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Governor Newsom signed Senate Bill 1365 (SB 1365) on October 1, 2026. This law closes a gap in California’s emergency rent-gouging rules that’s been sitting there for years. Starting January 1, 2027, the state’s 10% rent cap during a declared emergency applies to every residential lease — doesn’t matter how long the term is. That’s a big deal for landlords, property managers, and tenants across Los Angeles County, Orange County, San Bernardino County, and Riverside County, including West Covina, Los Angeles, Anaheim, San Bernardino, Riverside, Ontario, and Pomona. Own rental property in Southern California? Rent a home here? You need to know this law before it kicks in. Plan your lease renewals and rent increases now, not later.
Background: What This Means
Here’s the deal. California Penal Code Section 396 already bans “price gouging” during a state or local emergency — wildfire, earthquake, you name it. Under the existing law, landlords generally can’t raise rent more than 10% above what they were charging before the emergency hit. Why does this rule exist? To stop landlords from squeezing families who just lost their homes and need a place fast. We’ve seen this play out with the recent LA-area wildfires. Families displaced, scrambling for housing, and some landlords treating it like an opportunity instead of a crisis.
But there was a loophole. Leases longer than one year weren’t covered by the 10% cap. In theory, a landlord could lock someone into a long-term lease and jack up the rent during a declared emergency, as long as the lease allowed it. SB 1365 shuts that door for good. Want to read the bill yourself? Check the California Legislative Information website at leginfo.legislature.ca.gov, and the underlying price-gouging statute at Penal Code Section 396.
Once SB 1365 takes effect on January 1, 2027, the 10% cap will apply to all residential leases during a declared emergency, whether the lease is month-to-month, one year, or multiple years. A “declared emergency” simply means a state or local government has officially recognized a disaster, such as the wildfires that have affected parts of Los Angeles County in recent years.
How This Affects Landlords and Tenants in Southern California
Southern California has seen repeated emergency declarations tied to wildfires, floods, and other disasters. Cities like Altadena, Pasadena, and parts of the San Gabriel Valley near West Covina have experienced sudden housing shortages after fires, pushing up demand for rentals in nearby Pomona, Ontario, and Riverside. SB 1365 is designed to prevent landlords, even those with long-term leases already signed, from using an emergency to justify rent hikes above 10%.
For landlords and property managers, this means every lease renewal, rent increase notice, or new lease signed in an emergency period must be checked against the 10% cap, regardless of the lease length. Violating Penal Code 396 can lead to criminal penalties, civil lawsuits, and local code enforcement actions. Landlords in Los Angeles, Orange, San Bernardino, and Riverside Counties should review their current lease templates and rent-increase policies now, before the law takes effect.
For tenants, this closes a loophole that some landlords may have relied on to raise rent sharply on long-term leases during a local emergency. Tenants who believe they were charged an increase above 10% during a declared emergency, even under a multi-year lease, may have grounds to challenge the increase once the new law is in force.
Property owners who are also involved in real estate development or construction projects in the region should also note that these rent-gouging rules can affect pricing decisions tied to newly built or renovated rental units delivered during an emergency period.
What You Should Do Now
- Review your lease agreements. Check whether your current leases include rent escalation clauses that could exceed 10% if an emergency is declared after January 1, 2027.
- Track local emergency declarations. Rent caps only apply once a state or local emergency is officially declared. Landlords and tenants should know how to confirm whether their city or county has an active declaration.
- Update rent-increase notices. Property managers should build a compliance checklist so that any rent increase notice sent during a declared emergency is automatically capped at 10%, regardless of lease term.
- Keep records. Landlords should document the rent amount charged immediately before any emergency declaration, since this is the baseline used to calculate the 10% cap.
- Talk to a lawyer before signing or renewing a long-term lease that includes future rent escalation terms, so the lease language accounts for this new statewide rule.
How Tez Law P.C. Can Help
Tez Law P.C. advises landlords, property owners, and tenants in West Covina, Newport Beach, and throughout Southern California on lease drafting, rent-increase compliance, and disputes connected to California’s emergency price-gouging rules. The firm can review existing lease agreements, help update rent-increase procedures ahead of the January 1, 2027 effective date, and represent clients in landlord-tenant disputes or evictions tied to these rules. You can learn more about this area of practice on the landlord-tenant and business litigation page and the real estate and construction page.
Frequently Asked Questions
What is SB 1365 and when does it take effect?
SB 1365 is a California law signed on October 1, 2026, that removes the exemption for leases longer than one year from the state’s 10% emergency rent cap. It takes effect on January 1, 2027. Before this date, long-term leases were not covered by the cap during declared emergencies.
Does the 10% cap apply all the time, or only during emergencies?
The cap only applies during a declared state or local emergency, such as a wildfire or earthquake disaster declaration. Outside of a declared emergency, this specific rent-gouging rule does not apply, though other California and local rent laws may still apply.
Can a landlord still raise rent more than 10% on a multi-year lease after January 1, 2027?
Generally, no, if a state or local emergency has been declared and the lease covers housing in the affected area. Under SB 1365, the 10% cap applies regardless of lease length once the law takes effect on January 1, 2027.
What can happen to a landlord who violates the rent cap?
Violations of California’s price-gouging statute, Penal Code Section 396, can lead to criminal charges, civil penalties, and lawsuits from tenants or local authorities. Specific consequences can depend on the facts of each case, so landlords and property managers should review lease terms carefully before and during a declared emergency.
I think my landlord raised my rent too much during a recent emergency. What should I do?
You should gather your lease documents, rent payment history, and any rent-increase notices you received. An attorney can help you review whether the increase may have exceeded the legal cap and explain the options available under California law.
If you own rental property, manage leases, or are a tenant facing a rent increase tied to a declared emergency anywhere in Los Angeles, Orange, San Bernardino, or Riverside County, it may help to have your lease and rent-increase documents reviewed before SB 1365 takes effect on January 1, 2027. Contact Tez Law P.C. to schedule a consultation and discuss how this new rent cap rule may apply to your situation.
This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws and agency practices change; contact Tez Law P.C. at 626-678-8677 or [email protected] about your situation. Prior results do not guarantee a similar outcome.