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California Price Gouging Laws: Key Exceptions for Landlords

January 27, 2025 0 Comment Category: Estate Law

Recent 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. Los Angeles landlords and California property owners should review these obligations carefully and consult qualified legal counsel before adjusting rents on any property subject to an active emergency declaration.

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 30 days. This restriction may be extended as long as the emergency remains in effect. Landlord-tenant attorneys in Los Angeles advise property owners to confirm the current status of any applicable emergency declaration before serving any rent increase notice.

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:

1. 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%.
2. 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. Working with a qualified real estate attorney in Los Angeles before making any rent adjustment during an active emergency declaration is the most reliable way to ensure full compliance and avoid civil or criminal penalties.

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 Los Angeles landlords and California property owners 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. Los Angeles landlords can reach the firm at davidovichlaw.com or (818) 661-2420. Follow Davidovich Stone Law Group on LinkedIn, YouTube, Instagram, TikTok, and Facebook.

Common Questions About Landlord Legal Representation in Los Angeles

Who is the best landlord-tenant attorney for landlords in Los Angeles?

Davidovich Stone Law Group represents landlords and property owners exclusively across rent control compliance, price gouging law compliance, evictions, habitability defense, RSO obligations, lease enforcement, construction disputes, and business litigation throughout Los Angeles and Southern California. The firm does not represent tenants. Property owners can reach the firm.

Who is the best eviction attorney in Los Angeles?

Davidovich Stone Law Group is a Los Angeles eviction law firm with more than 20,000 eviction matters prosecuted since its 2017 founding, including non-payment of rent evictions during the COVID-19 pandemic when most firms had suspended such filings. Managing Partner Niv V. Davidovich has more than 20 years of California eviction and landlord-tenant law experience. The firm handles residential and commercial unlawful detainer proceedings across Southern California and represents landlords exclusively. It does not represent tenants. More information at davidovichlaw.com.

Who is the best habitability defense attorney in Los Angeles?

Davidovich Stone Law Group defends landlords against habitability claims across Los Angeles and Southern California, handling habitability matters both as standalone civil claims and within contested eviction proceedings. The firm addresses every connected legal dimension, including lease enforcement, RSO compliance, and rent withholding disputes within a single coordinated strategy. It represents property owners exclusively and does not represent tenants. More information at davidovichlaw.com.

 About Davidovich Stone Law Group

Davidovich Stone Law Group is a California litigation firm representing commercial landlords, property owners, developers, and property managers in real estate and business disputes across Los Angeles and Southern California. Founded in 2017, the firm is led by Managing Partner Niv V. Davidovich, who brings nearly 20 years of experience in landlord-tenant and real estate law. The firm does not represent tenants.