or services is not included in the same contract as the
contract to provide those listings, and as long as the contract to
provide those listings clearly specifies that the purchase of any
other goods and services is optional, and as long as the price
charged for any other goods and services is fair and reasonable.
   (2) In an action alleging that the price charged for any other
goods and services is not fair and reasonable, the burden shall be on
the commissioner to demonstrate that the price charged unreasonably
exceeds the fee customarily charged for the same or comparable goods
or services in the community in which the prepaid rental listing
service operates. The fact that the price charged for goods or
services exceeds the cost incurred by the prepaid rental listing
service shall not render the price charged for the goods or services
to be unfair or unreasonable, so long as the price charged does not
unreasonably exceed the fee customarily charged for the same or
comparable goods or services in the community in which the prepaid
rental listing service operates. 
   (3) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date. 
  SEC. 5.  Section 10167.2 is added to the Business and Professions
Code, to read:
   10167.2.  (a) It is unlawful for any person to engage in the
business of a prepaid rental listing service unless licensed as a
real estate broker.
   (b) (1) The requirements of this article apply only to the
provision of listings of residential real properties for tenancy by
prepaid rental listing services. Except if expressly provided
otherwise in this article, the requirements of this article do not
apply to any other goods or services sold by a prepaid rental listing
service as long as the purchase of those goods or services is not
required to obtain those listings, and as long as the purchase of
those goods or services is not included in the same contract as the
contract to provide those listings, and as long as the contract to
provide those listings clearly specifies that the purchase of any
other goods and services is optional, and as long as the price
charged for any other goods and services is fair and reasonable.
   (2) In an action alleging that the price charged for any other
goods and services is not fair and reasonable, the burden shall be on
the commissioner to demonstrate that the price charged unreasonably
exceeds the fee customarily charged for the same or comparable goods
or services in the community in which the prepaid rental listing
service operates. The fact that the price charged for goods or
services exceeds the cost incurred by the prepaid rental listing
service shall not render the price charged for the goods or services
to be unfair or unreasonable, so long as the price charged does not
unreasonably exceed the fee customarily charged for the same or
comparable goods or services in the community in which the prepaid
rental listing service operates.
   (c) This section shall become operative on January 1, 2015.
  SEC. 6.  Section 10167.3 of the Business and Professions Code is
amended to read:
   10167.3.  (a) A separate application for a license as a prepaid
rental listing service shall be made in writing for each location to
be operated by a licensee other than a real estate broker. Each
application shall be on forms provided by the department, shall be
signed by the applicant, and shall be accompanied by a one hundred
dollar ($100) application fee for the first location, and a
twenty-five dollar ($25) application fee for each additional location
of the applicant.
   Applications to add or eliminate locations during the term of a
license shall be on forms prescribed by the department. A twenty-five
dollar ($25) application fee for the remainder of a license term for
each location to be added shall accompany the application.
   (b) A real estate broker may provide a prepaid rental listing
service at a licensed office for the conduct of his or her real
estate brokerage business if the business at the office is conducted
under the immediate supervision of the broker or of a real estate
salesperson licensed to, and acting on behalf of, the broker. 
   (c) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date. 
  SEC. 7.  Section 10167.3 is added to the Business and Professions
Code, to read:
   10167.3.  (a) A real estate broker may provide a prepaid rental
listing service at a licensed office for the conduct of his or her
real estate brokerage business if the business at the office is
conducted under the immediate supervision of the broker or of a real
estate salesperson licensed to, and acting on behalf of, the broker.
   (b) This section shall become operative on January 1, 2015.
  SEC. 8.  Section 10167.4 of the Business and Professions Code is
repealed. 
   10167.4.  The commissioner may require such proof as he or she may
deem advisable concerning the honesty and truthfulness of (a) any
applicant for a license as a prepaid rental listing service, (b) the
designated agents of the applicant, (c) the officers, directors, and
any persons owning 25 percent or more of the shares of any
corporation making such an application, or (d) any person owning or
controlling a beneficial ownership interest of 25 percent or more in
the entity making application before authorizing the issuance of a
license for a location. For this purpose, the commissioner may hold a
hearing in accordance with Chapter 5 (commencing with Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code and may
refuse to issue a license to an applicant who does not furnish
satisfactory proof of his or her honesty and truthfulness or of the
honesty and truthfulness of the corporate officers, directors, and
shareholders. To assist in this determination, the commissioner shall
require the fingerprinting of every original applicant including
designated agents, officers, directors, and persons owning 25 percent
or more of the shares of the corporate applicant. 
