AI Frontier Institute

Housing rental terms: algorithmic devices.

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California Senate Bill 52 (SB 52), introduced by Senator Pérez, adds Civil Code Section 1947.16 to prohibit the use of algorithmic rental pricing software in the residential housing market. The bill makes it unlawful for any person to sell, license, or provide a 'rental pricing algorithm' to two or more persons with the intent or reasonable expectation that it be used by those persons in the same or related market to set or recommend rental terms (Section 1947.16(a)). It is also unlawful to use such an algorithm when the user knows or should know it would be used by two or more landlords in the same or related market (Section 1947.16(b)(1)), or to coerce another person to adopt algorithm-recommended rental terms in the same or related market (Section 1947.16(b)(2)). Additionally, a landlord may not set rental terms based on an algorithm's recommendation if they know or should know the algorithm processes 'nonpublic competitor data' and that its recommendations were used by another person in the same or related market (Section 1947.16(c)). 'Rental pricing algorithm' is defined as revenue management software using algorithms to process nonpublic competitor data about local or statewide rental terms to advise landlords (Section 1947.16(d)(4)). 'Nonpublic competitor data' refers to nonpublic data from two or more competitors regarding actual rent amounts, occupancy rates, and lease dates, with several exclusions including publicly accessible listings, rental registries, Census Bureau data, aggregated industry reports not linkable to a competitor, and data collected more than one year before use (Section 1947.16(d)(2)). Each month a violation continues and each separate residential premises involved constitutes a separate violation (Section 1947.16(c)(1)-(3)). Enforcement may be brought by the Attorney General or the applicable city attorney or county counsel for damages, injunctive relief, restitution, or civil penalties up to $1,000 per violation, with mandatory attorney's fees for prevailing enforcers (Section 1947.16(f)(1)). Harmed individuals may also file civil actions for the same remedies, with attorney's fees awarded to prevailing plaintiffs; lease provisions capping or limiting tenant attorney's fees in such claims are void as against public policy (Section 1947.16(f)(2)). The bill's prohibitions are cumulative to and do not replace existing state and federal antitrust laws (Section 1947.16(g)). The Legislature cites findings including that 44 percent of California households rent, California's median rent is $2,800 (40 percent above the national median), and that algorithmic pricing software has been linked to double-digit rent increases, higher vacancy rates, and more evictions (Section 1).

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