California’s attorney general says bidding wars are not exempt from price gouging laws

California Atty. Gen. Rob Bonta on Saturday warned homeowners that the fire-reduced price reduction laws in Los Angeles County apply even in cases where bidding wars erupt over their properties.

Under those laws, which began when the governor declared a state of emergency, local property owners generally cannot charge more than 10% more than what they were charging or advertising before the disaster.

Many landlords have tried to charge more than those rates though, posting listings online that sometimes show increases as high as 50% or 100%.

These rental ads have attracted politicians, rental agencies and even home owners’ associations who have all called on law enforcement to take action.

Bonta promised to prosecute, but there was confusion among some agents, property owners and tenants as to whether the law applies in cases where there is a bidding war.

Sometimes, fire victims – either at the request of the landlord, or against their own will – submit offers above the original asking price, seeking to secure housing in a strong market after fires have destroyed their homes.

In a press conference on Saturday, the attorney general’s office sought to clear up any confusion, clearly stating that the price reduction law applies to bidding wars, where landlords cannot accept offers that lead to rent exceeding the limits otherwise set by law.

“The bottom line is this: landlords cannot charge, or accept, rent that exceeds the 10 percent limit set by California’s rate hike law, even if they find someone willing to pay it,” Bonta said in a statement. “Our legislature has created strong protections for employers in times of crisis, and I am committed to making sure those protections are followed and respected.”

If convicted of price gouging, homeowners can face up to a year in jail and $10,000 in criminal fines for each violation. The attorney general’s office urged Californians who believe they have been victims of price-fixing to report it at oag.ca.gov/report.