Anti-price gouging law triggered again by wildfires in Southern California

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Rent increases limited to 10 percent while protections in effect

With wildfires continuing to spread in Southern California, Gov. Jerry Brown has declared states of emergency in San Diego and Santa Barbara counties. The declarations on Thursday come just days after the fires prompted Brown to declare emergencies in the counties of Los Angeles and Ventura.

The governor’s declarations once again trigger the state’s anti-price gouging law. When activated, Penal Code Section 396 prohibits raising the price of many consumer goods and services, including that of rental housing, by more than 10 percent after the emergency has been declared.

The newly declared states of emergency come after wildfires prompted emergency declarations earlier this fall in Orange County and the Wine Country region. Those earlier states of emergency run until April.

The implications on price-gouging reach far beyond the wildfire-ravaged counties.

The California Attorney General’s Office has interpreted the anti-price gouging restrictions to apply anywhere with an increased consumer demand resulting from the emergency. Anyone convicted of violating the statewide anti-price-gouging law can face a year in county jail, a fine of up to $10,000, or both, as well as civil penalties and penalties related to local ordinances. In Sonoma County, six landlords have been charged with price gouging, and with 40 cases under investigation, prosecutors expect to file more charges, the Press Democrat reported.

Because the price-gouging law does not set clear parameters for determining where the price controls apply, rent increases exceeding 10 percent — anywhere in California — may constitute price gouging while emergency declarations are in effect.

In Ventura and Santa Barbara counties, the states of emergency will continue until June 4; in San Diego County, it will last until June 7. The normal time frame for such declaration is 30 days, however, the governor has extended these to five months.

At this point, Brown has not extended the 30-day state of emergency in Los Angeles County. Based on the Attorney General Office’s interpretation of the anti-price gouging law, however, price restrictions there will likely remain in place well into 2018, based on ongoing states of emergency in adjacent counties and elsewhere in California.

In addition to the states of emergency declared by the governor, President Trump on Friday issued a presidential declaration of emergency for California. The declaration, made at Brown’s request, specifically mentions the counties of Los Angeles, Ventura, San Diego, Santa Barbara and Riverside.

It is not yet clear what impact, if any, the president’s declarations will have on price gouging restrictions.

CAA continues to urge its members to refrain from any rent increases during these states of emergency. Where rent increases are unavoidable, owners should proceed with caution. CAA members who unsure whether price controls apply to their property should seek the advice of an attorney before implementing any increase of more than 10 percent.

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Tagged: Los AngelesOrange County

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