.webp)
Is Your Multi-Year Lease Really Locked In?
Signed a two-year lease with built-in rent bumps and figured you were set? A new state law changes the math the moment a disaster is declared. Starting January 1, 2027, California's emergency price-gouging rules will reach long-term leases that used to sit outside them.
This guide breaks down what SB 1365 changes, how the emergency rent cap works, which defenses still protect you, and the steps worth taking before the new year. At Welcome Home Management Inc., our team brings over 65 years of combined experience to rental owners across Martinez and the East Bay, and we track changes like this so our owners aren't caught off guard.
Key Takeaways
- Long leases lose their exemption: SB 1365 removes the one-year lease-term limit, so Penal Code Section 396 covers rental housing of any lease length.
- The change starts January 1, 2027: Governor Newsom signed the bill on September 30, 2026, giving owners a few months to prepare.
- The cap only applies during emergencies: The 10% limit kicks in after a federal, state, or local emergency declaration, not as an everyday rent control rule.
- Pre-agreed increases still have protection: An increase your tenant agreed to before the declaration can serve as an affirmative defense.
- Documentation is your safety net: Records of lease terms and qualifying repair costs can make the difference if an increase is ever questioned.
What SB 1365 Changes for East Bay Landlords
SB 1365 makes one targeted change with big consequences for owners who prefer longer leases.
The One-Year Exemption Is Gone
Under current law, Penal Code Section 396 only treats rental housing as covered if the initial lease term is one year or less. That left multi-year agreements outside the emergency cap. SB 1365, authored by Senator Ben Allen, removes that limit so the law applies regardless of the initial lease term.
For landlords, this means a long lease no longer works as a workaround during a disaster. Whether your tenant signed for 12 months or 36, the same ceiling applies once an emergency is declared.
When the New Rule Takes Effect
Governor Gavin Newsom signed SB 1365 on September 30, 2026, and the change takes effect January 1, 2027. Until then, the current one-year definition still governs. That window is your chance to review existing long-term leases and update your templates before the rule applies.
How California's Emergency Rent Cap Works
The cap isn't permanent rent control, but it carries real weight when it applies.
What Triggers the Cap
The restrictions start when the President, the Governor, or a county or city executive officer declares an emergency. They apply for 30 days after the declaration, and officials can extend that period. In the East Bay, wildfires, storms, and other disasters can prompt these declarations with little warning.
How the 10% Limit Is Measured
During the covered period, it's unlawful to raise the rent advertised, offered, or charged to a current or prospective tenant by more than 10%. For units rented in the year before the declaration, the baseline is generally the actual rent the tenant was paying. Vacant units and furnished rentals follow separate baseline rules, so get guidance before listing a unit during an emergency.
Penalties for Getting It Wrong
A violation can be prosecuted as a misdemeanor, with up to one year in county jail, a fine of up to $10,000, or both. Because this is a criminal statute, an honest pricing mistake can carry far more risk than a typical lease dispute.
A long lease used to be a shield during a disaster. Starting in 2027, it's only as strong as the paperwork behind it.
Defenses That Can Still Protect Your Rent Increases
SB 1365 also clarifies when an increase above 10% can still hold up.
Increases Agreed to Before an Emergency
If your tenant agreed to a rent increase before the emergency declaration, you can raise that as an affirmative defense. Keep in mind that an affirmative defense puts the burden on you to prove it. A signed lease with scheduled rent steps, dated before the disaster, is the clearest evidence, while verbal understandings or unsigned addendums are much harder to rely on.
Documented Repairs and Improvements
An increase tied directly to repairs or additions beyond normal maintenance, incurred within the year before the declaration, may also qualify. The unit must have been rented, advertised, or offered for rent when you incurred those costs, or you must show you already intended to rent it within six months of the work.
Projects coordinated through professional property maintenance services typically leave a trail of dated invoices and scopes of work. That record is what makes this defense usable if you ever need it.
How to Prepare Your Long-Term Leases Before 2027
A little planning now can keep a future emergency from disrupting your rental income.
Write Rent Steps Into the Lease Now
If you offer multi-year leases, consider building scheduled increases directly into the agreement. Increases a tenant accepts at signing are far easier to defend than ones you set later. A team offering full-service Martinez property management can help you structure these terms with California rules in mind.
Keep a Clean Paper Trail
Store signed leases, renewal notices, repair invoices, and listing histories where you can find them fast. Detailed owner accounting and financial reporting makes it easier to show when costs were incurred and what rent was in place before a declaration.
Know How This Fits With Other Rent Rules
The emergency cap sits on top of other limits, including California's statewide rent cap under AB 1482 and any local rent ordinances in your city. You must satisfy every rule that applies, so check each one before sending a renewal notice or raising an advertised rent during an emergency.
Frequently Asked Questions
Here are answers to common questions East Bay owners ask about SB 1365.
Does SB 1365 create permanent rent control?
No. The 10% limit only applies during a declared emergency and the covered period that follows. Outside those windows, your normal lease terms and other applicable rent laws govern increases.
Does the law affect leases I sign before 2027?
The expanded coverage begins January 1, 2027, and from that point it applies to rental housing regardless of lease length. Increases your tenant agreed to before an emergency declaration may still be defensible, which is why having those terms in writing matters.
Can I raise rent on a vacant unit during an emergency?
Price-gouging rules protect prospective tenants too, so the advertised rent on a vacant unit is subject to limits. Baseline rules for vacant units differ from occupied ones, so talk with a professional before listing during a declared emergency.
Keep Your Rental Income Steady When Disaster Strikes
SB 1365 puts long leases under the same emergency rules as shorter ones, so preparation now pays off later. Clear lease terms, organized records, and a careful pricing approach during emergencies keep you on the right side of the law while protecting your returns.
Welcome Home Management Inc. helps Martinez and East Bay owners stay compliant without the guesswork, backed by owner-friendly guarantees like our cancel-anytime policy. Call us at 925.307.8130 or schedule a property management consultation today. Have a question first? Contact us, and our team will be glad to help.
.webp){kind=logo}