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Rent Stabilization Board
Rent Stabilization Board

California Penal Code §396: Anti-Price Gouging During Emergencies


California Penal Code §396 stabilizes the price of essential consumer goods and services, including housing, for thirty days following the proclamation of a state of emergency or the declaration of a local emergency.

Sections 396(e) and (f) offer specific protections related to the price of rental housing. While these protections are in place, the rental price advertised, offered, or charged for housing to an existing or prospective tenant can not increase by more than ten percent in most cases. Exemptions include some amortized non-maintenance repairs and contractual increases agreed to prior to the declaration or for furnishings (Cal. Pen. Code §§396(e), 396(j)(11)). An additional five percent increase is also allowed for fully furnished housing that was previously rented or offered for rent unfurnished (Cal. Pen. Code §396(j)(11)).

The anti-price gouging protections can be extended to protect people’s lives, property, or welfare for periods of up to 30 days at a time (Cal. Pen. Code §396(g)). The protections related to rental housing remain in effect if the state of emergency proclamation or local emergency declaration is extended (Cal. Pen. Code §§396(e), 396(f)). Since there is some contradiction within the statute related to when the protections related to rental housing are in effect absent an explicit extension beyond the initial 30 days, we recommend that you consult with an attorney if you have questions about this (Cal. Pen. Code §§396(b), 396(e), 396(f), 396(g)).  

Rental Price (Cal. Pen. Code §396(j)(11)): For housing that was rented within one year prior to the declaration, the rental price is the actual price paid by the tenant. For housing that was not rented at the time of the declaration, but was rented or offered for rent within a year prior, the rental price is the most recent price offered before the declaration. For housing that was rented at the time of the declaration, was subject to local rent stabilization, but became vacant while the emergency was in effect, the rental price is the greater of actual rental price paid by the previous tenant or 160 percent of HUD fair market rent. For housing that was not rented within one year prior to the declaration, the rental price is 160 percent of HUD fair market rent.

If a tenant is evicted after the declaration of the emergency, the next tenant can not be charged more than what the evicted tenant could have been charged while these protections are in place. This does not apply if the eviction process was lawfully started before the emergency declaration (Cal. Pen. Code §396(f)). 

 Rent Board staff do not provide detailed counseling regarding this law.

You can report a suspected violation of Penal Code §396 to the Attorney General or Alameda County District Attorney (pricegouging@acgov.org, (510) 383-8600). 

Other Resources:

Attorney General’s FAQ’s
California Penal Code §396
California Attorney General’s COVID-19 Consumer Information and Resources

 

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