California Price Gouging and Rent Increases After an Emergency: What Penal Code 396 Actually Requires
A landlord in Los Angeles County who listed a unit, renewed a lease, or raised a month-to-month tenant's rent after the January 2025 wildfires is now asking two questions: was that increase legal when it was made, and does the anti-price-gouging cap still apply today?
The controlling authority is California Penal Code Section 396, subdivision (e), which makes it unlawful, after a declared emergency, to increase the rental price "advertised, offered, or charged for housing, to an existing or prospective tenant, by more than 10 percent." The questions that create litigation exposure are what the 10 percent is measured against, how long the window lasts, what the landlord must prove to justify more, and what a violation costs.
The statute also just changed. On September 30, 2026, the Governor signed SB 1365 (Allen), Chapter 1028, Statutes of 2026, which amends Penal Code Section 396 effective January 1, 2027. This article covers the rules as of October 3, 2026, and the January 1, 2027 changes.
- California Penal Code Section 396(e) caps rent increases for "housing," which through December 31, 2026 means rental housing with an initial lease term of no longer than one year, at 10 percent for 30 days after a state of emergency is proclaimed by the President or the Governor or a local emergency is declared, plus any extension the statute authorizes by the Governor, the Legislature, or a local body or official, unless the Governor has suspended the restrictions for that emergency.
- Under California Penal Code Section 396(j)(11)(B), the baseline for housing that was not rented and not offered for rent within one year before the emergency is 160 percent of the HUD fair market rent, although under subdivision (g) an order extending the protections may authorize a higher figure.
- As of October 3, 2026, Los Angeles County's 30-day extensions of the Penal Code Section 396 protections for the January 2025 wildfires ran through May 28, 2026, and the County Board of Supervisors declined on May 19, 2026 to extend them again; whether the County's separate September 23, 2026 El Nino local emergency proclamation triggered a new rent cap, given the Governor's September 21, 2026 suspension of Penal Code Section 396 for that event, is unsettled.
- A landlord's conduct during a California Penal Code Section 396 protection period can still be prosecuted or sued over after the period ends, within the applicable limitation periods.
- California SB 1365 (Chapter 1028, Statutes of 2026), effective January 1, 2027, extends the Penal Code Section 396 rent cap to rental housing with initial lease terms longer than one year and recasts the landlord's pre-emergency-agreement and repair-cost justifications as affirmative defenses, narrowing the repair-cost defense to costs incurred within the year before the emergency.
- Penal Code Section 396 does not displace California's statewide rent cap in Civil Code Section 1947.12 (AB 1482) or a Los Angeles rent stabilization ordinance, so a rent increase in Los Angeles must satisfy every law that applies to the unit.
Does the Penal Code 396 rent cap apply in Los Angeles as of October 2026?
As of October 3, 2026, Los Angeles County's 30-day extensions of the Penal Code Section 396 protections for the January 2025 wildfires ran through May 28, 2026, and on May 19, 2026 the Board of Supervisors did not approve a further extension. Whether the County's September 23, 2026 El Nino emergency proclamation revives the cap, despite the Governor's suspension of Penal Code Section 396 for that event, is unsettled.
The path to that date:
- January 7, 2025. The Governor proclaimed a state of emergency, and Los Angeles County proclaimed a local emergency, for the fires.
- Executive Order N-23-25 (March 2025). The Governor kept subdivisions (d) (hotel and motel rates), (e) (rental housing), and (f) (evict and re-rent) in effect for Los Angeles County until July 1, 2025. The order also treated "housing" as including leases of any length until that date, and suspended the cap for two categories of units: certain single-family homes with four or more bedrooms in listed ZIP codes that were not rented or offered for rent in the prior year, and housing first issued a certificate of occupancy for residential use on or after January 1, 2025.
- County extensions. Penal Code Section 396(g) provides that "each extension by a local legislative body or local official shall not exceed 30 days," and that an extension may authorize "specified price increases." The Board renewed in 30-day increments. Its March 17, 2026 motion stopped extending subdivision (d) for hotel and motel rates and continued the 200 percent of HUD fair market rent vacant-unit baseline the Board had first authorized in its October 21, 2025 extension. Its April 2026 action extended subdivisions (b), (c), (e), and (f), and County Code Chapter 8.09, through May 28, 2026.
- Executive Order N-1-26 (January 6, 2026). The Governor extended only subdivisions (b) and (c), covering goods and repair and reconstruction services, through February 7, 2026, not the rental housing rule.
