Gov. Newsom’s latest emergency declarations, based on record-high temperatures and drought conditions, will keep California’s protections against rent gouging in place statewide until at least next month.
All told, Gov. Newsom has declared drought-related emergencies in 50 of California’s 58 counties — including nine counties named in an order this month and 41 named in orders in the spring. A state of emergency based on high temperatures covers the entire state.
The price-gouging limits triggered by the emergency proclamations have a variety of expiration dates. The rent increase limit triggered by the heat emergency is scheduled to expire Aug. 8, but limits based on other emergencies in specified counties will remain in effect for longer. For example, price gouging limits are slated to stay in effect through the end of the year based on fires in 2017 in Butte, Los Angeles, Mendocino, Napa, and Sonoma counties. All can be extended by the governor.
The governor’s proclamations of emergency trigger Penal Code Section 396, which makes it illegal to increase the price of many consumer goods and services, including that of rental housing, by more than 10% above pre-emergency levels. This limitation also applies to rent increases at turnover – and to any increase while the price-gouging restrictions remain in effect – even if those limits are extended for years.
Having property in those counties not named in an emergency proclamation, however, does not necessarily mean that rent increases over 10% are permissible, as enforcement of the state’s price-gouging ban does not stop at the county line.
California’s attorney general has interpreted the price-gouging law to apply anywhere in the state with an increased consumer demand resulting from the emergency. The law isn’t limited to rental housing. Earlier this month, for example, Walmart settled a price-gouging case in San Luis Obispo County after being accused of selling disinfecting wipes at inflated prices. Anyone convicted of violating the 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. Local ordinances may impose additional penalties.
Local governments may also declare local emergencies that trigger the penal code protections.