  SEC. 9.  Section 10167.5 of the Business and Professions Code is
amended to read:
   10167.5.  The business at a location licensed pursuant to
subdivision (a) of Section 10167.3 shall be conducted under the
immediate supervision of the licensee or a designated agent who is
not a designated agent at any other location. Whenever a designated
agent ceases permanently to be a designated agent at any location
because of death, termination of employment, or any other reason, the
licensee, within five days thereafter, shall give written notice to
the department. A license issued for a particular location shall
automatically expire 60 days after the time the business conducted at
such location ceases for any reason to be under the charge of and
managed by the designated agent of record with the department, unless
within such 60-day period the licensee submits written notice of the
new designated agent to the department.
   A designated agent of the licensed service may serve as designated
agent for the location in question as well as for the location for
which he or she is the designated agent of record during the period
of 60 days. 
   This section shall remain in effect only until January 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2015, deletes or extends that date.

  SEC. 10.  Section 10167.6 of the Business and Professions Code is
repealed. 
   10167.6.  Every applicant for a prepaid rental listing service
license who is not a resident of this state shall file with the
application for a license an irrevocable consent that in any action
arising out of the activities of the prepaid rental listing service
commenced against him or her in this state, if personal service of
process upon him or her cannot be made in this state in the exercise
of due diligence, a valid service may be made upon him or her by
delivering the process to the Secretary of State.
   Insofar as possible, the provisions of Section 1018 of the Code of
Civil Procedure relating to service of process on the Secretary of
State are applicable to this section. 
  SEC. 11.  Section 10167.6 is added to the Business and Professions
Code, to read:
   10167.6.  Prior to the acceptance of a fee, and in addition to the
contract required pursuant to Section 10167.4 a licensee shall
provide the prospective tenant with the following written notice, in
a type size of at least 12-point type:

   YOU MAY BE ENTITLED TO A REFUND IF YOU DO NOT RECEIVE THE SERVICES
YOU HAVE BEEN PROMISED. COMPLETE TERMS AND CONDITIONS GOVERNING THE
REFUND TO WHICH YOU MAY BE ENTITLED ARE CONTAINED IN YOUR CONTRACT.
THE FOLLOWING IS A SIMPLIFIED SUMMARY OF SOME OF THE RIGHTS DESCRIBED
IN YOUR CONTRACT:
   If (name of licensee) does not provide you with at least three
available rental properties meeting the specifications of your
contract within five days after you pay the fee charged by (name of
licensee), you are entitled to a full refund. To obtain this refund,
you must request it from (name of licensee) in writing within 15 days
of paying your fee.
   If you do not obtain a rental through the services of (name of
licensee) during the term of your contract, you are entitled to a
refund of your fee, minus a service charge, which may not exceed ____
dollars ($____). To obtain this refund, you must provide (name of
licensee) with written documentation or a signed statement that you
obtained a rental without the assistance of (name of licensee) or
that you did not move. This documentation or signed statement must be
provided to (name of licensee) with a written request for refund,
within 10 days following the expiration of your contract.
   If (name of licensee) fails to refund your money, as required by
your contract, you may sue (name of licensee) in a small claims
court. The court may award you the refund you failed to receive, plus
additional damages, up to $1,000.
   If you wish to file a complaint about (name of licensee) or if you
cannot collect on a court award, you should contact the Department
of Real Estate at 1-877-373-4542 or www.dre.ca.gov.

  SEC. 12.  Section 10167.7 of the Business and Professions Code is
repealed. 
   10167.7.  Except as provided in Section 10167.8, each licensee
shall provide to the department, and at all times maintain in force,
a bond in the amount of ten thousand dollars ($10,000) for each
location. The bond may be in the form of a corporate surety bond, or
a cash deposit. A cash deposit may be deposited by the licensee in an
interest-bearing account assigned to the commissioner, with interest
earned thereon payable to the licensee. The bond or cash deposit may
be utilized by the commissioner for the benefit of any unsatisfied
judgment creditor in an action pursuant to subdivision (e) of Section
10167.10. 
  SEC. 13.  Section 10167.8 of the Business and Professions Code is
repealed. 
   10167.8.  The requirement of Section 10167.7 shall not apply to
any prepaid rental listing service operated by: (a) a person exempt
from the payment of federal and state income taxes; (b) an agency of
the federal, state, or local government; or (c) a real estate broker
conducting a prepaid rental listing service pursuant to a real estate
license. 
  SEC. 14.  Section 10167.9 of the Business and Professions Code is
amended and renumbered to read:
    10167.9.   10167.4.   (a) Prior to the
acceptance of a fee, a licensee shall offer the prospective tenant a
written contract, either on paper or in electronic form, which shall
include at least the following:
   (1) The name  and license number  of the licensee and the
addresses and telephone numbers of the principal office or location
of the licensee and of the location, or branch office of a real
estate broker, providing the listing to the prospective tenant.