- May 19, 2026. Supervisor Lindsey Horvath's official County page reports that the Board "failed to approve" her proposed extension, and that the protections were set to expire May 28, 2026. No later extension of the wildfire protections appeared on the official sources checked.
- September 2026 El Nino emergency. On September 21, 2026 the Governor proclaimed a statewide state of emergency for the anticipated El Nino season. That proclamation states that the Penal Code Section 396 restrictions "are suspended, and no such restrictions are imposed, with respect to this El Niño event, at this time." On September 23, 2026, the Chair of the Los Angeles County Board of Supervisors issued a local emergency proclamation for the same El Nino conditions. Under subdivision (e), the rent cap is triggered by the declaration of a local emergency as well as a state one. The official sources checked do not say whether the Governor's suspension also reaches restrictions that would otherwise follow from the County's local proclamation, so a landlord in Los Angeles County should confirm current status before raising rent by more than 10 percent.
Two cautions. First, Penal Code Section 396(k) preserves local ordinances on the same conduct, and cities inside the County can act on their own, so a landlord should check the current orders of the city where the property sits. Second, subdivision (e) runs the cap for 30 days "or any period the proclamation or declaration is extended by the applicable authority." The statute does not expressly say whether keeping the underlying emergency proclamation in force, as distinct from extending the price-gouging prohibitions under subdivision (g), keeps the rent cap alive. A landlord relying on the May 28, 2026 expiration should also confirm the status of the proclamations, and any new emergency proclamation covering the property restarts the analysis.
What is the 10 percent rent cap measured against under Penal Code 396?
California Penal Code Section 396(j)(11) defines "rental price," which sets the baseline. For housing rented within one year before the emergency, the baseline is the actual rent paid by the tenant. For housing not rented then but rented or offered within that year, it is the most recent rent offered before the emergency. Otherwise, it is 160 percent of HUD fair market rent.
Existing tenants, renewals, and month-to-month tenancies
Subdivision (e) applies to an increase "to an existing or prospective tenant." A renewal and a notice of increase to a month-to-month tenant are increases to an existing tenant, and the baseline is the rent actually being paid, not a market estimate. Through December 31, 2026, subdivision (j)(10) limits "housing" to rental housing with an initial lease term of no longer than one year, so a tenancy with a longer initial term falls outside subdivision (e) unless an order, such as Executive Order N-23-25 before July 1, 2025, expanded the definition; SB 1365 removes that limit on January 1, 2027. A new tenant moving into a unit that was rented at the time of the emergency is generally measured against the rent paid there. If the unit was vacant at the emergency but rented or offered within the prior year, the baseline is the most recent rent offered before the emergency. For a unit rented at the time of the emergency that becomes vacant while the emergency remains in effect and is subject to a local rent control ordinance, subdivision (j)(11)(A) uses the previous tenant's rent or the subparagraph (B) amount, whichever is greater.
The cap also reaches the advertised and offered price, not only the rent collected. In January 2025 the Attorney General warned that landlords cannot charge or accept rent above the cap "even if they find someone who is willing to pay it." A listing or bidding process that invites rent above the cap creates exposure even if no lease is signed at that figure.
Units that were vacant: the 160 percent HUD rule
For housing "not rented and not offered for rent within one year prior to the proclamation or declaration of emergency," subdivision (j)(11)(B) sets the rental price at "160 percent of the fair market rent established by the United States Department of Housing and Urban Development." The 10 percent cap runs from that figure. HUD publishes fair market rent by area and bedroom count, so the figure used for the specific unit should be documented.
The 160 percent figure can be changed by the authority extending the protections, as Los Angeles County did with 200 percent in its extensions beginning October 21, 2025.
Furnishings, utilities, and short-term rentals
The baseline "may be increased by 5 percent" if the housing was previously rented or offered unfurnished and is now offered fully furnished, but it "shall not be adjusted for any other good or service, including, but not limited to, gardening or utilities."
