On January 7, 2025, Governor Newsom declared a State of Emergency in Los Angeles and Ventura Counties due to the devastating fires. On that same day, Mayor Bass declared a State of Emergency in the City of Los Angeles. Because of the this, there is currently a cap on the amount of money a landlord can charge a tenant to rent their property. This means that if a landlord charges or even advertises for more than the allowable amount in the affected counties they are price gouging.
Implications for Real Estate Agents and Property Managers
If you are a real estate agent, real estate broker, or property manager who handles rentals, it is important for you to have a deep understanding of price gouging laws, their consequences, and when they are in effect. If an agent or property manager assists a landlord in charging more than they are entitled to charge, the agent or property manager can be found guilty of aiding and abetting a landlord in price gouging and also liable themselves for violating this statute. This can have grand consequences since an agent’s error and omission insurance does not cover criminal acts.
California’s Attorney General has issued press releases that his office is carefully monitoring the situation. He has already sent over 200 warning letters to people who might be price-gouging, and has stated his office will be prosecuting price-gouging cases.
Are there Exemptions?
Yes, but exemptions are also complicated so it is best to seek proper counsel to explore whether an exemption would apply so that a landlord, real estate agent, real estate broker, or property manager is not subject to price-gouging controls.
Penalties for Price Gouging
There are criminal penalties for violating price gouging laws. Each violation is a misdemeanor with up to a year in county jail. Additionally, a court may order restitution to the tenant for the excessive rent and fines up to $10,000.
Violations are also considered to be unlawful business practices and unfair competition within the meaning of Business and Professions Code Section 17200. If a tenant brings a 17200 cause of action against a landlord, the tenant can receive restitution and a court order compelling the landlord to comply with the law. If an authorized government agency, such as the California Attorney General, brings an action, the civil penalties are recoverable, which are greater if the tenants are over 65 or disabled or military service members.
Remedies are not exclusive, so there can be cumulative liability under different statutes. For example, under Civil Code Section 1770, inserting an unconscionable provision in a contract (which a rental amount greater that permitted by price-gouging statute would be) permits the recovery of punitive damages and attorneys’ fees.
Conclusion
In summary, the consequences for price gouging by a landlord, real estate agent, real estate broker, or property manager can be stiff and expensive. You should take the necessary steps to avoid being accused of, or even worse, sued or criminally prosecuted for price gouging. Landlords, agents, brokers, and property managers need to be aware of and understand price gouging laws, their consequences, and how to continue to smoothly operate when these laws are in effect.
TRN Law Associates is available to help. We have been practicing real estate and landlord-tenant law in California for over 15 years. We have offices in San Francisco, San Rafael, and Santa Monica. Contact us at (415) 823-4566 to make sure that you are not at risk of violating price gouging laws during these challenging times.