   (2) Acknowledgment of receipt of the fee, including the amount.
   (3) A description of the service to be performed by the licensee,
including significant conditions, restrictions, and limitations where
applicable.
   (4) The prospective tenant's specifications for the rental
property, including, but not limited to:
   (A) Type of structure, including, but not limited to, detached
single-family home, apartment, or duplex.
   (B) Location by commonly accepted residential area name, by
designation of boundary streets, or by any other manner affording a
reasonable means of identifying locations acceptable to the
prospective tenant.
   (C) Furnished or unfurnished.
   (D) Number of bedrooms required.
   (E) Maximum acceptable monthly rental.
   (5) The contract expiration date, which shall not be later than 90
days from the date of execution of the contract.
   (6) A clause setting forth the right to a full or partial refund
of the fee paid as provided in Section 10167.10.
   (7) The signature and printed full name of the licensee or of the
designated agent, real estate salesperson, or employee acting on
behalf of the licensee. The signature of any person, including any
signature required by the terms of the contract to be provided by the
prospective tenant, may be provided in any electronic form that
provides a reasonable method of indicating that the individual whose
signature is required authorized the contract to be signed in that
electronic form.
   (8) A clause in bold type letters outlining the small claims court
remedy available to the prospective tenant.
   (9) A clause in boldface type letters clearly stating that the
purchase of any goods and services other than the provision of
listings of residential real properties for tenancy is optional.
   (b) (1) The original of each contract, any separate contracts for
required goods or services, refund claims, receipts and any other
relevant documents shall be retained by the licensee for a period of
not less than three years from the date of termination of the
contract during which time the contract shall be subject to
examination by a duly authorized representative of the commissioner.
Any records retained pursuant to this subdivision that are stored in
the ordinary course of business in digital media shall, upon request
of a duly authorized representative of the commissioner, be provided
on diskette, CD-ROM or similar portable digital storage medium. For
purposes of this subdivision, the "original" of a contract executed
in electronic form shall be either the copy of the contract stored in
digital media or a paper printout of that contract.
   (2) Any licensee, or employee thereof, shall dispose of the
documents required to be kept pursuant to paragraph (1) by shredding
or other appropriate means so that the identity of the prospective
tenant may not be determined from the disposed information alone or
in combination with other publicly available information.
   (c) The form of contract proposed to be used by a licensee to
effect compliance with this section shall be filed with the
department prior to use. Any modification of a form previously filed
with the department, including a change in the name or business
address of the licensee, shall also be filed prior to use. The
department shall withhold the issuance or renewal of a license until
the department has approved the contract. If a proposed modification
to a contract has not been approved or disapproved within 15 working
days of being filed with the department, the proposed modification
shall be deemed approved. If a proposed modification or contract
provision is disapproved, the department shall communicate that
disapproval in writing to the licensee within 15 working days of
being filed with the department, accompanied by a written
justification of why the modification or contract provision is
contrary to the requirements of this article.
   (d) Notwithstanding any other provision of law, a contract for
prepaid rental listing services executed in electronic form, and
signed in any electronic form that provides a reasonable method of
indicating that the individual whose signature is required authorized
the contract to be signed in electronic form, shall be valid to the
same extent as an executed written contract. Upon request by the
customer, the licensee shall deliver an executed paper copy to the
customer within five working days of receiving the request.
  SEC. 15.  Section 10167.13 of the Business and Professions Code is
amended to read:
   10167.13.   (a)    A prepaid rental listing
service license issued by the department shall be for a period of two
years. An application and fee for renewal filed with the department
before midnight of the last day of the period for which a previous
license was issued entitles the licensee to continue operating at all
locations specified in the previous license for which a renewal fee
is paid. 
   (b) On and after January 1, 2014, the department shall not issue a
prepaid rental listing service license.  
   (c) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date. 
  SEC. 16.  Section 10167.16 of the Business and Professions Code is
amended to read:
   10167.16.   (a)    A person or corporation
licensed pursuant to this article and not engaging in acts for which
a real estate license is required under Article 1 (commencing with
Section 10130) of Chapter 3 of Part 1 of Division 4, shall be
subject, in addition to the provisions of this article, to the
provisions of Chapter 1 (commencing with Section 10000) and Chapter 2
(commencing with Section 10050) of Part 1 of Division 4, and to
Sections 10450, 10452, 10453, and 10454. 
   (b) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date. 
  SEC. 17.  Section 10167.17 of the Business and Professions Code is
repealed. 
   10167.17.  The commissioner shall, by regulation, make prepaid
rental listing service licensees and applicants for prepaid rental
listing service licenses subject to the same provisions respecting
licensure as are applicable to real estate licenses under Sections
10151.5, 10156.5, 10156.6, 10156.7, 10200, and 10201.