20250SB__005294AMD INTRODUCED 2024-12-20 AMENDED_SENATE 2025-04-08 AMENDED_SENATE 2025-04-24 AMENDED_ASSEMBLY 2025-06-26 AMENDED_ASSEMBLY 2025-07-08 AMENDED_ASSEMBLY 2025-07-17 2025 SB AMD Introduced by Senator Pérez (Principal coauthors: Assembly Members Bryan and Lee) (Coauthor: Senator Arreguín) (Coauthors: Assembly Members Boerner, Bonta, and Lowenthal) LEAD_AUTHOR SENATE Pérez PRINCIPAL_COAUTHOR ASSEMBLY Bryan PRINCIPAL_COAUTHOR ASSEMBLY Lee COAUTHOR SENATE Arreguín <caml:Contribution>COAUTHOR</caml:Contribution><caml:House>ASSEMBLY</caml:House><caml:Name>Boerner</caml:Name></caml:Legislator>"?> <caml:Contribution>COAUTHOR</caml:Contribution><caml:House>ASSEMBLY</caml:House><caml:Name>Bonta</caml:Name></caml:Legislator>"?> COAUTHOR ASSEMBLY Boerner COAUTHOR ASSEMBLY Bonta COAUTHOR ASSEMBLY Lowenthal

An act to add

Section 1947.16 to the Civil Code, relating to housing. housing Housing rental terms: algorithmic devices. Existing law governs the hiring of residential dwelling units and requires a landlord to provide specified notice to tenants prior to an increase in rent. Existing law, the Costa-Hawkins Rental Housing Act, prescribes statewide limits on the application of local rent control with regard to certain properties.

That act, among other things, authorizes an owner of residential real property to establish the initial and all subsequent rental rates for a dwelling or unit that meets specified criteria, subject to certain limitations. This bill would make it unlawful for any person to sell, license, or otherwise provide to or more persons a rental pricing algorithm, as defined, with the intent or reasonable expectation that it be used by or more persons, as specified, to set rental terms, as defined, for residential premises.

The bill would make it unlawful for a person to set or adopt rental terms based on the recommendation of a rental pricing algorithm if the person knows or should know that the rental pricing algorithm processes nonpublic competitor data, as defined, to set rental terms and that the pricing algorithm or the recommendation of the algorithm was used by another person to set or recommend a rental term for residential premises in the same market.

Existing law establishes the Attorney General as the head of the Department of Justice, with charge of all legal matters in which the state is interested, except as specified. Existing law imposes various requirements on the Attorney General related to consumer protection, including, among others, the supervision of charitable trusts and the enforcement of antitrust laws.

This bill would authorize the Attorney General, and the city attorney or county counsel in the jurisdiction in which the rental unit is located, to file a civil action for a violation of the bill, as specified, and would authorize a person who is harmed by a violation of the bill to file a civil action, as specified. MAJORITY NO YES NO NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares all of the following: (

a) Renters make up a larger share of households in California at percent, compared to the United States average of percent, and California has a higher percentage of renters compared to any other state other than New York, which has a rate of percent. (

b) California’s median rent is two thousand eight hundred dollars ($2,800), which is percent higher than the national median. In the City of Los Angeles, the median rent is two thousand eight hundred dollars ($2,800), while in the City and County of San Francisco, the median rent is three thousand two hundred eighty-five dollars ($3,285). (

c) Recently, algorithmic pricing software has disrupted rental housing markets in cities nationwide. (

d) Algorithmic pricing technology uses proprietary lease information to gather and share rent data, setting prices that can inflate rents and vacancy rates. The public sharing of vast amounts of proprietary data can harm renters by calculating and recommending rent and occupancy levels. (

e) Algorithmic pricing software has led to double-digit rent increases, higher vacancy rates, and more evictions, distorting markets by causing both rents and vacancy rates to rise simultaneously. (

f) Often used by large corporate landlords, algorithmic pricing software promotes the consolidation of corporate and private equity ownership of rental housing. This occurs at the expense of landlords, both large and small, who adhere to standard practices, thereby suppressing competition and creating an unfair market advantage. (

g) Investigations have been launched recently into the use of algorithmic pricing software. California and seven other states joined the United States Department of Justice’s antitrust lawsuit, alleging that an algorithmic intermediary collects, combines, and exploits landlords’ competitively sensitive information, causing renters to pay inflated prices. (

h) Local governments in California have introduced ordinances to ban the use of algorithmic rent pricing software to protect renters from potential market manipulations.

SEC.

