California Files Price Gouging Charges Against LA Realtor For Allegedly Hiking Price By 38% When Renting To A Family Displaced By Fires

The recent fires in Pacific Palisades and Altadena, California forced thousands of people into an already unforgiving LA real estate market and sparked fears of price gouging. Gov. Gavin Newsome responded by declaring a state of emergency order and promising legal action against would-be price gougers.

California Attorney General Rob Bonta carried through on that threat last month by filing criminal charges against an LA area broker for allegedly hiking rents by 38%.

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"I am proud to announce that we have filed a case charging price gouging," Bonta said in a statement. "May this announcement serve as a stern warning to those who would seek to further victimize those who have lost everything. [The state Department of Justice] is aggressively and relentlessly pursuing those who are trying to make a quick buck off of someone else's pain."

The state charged La-Canada Flintridge-based real estate broker Mike Kobeissi with violating a California law that makes it illegal to charge more than 10% for a product than they did before the governor officially declares a state of emergency. Kobeissi is accused of accepting a rental application from a couple displaced by the Eaton Fire and then raising the rent for the property by 38%.

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Although the couple opted not to rent the home, a complaint about Kobeissi's practices was filed with the state Attorney General's office, which investigated and found probable cause to proceed with charges. The charges alleging that Kobeissi “unlawfully raised the rental price advertised, offered, and charged” were read in Los Angeles Superior Court on January 11.

If convicted, Kobeissi faces a prison term of up to one year, a criminal fine of up to $10,000, and a civil fine of up to $2,500 per violation.  

The Attorney General's office said Kobeissi may also be forced to pay injunctive relief and restitution. He also may lose his real estate license. 

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Kobeissi, who owns Kobeissi Properties in La-Canada Flintridge, denied the charges. In an interview with the Silicon Valley News, he said, "There's been a mistake." He said he raised the originally advertised rent of $8,700 to $12,000 after he discovered the home had recently become part of a highly sought-after school district. However, the adjustment came after Newsom's emergency declaration.

Kobeissi acknowledged raising the rent after the fires but says even the adjusted $12,00 price was "very fair" for the area and claimed that the fires "had nothing to do with it."

La-Canada Flintridge is one of the Los Angeles metro area's most desirable enclaves and is well-known for having highly rated public schools. According to Zillow, the average rent for La-Canada Flintridge is $6,800 but properties routinely rent for much higher.

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