Federal and State legislation is targeting deceptive fee practices across industries, the rental housing industry being one of those affected. This includes the White House proposal for a Renters Bill of Rights (discussed further below) and weighing in heavily on the discussion of Junk Fees with the FTC’s proposed rule on “Unfair and Deceptive Fees”.

At the state level these measures are taken even further with California being among the loudest and most active. Additional states include Minnesota SF 2909 (discussed in our Q3 Compliance & Legislation Update blog post), Virginia HB 967 and HB 1519, and pending legislation with Illinois HB 4629.

Below we discuss the active and pending state level legislation in California and Virginia, as well as the federal level legislation as it applies to housing and the important legislative actions taking place in 2024.

California Senate Bill 478

Known as the “Honest Pricing Law” passed Oct 7, 2023 and primarily targeting California’s restaurant and retail industry, Senate Bill 478 prohibits the use of “drip pricing”, a practice in which companies advertise only a portion of what a customer would actually pay for a certain product or service. The law does not ban companies from setting a price but it does regulate how companies can advertise or display the cost. What's more, beginning on July 1, 2024 this bill would make unlawful advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction, as specified, with some exceptions.

Although not specifically targeting lease agreements in housing, the bill does have specific requirements housing providers should pay particular attention to. Existing law requires any solicitation to enter into a lease contract that includes the amount of any payment to also disclose "Plus tax and license" or a substantially similar statement - if amounts due for use tax, license fees, and registration fees are not included in the payments.

Senate Bill 478 is unique in another way in which a consumer can bring suit against a business directly if they claim they’ve been harmed due to a business’s violation of the law. The damages can be brought on an individual and class basis of at least $1000 per violation, plus attorney fees.

California AG guidance

On May 8, 2024 the California Attorney General Rob Bonta released guidance for businesses in California with the upcoming effective date of July 1, 2024 for SB 478. His direction is focused on the new wave of transparency fee laws working to “empower consumers by arming them with accurate information upfront, so that they can compare prices between merchants, and create an equitable marketplace for businesses to compete.” He goes on to say, “The law is simple: the price you see is the price you pay. Laws work when everyone can comply. I am pleased that we can offer this guidance to help facilitate compliance with the law and make a more fair and level marketplace for businesses and consumers."

Virginia HB 967 & HB 1519

The Virginia general assembly proposed two bills that ultimately required revision before being signed by governor Glen Youngkin in the 2024 General Session. Both HB 967 and HB 1519 were returned for revision, including requiring HB 1519 not taking effect unless reenacted in the 2025 session. Additional changes to HB 967 before signature included removal of a provision around font requirements and a removal of provisions requirements of adding fees to a lease during the period of the lease.



Additional requirements of HB 1519 (if enacted in 2025) include amendments to the existing Code of Virginia (Article 3 Chapter 18) regarding tenant agreement requirements. Examples of these changes include prohibiting rental agreements from including agreement to pay landlord’s attorney fees, agreement to payment of security deposit, insurance premiums for damage insurance, and insurance premiums for renter’s insurance prior to the commencement of the tenancy (which exceed the amount of two month’s periodic rent), etc.

The State Corporation Commission has been instructed to report back to the state assembly by December 2024 the potential effects of the new policy. After which the Virginia state assembly will reconvene in 2025 to vote on reenacting HB 1519.

HB 967 was passed on April 27 and includes the language, “A landlord shall provide, beginning on the first page of the written rental agreement, a description of any rent and fees to be charged to the tenant in addition to the periodic rent”.

Additionally HB 967 requires the statement: “No fee shall be collected unless it is listed below or incorporated into this agreement by way of separate addendum after execution of this rental agreement”. This must be included “immediately above the list of fees” on the rental agreement.

Particular attention should be paid to these two legislative actions in Virginia and we strongly recommend review with counsel to assure compliance.

Federal progress and considerations

On October 11, 2023, the FTC announced a proposed rule to prohibit hidden and junk fees for consumers, defined as costs that are not disclosed to customers before they begin a purchase. This falls on the heels of a January 2023 announcement by the Biden Administration of a proposed "Renters Bill of Rights". However, the opening disclaimer of the proposed Bill of Rights acknowledges that it is non-binding and does not constitute policy, but the various agencies referenced within will have the power to enact these items. Some of the federal proposals are quite clear with regards to the course of action. Elsewhere, there are statements made that are more subtle, potentially forecasting a future direction. It should also be noted that this document largely has federal policy in mind, but in many instances, the real movement being seen is at the state and local government level, and they could act on these proposals more swiftly.

Entrata’s Response

Entrata encourages customers to err on the side of transparency regarding the disclosure of fees and to abide by any regulations that their properties are subject to, particularly in states with enacted legislation, like Virginia and California.

Entrata provides features and solutions that allow our customers to be conformant to all current regulations. These include: customer ability to configure pricing to designate how rent, deposits, and fees are calculated and when they are charged to prospective and current residents; customers ability to set their advertised rent amount to include all non-optional fees as configured in their Entrata property settings; and providing customers the ability to disclose fees in their leasing agreements.

Stay tuned for more information on future releases from Entrata to help customers meet their compliance needs for fee transparency.

Summary

Currently there are over 60 bills in play related to housing across the country at the state level. These bills do not focus only on fees but cover tenant screening, rent increases, security deposit requirements, to name only a few.



If you have any questions regarding what has been discussed in this article please contact your Entrata representative or the Entrata support team and we will be happy to assist.