Section 1947.16 is added to the Civil Code , to read: 1947.16. (

a) It is unlawful for any person to sell, license, or otherwise provide to two or more persons a rental pricing algorithm with the intent or reasonable expectation that it be used by two or more persons in the same market to set or recommend rental terms for residential premises. (b)<xhtml:span class="EnSpace"/>It is unlawful for any person to use a rental pricing algorithm for residential premises if either of the following applies:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>The person knows or should know that the rental pricing algorithm would be used to set rental terms for a residential premises by two or more landlords in the same market or a related market.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>The person coerces any other person to set or adopt a recommended rental terms for a residential premises located in the same market or a related market.</xhtml:p><xhtml:p>(c)</xhtml:p>"?> (

b) It is unlawful for a person to set or adopt rental terms based on the recommendation of a rental pricing algorithm if the person knows or should know that the rental pricing algorithm processes nonpublic competitor data to set rental terms and that the pricing algorithm or the recommendation of the pricing algorithm was used by another person to set or recommend a rental term for a residential premises in the same market. (d)</xhtml:p>"?> (c)

(1) For a person who uses a rental pricing algorithm in violation of this section, each month that a violation exists or continues shall constitute a separate and distinct violation.

(2) Each month that a person sells, licenses, or otherwise provides the rental pricing algorithm in violation of this

section shall constitute a separate and distinct violation.

(3) Each separate residential premises for which the rental pricing algorithm is sold, licensed, provided, or used in violation of this

section shall constitute a separate and distinct violation. (e)</xhtml:p>"?> (

d) The following

definitions apply for purposes of this section: (1) “Antitrust laws” has the same meaning as defined in the Clayton Act (15 U.S.C.

Sec. 12), and includes

Section of Title of the United States Code, and

Part 2 (commencing with

Section 16600) of Division of the Business and Professions Code, including provisions commonly known as the Cartwright Act. (2) (A) “Nonpublic competitor data” means nonpublic data derived from two or more competitors, directly or indirectly, regarding information about actual rental amounts charged to a tenant, occupancy rates, and lease start and end dates that is obtained through nonpublic means. (B) “Nonpublic competitor data” does not include any of the following: (

i) Information regarding actual rent amounts charged to a tenant, occupancy rates, and lease start and end dates that are obtained from publicly accessible sources, including, but not limited to: (

I) Advertisements of available rental properties, including listings published on internet websites maintained by a property owner or a third party. (II) Rental registries maintained by a city, county, city and county, or state or federal agency. (ii) Information obtained from public records subject to disclosure pursuant to the California Public Records Act (Division 10 (commencing with

Section 7920.000) of Title of the Government Code) or the federal Freedom of Information Act (5 U.S.C.

Sec. 552). (iii) Information obtained from the United States Census Bureau or State Census Data Center. (iv) Aggregated information distributed, reported, or otherwise communicated in a way that is not reasonably linkable to a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results, provided that such aggregated information is not derived from sources which may be considered nonpublic competitor data. (

v) Other forums, including internet websites, in which information about actual rent amounts charged to a tenant, occupancy rates, or lease start and end dates is equally accessible to tenants or prospective tenants and landlords. (vi) Data processed by the rental pricing algorithm collected more than one year before the use or distribution of the rental pricing algorithm. (vii) Listings, advertisements or other information regarding rental properties on a multiple listing service, as defined in

Section 1087. (3) “Nonpublic data” means information that is not widely available or easily accessible to the public. (4) “Rental pricing algorithm” means a service or product, commonly known as revenue management software, that uses one or more algorithms to perform calculations of nonpublic competitor data concerning local rental terms for the purpose of advising a landlord on setting or recommending rental terms for residential premises. (A) “Rental pricing algorithm” includes a product that incorporates a rental pricing algorithm. (B) “Rental pricing algorithm” does not include either of the following: (

i) A report that publishes publicly available rental data in an aggregated manner but does not recommend rental rates or occupancy levels for future leases. (ii) A product used for the purposes of establishing rent or income limits in accordance with the affordable housing program guidelines of a local, state, or federal program. (5) “Rental term” means rental rate, lease term, or occupancy level. (

e) For purposes of this section, a parent entity and its wholly owned subsidiaries shall be considered one person. (f)

(1) The Attorney General, in the name of the people of the State of California, and the city attorney or county counsel in the jurisdiction in which the rental unit is located, in the name of the city or county, may file a civil action for a violation of this

section for damages, injunctive relief, restitution, or civil penalties of up to one thousand dollars ($1,000) per violation, or any combination of those remedies. The court shall award reasonable attorney’s fees and costs to the Attorney General, city attorney, or county counsel, as applicable, if they are the prevailing party in the action.

(2) A person who is harmed by a violation of this

section may file a civil action for damages, injunctive relief, or civil penalties of up to one thousand dollars ($1,000) per violation, or any combination of those remedies. The court shall award reasonable attorney’s fees and costs to the prevailing plaintiff in the action. A lease provision that limits a tenant from recovering attorney’s fees or that caps the tenant’s fee award shall be void as contrary to public policy in a tenant’s claim against their landlord under this section. (g)

(1) Nothing in this

section shall impair or limit the applicability of antitrust laws. The prohibitions described herein apply in addition to, and not in lieu of, any prohibitions described in applicable state or federal antitrust laws.

(2) The remedies and penalties provided by this

section are cumulative to each other and the remedies or penalties available under all other laws of this state.