Hiring of real property: portable screening reports: disclosure of application materials., the official text

An act to add Section 1950.3 to, and to repeal and add Section 1950.1 of, the Civil Code, and to add Section 50514.7 to the Health and Safety Code, relating to tenancy.

LEGISLATIVE COUNSEL'S DIGEST

Existing law regulates the terms and conditions of residential tenancies, including imposing specified requirements on a security for a rental agreement for residential property. Existing law defines security as any payment, fee, deposit, or charge that is imposed to reimburse the landlord for costs associated with processing a new tenant or that is imposed as an advance payment of rent, used for any purpose, as provided. Existing law authorizes a landlord, or the landlord’s agent, who receives a request to rent a residential property from an applicant to charge that applicant an application screening fee to cover the costs of obtaining information about the applicant, as provided. Existing law authorizes a landlord to accept a reusable tenant screening report, as provided, and prohibits the landlord from charging the applicant specified fees, including an application screening fee, if the landlord accepts the reusable tenant screening report. Existing law defines a reusable tenant screening report as a consumer report that, among other things, was prepared within the previous 30 days by a consumer reporting agency at the request and expense of the applicant and is available to the landlord at no cost to access or use.
Existing law defines “unfair competition” to include any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising and subjects a person who engages, has engaged, or proposes to engage in unfair competition to various remedies and penalties.
This bill would repeal the provisions authorizing a landlord to accept reusable tenant screening reports and would, instead, require a landlord to accept from a prospective tenant a portable screening report prepared by a tenant screening company approved by the Department of Housing and Community Development, as provided. The bill would define various terms for these purposes, including defining a “portable screening report” as a consumer report prepared by a tenant screening company that, among other things, is dated within 45 days before submission to the landlord and costs the prospective tenant no more than $45. The bill would prohibit a landlord from, among other things, charging the prospective tenant specified fees associated with processing the rental application, including an application fee, or requiring the prospective tenant to undergo or pay for an additional background check, credit check, or tenant screening, if the prospective tenant provides a portable screening report under these provisions. The bill would require a landlord to advise a prospective tenant in an advertisement for a dwelling unit and before accepting any application materials for a dwelling unit on certain obligations of the landlord regarding portable screening reports. If the landlord rejects an application after reviewing the portable screening report provided by the tenant under these provisions, the bill would require a landlord to provide the prospective tenant with the specific reasons for rejection in writing, as provided. The bill would require the Department of Housing and Community Development to post on its internet website information for prospective tenants about these provisions.
This bill would also require a landlord to provide in writing a complete and itemized disclosure of all application requirements to the prospective tenant before accepting any application materials. The bill would require that the disclosure, among other things, be provided in a clear, plain-language, and standardized format, as prescribed by the Department of Housing and Community Development. The bill would prohibit a landlord from adding, modifying, or requesting additional application requirements from a prospective tenant, except as provided, and prohibit a landlord from denying an application based a prospective tenant’s failure to provide an application requirement that was not disclosed. The bill would specify that a violation of these provisions is an act of unfair competition, as described above.
This bill would make a landlord who violates either of the above-described provisions liable to a prospective tenant in a civil action, as provided. The bill would require a prospective tenant to provide a landlord with an opportunity to cure the violation before bringing a civil action, as provided. The bill would additionally authorize the Attorney General to bring a civil action to seek specified remedies based on violations of its provisions. The bill would provide that these remedies are in addition to any other remedies.
This bill would declare that its provisions are severable.

The people of the State of California do enact as follows:

SECTION 1.
Section 1950.1 of the Civil Code is repealed.

