When you lose entire cities and thousands of homes in the state of CA due to wild fires, what safe guards does the state have in place for tenants and how could landlords find themselves with potential criminal charges if they aren’t aware?
When the rental housing demand is high and the supply is low, this creates the perfect storm for a rental property owner to capitalize on the increase of rent. But what about when demand is low due to the loss of homes in a natural disaster? While most owners are modest in their increases, investment properties are a business and are generally treated as such. Having said that…there is an anti-price gouging statute CURRENTLY IN EFFECT that renters and landlords alike should be aware of.
With there are several fires throughout the state there are many areas where a state of emergency is declared. It’s at this time that Penal Code Section 396 comes in to effect which disables landlords from raising the rent on their investment properties more than 10%. When does this statute apply? The statute applies immediately after the President of the United States, the Governor of California, or city or county executive officer declares a state of emergency resulting from any natural or manmade disaster, such as an earthquake, flood, fire, riot, or storm.
This statute comes in to effect during the time a state of emergency is declared in any specific area and generally remains in effect for 30 days. Then at the end of the 30-days if it is necessary to extend it, the state will extend it month by month on an as-needed basis. The state also has the option to increase that time frame as they see fit.
Due to the significant fires and loss of housing in 2019, the state put this statute into effect on an ongoing bases FOR THE ENTIRE STATE OF CA until the end of that year. This has also been put in to effect as a result of the pandemic so this applies to all landlords currently as well but not as a result of the fires.
What does this mean to you? This means that as a landlord, you are prohibited from raising the rent on your property whether occupied, vacant or soon to be vacant more than 10%.
What is the penalty if you choose to not comply or you have already increased the rent on your property more than 10%? Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violations are also subject to civil enforcement actions including civil penalties of up to $5,000 per violation, injunctive relief and mandatory restitution.
For FAQ about Penal Code 396, please visit: https://oag.ca.gov/consumers/pricegougingduringdisasters#9C
At Divine Properties, THIS is the reason that we believe that it’s so important to have the right company managing your investment properties. You want to ask yourself, is my property manager aware of the ever changing tenant/landlord laws and looking out for my best interests as an owner. At Divine Properties, we feel that it is our duty to keep you up to date on all of the ever changing laws and statutes that could and do affect you. We work directly with the top tenant/landlord attorneys in Sacramento and stay abreast of all constantly changing laws. We would love to talk to you about how we could help you manage your property to keep you from potentially feeling the heat of the state. Keep in mind, in a court of law the court believes ignorance of the law is no excuse. Please contact me so we can help you today, Divine Properties, 209.304.1222.