Under subdivision (j)(11)(C), housing charged at a daily rate when the emergency began that stays daily is measured under subparagraph (A); if it moves to a periodic lease, it is measured under the 160 percent rule. Hotel and motel rates fall under subdivision (d), measured from the "regular rates, as advertised immediately prior to" the emergency. Effective January 1, 2027, SB 1365 sets the rental price, the baseline for the 10 percent cap, at one-thirtieth of the subparagraph (B) amount for housing advertised, offered, or charged at a daily rate after an emergency that was not advertised, offered, or charged at a daily rate in the year before it.
| Situation | Baseline under California Penal Code Section 396(j)(11) |
|---|---|
| Unit rented at the time of the emergency | Actual rent paid by the tenant |
| Rent-controlled unit rented at the emergency that becomes vacant during it | Greater of the previous tenant's rent or 160 percent of HUD fair market rent, still subject to the local rent control limit |
| Unit vacant at the emergency but rented or offered for rent within the prior year | Most recent rent offered before the emergency |
| Unit not rented and not offered for rent within the prior year | 160 percent of HUD fair market rent, unless an extension order under subdivision (g) authorizes a higher figure |
| Unfurnished unit now offered fully furnished | Applicable baseline plus up to 5 percent |
| Daily-rate unit that stays daily-rate | Measured under subparagraph (A) |
| Daily-rate unit converted to a periodic lease after the emergency | 160 percent of HUD fair market rent, under subparagraph (B) |
What can a California landlord prove to justify a larger increase?
Under California Penal Code Section 396(e) as it reads through December 31, 2026, an increase above 10 percent is permitted only if the landlord proves the tenant contractually agreed to it before the emergency, or that it is directly attributable to additional costs for repairs or additions beyond normal maintenance, amortized over the rental term. The burden is on the landlord, and ordinary operating cost increases do not qualify.
The repair and addition justification
The current text covers costs for "repairs or additions beyond normal maintenance" that were "amortized over the rental term." A landlord relying on it needs invoices, proof of payment, and arithmetic connecting the cost to the amount above 10 percent. Higher insurance premiums, taxes, or interest rates are not repairs or additions.
Subdivision (b) also lists "housing" among items whose price may not rise more than 10 percent, with a broader cost justification tied to supplier, labor, and materials costs. The statute does not say how that language interacts with the rental-specific rules in subdivisions (e) and (j)(11), and a landlord should not assume subdivision (b) rescues an increase that fails subdivision (e).
Effective January 1, 2027, SB 1365 makes this an affirmative defense limited to costs "incurred within the year prior to the proclamation or declaration," and requires either that the housing was rented, advertised, or offered for rent when the costs were incurred, or proof that "the intent to offer the housing for rent within six months of the repair or addition already existed" within a year before the emergency.
Increases agreed before the emergency
An increase "contractually agreed to by the tenant prior to the proclamation or declaration" is a recognized justification, and it becomes an express affirmative defense under SB 1365. An escalation clause signed before the emergency stands on different footing from a renewal negotiated after it.
Arguments the statute rejects
Subdivision (e) provides (and, from January 1, 2027, subdivision (e)(3) continues to provide) that it is not a defense that the increase was "based on the length of the rental term," reflected "the inclusion of additional goods or services" (other than the furnished-unit adjustment), or that "the rent was offered by, or paid by, an insurance company, or other third party, on behalf of a tenant." The section also does not authorize rent above what a local rent control ordinance allows.
Evicting a tenant to re-rent at a higher price
Penal Code Section 396(f) makes it unlawful to evict a residential tenant after the proclamation, during the protected period or any extension, "and rent or offer to rent to another person at a rental price greater than the evicted tenant could be charged under this section." Continuing an eviction "that was lawfully begun prior to the proclamation" is not a violation, and subdivision (m) confirms that the section "does not prohibit an owner from evicting a tenant for any lawful reason, including pursuant to Section 1161 of the Code of Civil Procedure." Notices under Section 1161 carry their own requirements, including the one-year limit on rent demanded in a three-day notice discussed in our article on the California three-day notice one-year limit.
What happens if a landlord exceeds the cap, and how does Penal Code 396 interact with AB 1482?
A violation of California Penal Code Section 396 is a misdemeanor punishable by up to one year in county jail, a fine of up to $10,000, or both, under subdivision (h). Under subdivision (i), a violation is also an unlawful business practice under Business and Professions Code Section 17200, exposing the landlord to civil penalties, injunctions, and restitution claims.
Criminal and civil exposure
The Attorney General has filed Penal Code Section 396 charges arising from the Los Angeles fires, including a June 2025 case against a real estate agent alleged to have raised rents more than 30 percent for evacuated families. The statute reaches "any person, business, or other entity," so agents and property managers who set or advertise the price are within it. Penal Code Section 802(a) generally requires a misdemeanor prosecution to be commenced within one year after the offense.
