California Senator Aims To Ban ‘Predatory’ Investors From Buying Lots After Disasters

Sen. Adam Schiff is putting forth a measure to ban investors from buying lots after natural disasters.

Under a new bill the California Democrat introduced Monday, institutional investors would be barred from making an offer on lots, parcels, or homes in a federally declared disaster area for six months after the disaster. S.3961, which doesn't yet have any cosponsors, is now in the Senate Homeland Security and Governmental Affairs Committee.

The bill defines an investor as a company owning, directly or indirectly, 75 or more homes. These investors are also prohibited from soliciting land owners to sell their properties under the new bill.

Homeowners in California have complained about the practice, especially after the early-2025 wildfires that destroyed 16,000 structures, including 12,000 homes, causing upward of $131 billion in property and capital losses in the Los Angeles area.

Those fires wiped out almost $8.3 billion in home value across celebrity-studded Pacific Palisades and working-class Altadena alone, according to Realtor.com® analysis. The numbers show just how much potential home value lies in what is rebuilt on those lots.

Post-disaster purchases in the crosshairs

Schiff's office says that limited liability investors and private equity firms bought 168 of the 289 lots that changed hands in Altadena since the disaster.

Schiff, in a statement, said the lot buying is "predatory". These institutional investors offer lower-than-market-rate purchase prices for the land. That then drives up the cost of recovery.

"Americans have witnessed giant corporate landlords and Wall Street firms buying up droves of lots in the wake of natural disasters with artificially low offers that take advantage of vulnerable families," Schiff said in a statement. "I’m proud to introduce legislation to help restrict giant corporate investors from purchasing properties in impacted areas."

The same law could be used to block investor sales after a variety of other disasters. Take Hawaiian volcanoes, Midwestern tornadoes, and Gulf Coast hurricanes, for instance.

Schiff also wants to see the measure introduced in the major comprehensive housing package working its way through Congress. The Senate unveiled a version with a ban on institutional investors, a goal of the Trump administration. But it must be reconciled with a more limited housing reform bill the House passed last month.

And, the several Congressional efforts to curtail investor activity in the single-family market continue to wrangle with how exactly to define the kind of major investors they say are making housing less affordable.