SEC. 2.
Section 1950.1 is added to the Civil Code, to read:
1950.1.
(a) For the purposes of this section, the following terms have the following meanings:
(1) “Application requirements” means any information, documentation, fees, deposits, or other materials that a landlord requires from a prospective tenant as part of the process of considering their application for tenancy.
(2) “Consumer report” has the meaning set forth in Section 1681a of Title 15 of the United States Code.
(3) “Portable screening report” means a consumer report prepared by a tenant screening company, which may include information about their current ability to pay that meets all of the following criteria:
(A) Be dated within 45 days of submission to the landlord.
(B) Comply with all applicable federal, state, and local laws governing the content of consumer reports and tenant screening reports.
(C) Be obtained with proper written authorization from the prospective tenant.
(D) Cost the prospective tenant no more than forty-five dollars ($45).
(4) “Tenant screening company” means a consumer reporting agency, as defined in Section 1681a of Title 15 of the United States Code, that compiles and provides portable screening reports to landlords or prospective tenants.
(b) A landlord shall accept from a prospective tenant a portable screening report prepared by a tenant screening company approved by the Department of Housing and Community Development pursuant to subdivision (g).
(c) If a prospective tenant provides a portable screening report pursuant to subdivision (b), the landlord shall not do any of the following:
(1) Notwithstanding Section 1950.6, charge the prospective tenant any of the following:
(A) An application fee.
(B) A screening fee.
(C) Any fee to access, review, or process the portable screening report.
(D) Any other fee associated with the rental application.
(2) Require a prospective tenant to pay for or undergo an additional background check, credit check, or tenant screening.
(3) Reject an application based solely on either of the following:
(A) The applicant’s provision of a portable screening report pursuant to subdivision (b) rather than submitting to the landlord’s preferred screening process.
(B) A score, recommendation, or rating generated by an automated system, algorithmic tool, or artificial intelligence that does not meet either of the following criteria:
(i) Derived from factors empirically related to the likelihood that an applicant will fulfill the obligations of a tenancy.
(ii) Tested periodically to ensure it does not produce a disparate impact on members of a protected class under applicable fair housing law.
(d) A landlord shall advise a prospective tenant in an advertisement for a dwelling unit and before accepting any application materials for a dwelling unit of both of the following:
(1) The landlord is required to accept portable screening reports provided by the prospective tenant pursuant to subdivision (b).
(2) The landlord is prohibited from charging a prospective tenant, who provides a portable screening report pursuant to subdivision (b), any fee described in paragraph (1) of subdivision (c).
(e) If a landlord rejects an application after reviewing a portable screening report provided by the prospective tenant pursuant to subdivision (b), the landlord shall, within three business days, provide the prospective tenant with the specific reasons for rejection in writing that complies with all of the following:
(1) Identify the specific criteria that were not met.
(2) Comply with the adverse action notice requirements specified in Section 1681m of Title 15 of the United States Code.
(3) Comply with existing, applicable fair housing and consumer protection laws.
(4) Inform the prospective tenant of their right to dispute inaccurate information that was used.
(f) A portable screening report may be used for multiple rental applications during its 45-day validity period.
(g) The Department of Housing and Community Development shall establish and maintain a publicly accessible list of approved tenant screening companies that prepare portable screening reports, pursuant to both of the following:
(1) The Department of Housing and Community Development shall review and update the list at least annually. The Department of Housing and Community Development shall remove from the list any tenant screening company that does not prepare a portable screening report that meets the requirements described in paragraph (3) of subdivision (a).
(2) The Department of Housing and Community Development shall establish procedures for tenant screening companies to apply for approval and inclusion on the list.
(h) (1) A landlord who violates this section shall be liable to the prospective tenant in a civil action for any of the following:
(A) Actual damages, including, but not limited to, application fees paid, economic harm, and costs incurred for seeking alternative housing.
(B) Statutory damages of two thousand five hundred dollars ($2,500) per violation.
(C) Reasonable attorney’s fees and costs.
(D) Any other relief the court deems appropriate, including injunctive relief.
(2) (A) Subject to subparagraph (C), before a prospective tenant brings a civil action pursuant to paragraph (1), the prospective tenant shall give notice of the violation to the landlord, with an opportunity to cure the violation, that includes all of the following:
(i) Identifies the specific provision or provisions of this section that the landlord allegedly violated.
(ii) Describes the facts giving rise to the alleged violation.
(iii) States that the landlord has seven calendar days to cure the violation.
(B) The landlord shall not be liable to the prospective tenant for a violation of this section if the landlord does both of the following:
(i) Cures the violation within seven days of receiving the notice pursuant to subparagraph (A).
(ii) Pays the prospective tenant a penalty of fifty dollars ($50).
(C) This paragraph applies only to a landlord’s first violation of this section with respect to a particular prospective tenant. This paragraph shall not apply to subsequent violations by the same landlord against the same prospective tenant, in which case the landlord shall be immediately subject to full liability pursuant to paragraph (1).
(i) The Attorney General may bring a civil action to seek any of the following based on violations of this section:
(1) Injunctive relief.
(2) A civil penalty in an amount of up to two thousand five hundred dollars ($2,500) per violation.
(3) Restitution on behalf of affected prospective tenants.
(4) Any other appropriate relief.
(j) The remedies provided by this section shall be in addition to any other remedies provided by law.

