California moves to stop predatory sales of fire-stricken homes

• California has banned undervalued and unsolicited property offers in fire-hit areas of Los Angeles.
• Gov. Gavin Newsom's executive order targeted speculators trying to exploit victims of the LA fires.
• The order covers areas like Pacific Palisades and Altadena, which have been devastated by the fires.

California just made it harder for predatory real estate investors to take advantage of victims of the Los Angeles fires.

On Tuesday, California Gov. Gavin Newsom signed an executive order temporarily banning unsolicited and undervalued offers for properties in specific Los Angeles County zip codes.

The order will be in place for three months, with the zip codes including areas such as Malibu, Altadena, Pasadena, and Pacific Palisades — some of the areas worst hit by the ongoing fires.

The LA wildfires, which have been raging for more than a week, have burned more than 40,000 acres, damaged over 12,000 structures, including many homes, and killed at least 25 people.

"As families mourn, the last thing they need is greedy speculators taking advantage of their pain," Newsom said in a press release.

The governor described how real estate speculators are exploiting the situation, saying he'd heard firsthand from victims who had "received unsolicited and predatory offers" from speculators offering cash far below the market value.

The executive order prohibits offers below the fair market value as of January 6, 2025 — the day before the fires started.

The press release said that the order was inspired by a similar measure issued by Hawaii Gov. Josh Green in August 2023, designed to protect residents after wildfires devastated much of Lahaina.

Violating the order during a state of emergency is a misdemeanor punishable by a fine of up to $1,000, six months in prison, or both.

Altadena, a "working-class neighborhood" hit hard by the Eaton fire, was cited as an example where undermarket offers could displace vulnerable residents with long-standing ties to the community.

"We will not allow greedy developers to rip off these working-class communities at a time when they need more support than ever before," Newsom said.

Even in areas like the Palisades, which has some of the most expensive real estate in the country, not all victims were wealthy.

A 22-year-old living in the Palisades, who works multiple jobs and said many in her building were blue-collar workers, told Business Insider about having to evacuate her rental apartment.

Concerns about exploitation in the rental market are also growing, as those who have lost their homes look to the future.

Jason Oppenheim of Netflix's "Selling Sunset" said that greedy landlords have been taking advantage of the fires by price gouging, or illegally hiking rents.

He told Business Insider: "This is a time for people to put aside any opportunities for financial gain. If anything, we should be giving back financially, not trying to be rewarded financially from the situation."