California Emergency Rent Caps After SB 1365: Price Gouging Rules for Landlords

California's price-gouging law, Penal Code §396, kicks in whenever a state of emergency is declared, after wildfires, earthquakes, floods, or similar events. For years, it had a gap: rental housing with an initial lease term longer than one year wasn't covered. SB 1365, signed September 30, 2026, closes that gap starting January 1, 2027.

The Basic Rule: 10% After an Emergency Declaration

After a covered emergency declaration (by the President, the Governor, or a county or city), Penal Code §396 generally bars landlords from raising rent more than 10% above what was charged or advertised before the declaration. The restriction typically lasts 30 days but is frequently extended by executive order, sometimes for many months in affected counties.

The statute also limits evicting a tenant and re-renting the unit at a rate above what the law allows during the emergency period.

What SB 1365 Changes

Before 2027: Rentals with an initial lease term over one year were excluded.

Starting January 1, 2027: The cap applies to rental housing regardless of the initial lease term. Month-to-month, one-year, and multi-year leases are all covered.

New Defenses for Increases Above 10%

SB 1365 also spells out when a landlord can defend an increase above the cap:

• Pre-agreed increases. You can raise as a defense that the tenant agreed to the increase before the emergency was declared (for example, a scheduled step-up in a signed lease).
• Recent repairs or additions. An increase tied directly to costs for repairs or additions beyond normal maintenance, incurred within the year before the declaration, but only if the unit was rented, advertised, or offered for rent when the costs were incurred, or you can prove that, within a year before the declaration, you already intended to rent it within six months of the work.

Keep invoices, dated listings, and lease amendments. These defenses only work if you can document them.

Why This Matters: It's a Crime

A violation of Penal Code §396 can be prosecuted as a misdemeanor, punishable by up to one year in county jail, a fine of up to $10,000, or both. Civil liability and enforcement by local prosecutors are also possible. This isn't a paperwork issue.

How It Fits With AB 1482 and Local Rent Control

The emergency cap stacks on top of other rules. If your unit is covered by AB 1482 or a local rent control ordinance, the lowest applicable limit controls. During an emergency, a unit that's exempt from AB 1482 (like many single-family homes) can still be capped at 10% under §396.

Bottom Line for Landlords

1. After a declared emergency, California generally limits rent increases to 10% under Penal Code §396
2. Starting January 1, 2027, that applies to all rental housing, including leases over one year
3. Pre-agreed increases and documented recent repair costs can be defenses, but only with paperwork
4. Violations can be prosecuted as a misdemeanor with jail time and fines up to $10,000
5. Before raising rent anywhere in California, check whether an emergency declaration is active for your county

FAQ

Does California's price-gouging law apply to rent increases?

Yes. After a declared state of emergency, Penal Code §396 generally prohibits raising rent more than 10% above the pre-emergency amount. Starting January 1, 2027, SB 1365 extends this to leases longer than one year.

How long do California emergency rent caps last?

Usually 30 days after the declaration, but they are often extended by executive order, sometimes for many months in affected areas.

Can a landlord raise rent more than 10% during an emergency if the lease already scheduled it?

Under SB 1365, a landlord can raise as a defense that the tenant agreed to the increase before the emergency was declared.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed California attorney before raising rent during a declared emergency.