SEC. 3.
Section 1950.3 is added to the Civil Code, to read:
1950.3.
(a) For the purposes of this section, “application requirements” means any information, documentation, fees, deposits, or other materials that a landlord requires from a prospective tenant as part of the process of considering their application for tenancy.
(b) Before accepting any application materials, the landlord shall provide in writing a complete and itemized disclosure of all application requirements to the prospective tenant. The disclosure shall include, but is not limited to, all of the following:
(1) All required documentation, including, but not limited to, proof of income, employment verification, references, and government-issued identification.
(2) All minimum qualification criteria, including income thresholds and rental history requirements.
(3) Any deposit required upon approval.
(4) Any other terms, conditions, or criteria that may affect whether an application is approved.
(5) The anticipated timeline for application processing and notification of a decision.
(c) The Department of Housing and Community Development shall prepare a clear, plain-language, and standardized format for the disclosure required pursuant to subdivision (b).
(d) The disclosures pursuant to subdivision (b) shall comply with all of the following:
(1) Be provided in a clear, plain-language, and standardized format, as prescribed by the Department of Housing and Community Development pursuant to subdivision (c).
(2) Be made available before the prospective tenant submits any portion of an application.
(3) Be publicly posted wherever the dwelling unit is advertised, including online listings.
(4) Be available in the same languages in which the landlord advertises the dwelling unit.
(e) After providing the disclosure pursuant to subdivision (b), a landlord shall not add, modify, or request additional application requirements from a prospective tenant, except in either of the following circumstances:
(1) The prospective tenant provided materially false or incomplete information in their application.
(2) The landlord discovers a bona fide error in the initial disclosure, immediately notifies all affected prospective tenants in writing, and offers each the option to withdraw their application with a full refund of any fees paid.
(f) A landlord shall not deny an application based on a prospective tenant’s failure to provide an application requirement that was not disclosed pursuant to subdivision (b).
(g) In addition to the remedies provided in subdivisions (i) and (j), a violation of this section shall constitute an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code.
(h) The purpose of this section is to enable a prospective tenant to make a fully informed decision about whether to apply before incurring any cost or obligation. Any ambiguity in a disclosure pursuant to subdivision (b) shall be construed in favor of the prospective tenant.
(i) (1) A landlord who violates this section shall be liable to the prospective tenant in a civil action for any of the following:
(A) Actual damages, including, but not limited to, application fees paid, economic harm, and costs incurred for seeking alternative housing.
(B) Statutory damages of two thousand five hundred dollars ($2,500) per violation.
(C) Reasonable attorney’s fees and costs.
(D) Any other relief the court deems appropriate, including injunctive relief.
(2) (A) Subject to subparagraph (C), before a prospective tenant brings a civil action pursuant to paragraph (1), the prospective tenant shall give notice of the violation to the landlord, with an opportunity to cure the violation, that includes all of the following:
(i) Identifies the specific provision or provisions of this section that the landlord allegedly violated.
(ii) Describes the facts giving rise to the alleged violation.
(iii) States that the landlord has seven calendar days to cure the violation.
(B) The landlord shall not be liable to the prospective tenant for a violation of this section if the landlord does both of the following:
(i) Cures the violation within seven days of receiving the notice pursuant to subparagraph (A).
(ii) Pays the prospective tenant a penalty of fifty dollars ($50).
(C) This paragraph applies only to a landlord’s first violation of this section with respect to a particular prospective tenant. This paragraph shall not apply to subsequent violations by the same landlord against the same prospective tenant, in which case the landlord shall be immediately subject to full liability pursuant to paragraph (1).
(j) The Attorney General may bring a civil action to seek any of the following based on violations of this section:
(1) Injunctive relief.
(2) A civil penalty of up to two thousand five hundred dollars ($2,500) per violation.
(3) Restitution on behalf of affected prospective tenants.
(4) Any other appropriate relief.
(k) The remedies provided by this section shall be in addition to any other remedies provided by law.

SEC. 4.
Section 50514.7 is added to the Health and Safety Code, to read:
50514.7.
The department shall post on its internet website information for prospective tenants about the requirements of Section 1950.1 of the Civil Code.

SEC. 5.
The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.