On the civil side, public prosecutors may seek civil penalties of up to $2,500 per violation under Business and Professions Code Section 17206(a). A tenant who "has suffered injury in fact and has lost money or property" has standing under Business and Professions Code Section 17204, generally for restitution and injunctive relief rather than damages, and Section 17208 allows four years from accrual. An increase charged in 2025 can therefore support a civil claim after the County's protections lapsed. Overcharge claims of this kind can arise alongside lease contract disputes.
AB 1482 and Los Angeles rent ordinances
Civil Code Section 1947.12 (AB 1482) limits increases over any 12-month period to 5 percent plus the change in the cost of living, or 10 percent, whichever is lower, for covered units, and remains in effect until January 1, 2030. Its exemptions include housing issued a certificate of occupancy within the previous 15 years and certain single-family homes whose owners are not a real estate investment trust, a corporation, or an LLC with a corporate member and who give the required written notice. The City of Los Angeles Rent Stabilization Ordinance and Los Angeles County's rent stabilization rules for unincorporated areas set their own limits for covered units.
An increase can be under 10 percent and still exceed an AB 1482 or local cap, and an AB 1482-exempt single-family home could still be subject to the Penal Code Section 396 cap if its tenancy fell within the statute's definition of housing and no order exempted it.
What SB 1365 changes on January 1, 2027
SB 1365 removes the one-year initial lease term limit from the definition of "housing," so the cap will reach any rental housing; recasts the repair and contractual justifications as affirmative defenses; and adds the one-thirtieth daily-rate rule. Penalties are unchanged. The bill has no urgency clause. As a brand-new statute, SB 1365 has no case law interpreting it.
The same emergencies also trigger the 180-day cap on repair and reconstruction pricing in Penal Code Section 396(c), discussed with rebuild-contract protections in our article on voiding and canceling California wildfire rebuild contracts. Landlords and tenants with a question about a specific increase, listing, or eviction can contact ROMO Law Group.
Common questions
Can a California landlord raise rent more than 10 percent during a state of emergency?
Under California Penal Code Section 396(e), an increase of more than 10 percent to an existing or prospective tenant of housing covered by the statute (through December 31, 2026, rental housing with an initial lease term of one year or less) is unlawful during the protected period after a state or local emergency proclamation, unless the restrictions have been suspended for that emergency or the landlord proves a statutory justification. Under the current text, those justifications are an increase the tenant agreed to before the emergency, or qualifying repair or addition costs beyond normal maintenance; effective January 1, 2027, SB 1365 makes them affirmative defenses and limits the repair defense to costs incurred within the year before the emergency. Other rent laws such as AB 1482 or a local rent ordinance may set a lower limit.
Is the Los Angeles County wildfire rent cap still in effect?
As of October 3, 2026, Los Angeles County's 30-day extensions of the Penal Code Section 396 protections for the January 2025 fires ran through May 28, 2026, and the Board of Supervisors declined on May 19, 2026 to extend them again. Separately, the Governor proclaimed a statewide El Nino emergency on September 21, 2026 that suspends the Penal Code Section 396 restrictions for that event, and the County Board Chair proclaimed a local El Nino emergency on September 23, 2026; how the suspension applies to the County proclamation is unsettled. Individual cities may have their own orders, so current status should be confirmed for the specific property.
What is the price gouging baseline for a unit that was vacant before the emergency?
Under California Penal Code Section 396(j)(11)(B), housing not rented and not offered for rent within one year before the emergency has a baseline rental price of 160 percent of the HUD fair market rent, plus up to 5 percent if offered fully furnished. An extension order can authorize a higher figure, as Los Angeles County did when it used 200 percent in its extensions from October 2025 through May 2026.
Can a landlord evict a tenant during a price gouging period in California?
Penal Code Section 396(m) states that the section does not prohibit evicting a tenant for any lawful reason. What Penal Code Section 396(f) prohibits is evicting a residential tenant during the protected period and then renting or offering the unit to someone else at more than the evicted tenant could have been charged. An eviction lawfully begun before the proclamation may continue.
Can a landlord be liable after the price gouging protections expire?
Yes, potentially. Conduct during the protected period can support misdemeanor charges, which Penal Code Section 802(a) generally requires to be filed within one year after the offense, and civil claims under Business and Professions Code Section 17200, which Section 17208 allows to be brought within four years after the claim accrued.
This article is general information about California law as of October 3, 2026 and is not legal advice. It does not create an attorney-client relationship. Anyone facing a specific dispute should consult a lawyer about their own circumstances.
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