COVID-19 State of Emergency
On March 4, 2020 Governor Newsom declared a statewide emergency due to the coronavirus (COVID-19) pandemic.
During a State of Emergency, California Law generally prohibits charging a price that exceeds by more than 10% the price of an item before a state or local declaration of emergency.
California Penal Code Section 396 prohibits price gouging on any necessary goods and services and defines “price gouging” as any increase above 10%, including rental housing.
Attorney General Becerra reminds all Californians that price gouging is illegal in all California communities during the declared state of emergency.
Executive Order N-44-20 – makes it unlawful to increase the price of food items, consumer goods, or medical and emergency supplies by more than 10 percent of what a seller charged for that item on February 4, 2020. Exceptions to this prohibition exist if the seller has experienced increased costs in labor, goods, or materials, or if the seller sold the item at a discount on February 4, 2020, in which case they may sell the item for no more than 10 percent greater than the price at which they ordinarily sold the item. If the seller did not offer the item for sale on February 4, 2020, the seller may not sell the item at a price that is 50 percent greater than what they paid for it, or, if the seller produced the item, they may not sell it for a price that is 50 percent greater than the cost to produce and sell the item.
In addition to Executive Order N-44-20, Penal Code section 396 generally prohibits charging a price that exceeds, by more than 10 percent, the price of an item before a state or local declaration of emergency. This law applies to those who sell food, emergency supplies, medical supplies, building materials, and gasoline. The law also applies to repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodations, and rental housing. Exceptions to this prohibition exist if, for example, the price of labor, goods, or materials has increased for the business. California’s price gouging law also applies to transactions between manufacturers, wholesalers, distributors, and retailers as it does between retailers and consumers.
Attorney General’s COVID-19 Consumer Information website
Penal Code Section 396 (D) defines the “Rental Price for Mobilehomes” as:
(10) “Housing” means any rental housing with an initial lease term of no longer than one year, including, but not limited to, a space rented in a mobilehome park or campground.
Penal Code Section 396 (10)
(11) (D) For mobilehome spaces rented to existing tenants at the time of the proclamation or declaration of emergency and subject to a local rent control ordinance, the amount authorized under the local rent control ordinance. For new tenants who enter into a rental agreement for a mobilehome space that is subject to rent control but not rented at the time of the proclamation or declaration of emergency, the amount of rent last charged for a space in the same mobilehome park. For mobilehome spaces not subject to a local rent control ordinance and not rented at the time of the proclamation or declaration of emergency, the amount of rent last charged for the space.
Penal Code Section 396 (11)(D)
Questions & Answers from the Attorney General’s website:
What goods and services are covered by the statute?
The statute applies to the following major necessities: lodging (including permanent or temporary rental housing, hotels, motels, and mobilehomes); food and drink (including food and drink for animals); emergency supplies such as water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries, plywood, nails, and hammers; and medical supplies such as prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products.
It also applies to other goods and services including: home heating oil; building materials, including lumber, construction tools, and windows; transportation; freight; storage services; gasoline and other motor fuels; and repair and reconstruction services.
The goods and services listed above are just examples; the statute’s protections are not strictly limited to these items.
Attorney General’s COVID-19 Price Gouging FAQ
How does the statute affect rental housing?
As with all other covered goods and services, following a declaration of emergency, the statute generally prohibits landlords from increasing the price of rental housing by more than 10% of the previously charged or advertised price. For rental housing that was not rented or advertised for rent prior to a declaration of emergency, the price cannot exceed 160% of the fair market value of the rental housing as established by the U.S. Department of Housing and Urban Development.
For rental housing advertised or rented on a daily basis, such as an AirBnB or VRBO listing, the daily price may not be increased by more than 10% following a declaration of emergency. For rental housing advertised or rented on a daily basis prior to a declaration of emergency but offered on a full-time or monthly basis following a declaration of emergency, the price may not exceed 160% of the fair market value of the rental housing as established by the U.S. Department of Housing and Urban Development.
A landlord may not justify an otherwise unlawful price increase by providing additional services such as gardening, cleaning, or utilities, or because they are now offering a shorter lease term. Similarly, a landlord may not charge more than the allowable price because an insurance company offered to pay a higher price.
Finally, the statute also makes it a separate misdemeanor for a landlord to evict a tenant and then re-rent the property at a rate that the landlord would have been prohibited from charging the evicted tenant under the price gouging statute.
Attorney General’s COVID-19 Price Gouging FAQ
What are the consequences of violating the statute?
Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violations are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief and mandatory restitution.
The Attorney General, local district attorneys, and private individuals can bring actions for violations of the statute.
Attorney General’s COVID-19 Price Gouging FAQ
Can the Attorney General’s office assist me with a claim against someone who price gouged me?
Our office cannot give you legal advice or represent you. If you believe that you might have a claim for price gouging, you might consider contacting an attorney to explore your options. For referral to a lawyer, you may contact the State Bar at (866) 442-2529 (toll-free in California) or (415) 538-2250 (from outside California), or through its website at: http://www.calbar.ca.gov. If you cannot afford to pay an attorney, you may consider contacting your local legal aid office.
For a referral, visit http://www.lsc.gov and click on the Find Legal Assistance tab, or go to http://lawhelpca.org
Attorney General’s COVID-19 Price Gouging FAQ
The price gouging ban is not limited to the counties where the state of emergency is declared. The statute does not restrict its protection to a city or county where the emergency or disaster is located. It is intended to prevent price gouging anywhere in the state where there is increased consumer demand as a result of the declared emergency.
This message was based on internal communications with staff members of the Golden State Manufactured-Home Owners League. (GSMOL). More information is available on the GSMOL website. If you find their information to be helpful, please consider joining.