LATEST IN THE LAW


California Price Gouging Laws: Key Exceptions for Landlords
January 27, 2025 0 Comment Category: Estate LawRecent wildfires have brought renewed attention to California’s price gouging laws, particularly in Los Angeles County. Penal Code 396(e) imposes strict limits on rental price increases during a declared state of emergency, creating significant implications for landlords.
What Does Penal Code 396(e) State?
When a state of emergency is declared by the President, Governor, or local officials, rent increases are capped at no more than 10% for a 30-day period. This restriction may be extended as long as the emergency remains in effect.
Key provisions include:
- Rental Increase Cap: Rent increases above 10% are prohibited unless specific exceptions apply.
- Exceptions for Repairs: Rent increases tied to significant repairs or improvements beyond routine maintenance may exceed the cap if properly amortized over the lease term.
- Definition of Housing: The law applies to rental agreements with an initial lease term of one year or less.
Violations of this law can result in severe penalties, including fines and legal action.
Key Exceptions to Price Gouging Laws
While the 10% cap is strictly enforced, two critical exceptions can benefit landlords:
- Amortized Repairs or Improvements: If a rent increase reflects costs for substantial repairs or upgrades that extend beyond routine maintenance, and those costs are spread over the lease term, the increase may exceed 10%.
- Lease Term of Over One Year: The law’s definition of “housing” excludes rental agreements with an initial lease term longer than one year. New leases that specify a term of 12 months and one day (or longer) are not subject to the statute, allowing landlords to set any lawful rate. This exemption applies only to new leases, and advertisements must clearly state the lease term requirements.
What Landlords Should Do Now
If you’re a landlord operating under a declared state of emergency, it’s essential to:
- Review existing leases to determine if exceptions apply.
- Clearly communicate lease terms exceeding one year in advertisements for new rentals.
- Ensure any rent increases above 10% are backed by documented repair or improvement costs.
How Davidovich Stone Law Group Can Help
Understanding California’s price gouging laws and their exceptions can be challenging. At Davidovich Stone Law Group, we help landlords navigate these complexities by:
- Reviewing rental agreements for compliance.
- Advising on strategies for lease term adjustments or rent increases.
- Providing guidance on documentation for repair-related rent adjustments.
Stay Informed and Protected
We are monitoring these laws closely and are here to assist landlords in adapting to regulatory changes. Schedule a consultation with our office today to learn more about how these rules impact your properties.
Your bottom line is our top priority.
leave A comment