By Ellen D. Gregory
The past couple of years have brought deadly wildfires to populated areas of both Southern and Northern California, further exacerbating the already stressed rental market. Most Californians are aware of the recent state-wide rent control bill signed into law on October 8, 2019. However, many are not aware of the separate laws that prohibits landlord price-gouging after a state of emergency such as a wildfire.
As of the publication date of this article, there are seven counties still under a state of emergency as a result of wildfires, including Sonoma County (2017 wildfires), Butte (2018 Camp fire), and Santa Barbara and Ventura (2017 and 2019 wildfires). If you are a landlord or a tenant in any of these counties, you should be aware of the prohibitions against evictions and rent increases. Unfortunately, it is not a simple matter of looking at the law and determining your obligations. The applicable law (Penal Code §396) refers back to federal, state/gubernatorial, and local state-of-emergency declarations, so you need to know both the law itself and whether or not your city or county is under a state of emergency.
The 2017 Tubbs Fire resulted in an emergency declaration for Sonoma County, which was subsequently extended multiple times, and is currently set to expire on December 31st of this year. Butte County (Camp Fire) is also under a continuing state of emergency that is set to expire on November 8th of this year. However, it is likely that declaration will be extended, as well. If you are uncertain about whether or not your area is under an emergency declaration, go to the Governor’s Office of Emergency Services webpage. The current states of emergency and expiration dates for state-level (gubernatorial) declarations are listed here: https://www.caloes.ca.gov/cal-oes-divisions/legal-affairs/price-gouging. To find local declarations, you’ll need to contact your city or county emergency officials.
So, once you’ve determined that your rental unit is located in an area that is under an emergency declaration, then what? The law states that a person, business, or other entity cannot increase the rental price charged for housing by more than 10%. Neither can a landlord evict a tenant and then re-rent, or offer the unit, for more than the amount the evicted tenant could have been charged. This is a criminal statute, meaning a landlord that violates this prohibition is subject to fines and/or imprisonment. In this instance, the maximum penalty is a $10,000 fine or up to one year in prison or both.
Issues of proof arise in the eviction scenario because the statute is technically not violated until the landlord actually re-rents the unit or offers it for the higher amount. In other words, the tenant cannot raise the statute as a defense in an eviction or unlawful detainer proceeding unless the tenant has strong evidence that the landlord intends to raise the rent for the next tenant. However, a tenant can raise the new rent control law (AB 1482) as a defense even if he or she cannot prove the elements of the criminal statute.
Local ordinances also come into play. For example, Santa Rosa has an ordinance that became effective in July 2019 that prohibits a landlord from evicting a tenant and re-renting, or offering the unit for rent, for any price that is higher than the same unit rented for as of October 2017 (the date of the Tubbs fire.) This in most cases will be more stringent than the state law, so be sure to find out what your city or county provides, in addition to being familiar with the state law.
To summarize, landlords in areas that are or may be subject to emergency declarations need to be aware of the prohibitions against price-gouging. Even if you have no intention of gouging current or prospective tenants, you could unintentionally violate the law and open yourself up to criminal liability.