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California Self Storage Association

State of Emergency, Moratoriums, Price Gouging

With the daunting amount of news and information coming at you constantly it is impossible for any one person to keep up. Our team curates and alerts you to the "must have” information to ensure you are in the know. Having relevant, current information helps you to make the best decisions possible.

  • Thursday, August 13, 2020 10:04 AM | Ross Hutchings (Administrator)

    Price Restrictions Remain Despite Lifting of Stay-at-Home Orders

    Joe Doherty posted on 7/15/2020 3:22:00 PM

    Price Restrictions Remain Despite Lifting of Stay-at-Home Orders  

    As many states’ stay-at-home orders are lifted and states are “reopened,” many storage operators ask whether it is permissible to return to business as usual as it relates to normal rent increases for both current and prospective tenants. The answer to that question is: it depends. 

    The first inquiry is whether your state has a price gouging restriction in effect. Most states do. Although these laws differ, they generally put a cap on raising prices for certain goods and services above a certain percentage from the amount charged immediately preceding an emergency declaration, subject to certain narrow exceptions. Some of these laws are clearly applicable to self storage, some clearly are not, and others are uncertain in scope. 

    These price gouging statutes are “activated” by a declaration of a state of emergency by either the Governor or the President. Many Governors’ powers are limited to only declare a state of emergency in 30-day intervals. As such, while an operator may see that their applicable emergency order is set to expire on a certain date, it is likely that it will be extended given the uncertainty surrounding the COVID-19 pandemic. The current “expiration” date is likely more a reflection on the limitation of the Governor’s power, not that the state envisions that the disaster will conclude then. 

    Further, operators must remember that many states’ price gouging laws are activated by Presidential action too. President Trump declared a national emergency on March 13. That declaration remains in effect indefinitely. As such, before any rent increase is considered, an operator must look to see if the President has lifted the national emergency declaration as well as whether the Governor(s) of the states within which you operate has lifted the state emergency declaration – and not just the shelter-in-place or similar order, as discussed below. 

    State of Emergency Declarations vs. Stay-at-Home Orders 

    Importantly, a declaration of a state of emergency is different from a stay-at-home order that required individuals to limit movement outside of their residence except for essential activities during the early stages of the COVID-19 pandemic. While lifting of stay-at-home orders ensures that storage operators may continue to remain open for business, they are not the controlling orders for purposes of potential rent increases. 

    The President and Governors traditionally declare a state of emergency when they believe a disaster has occurred that is severe enough that it will require the government to deploy resources to states, cities, and counties on a more expedited timeline. Oftentimes, these orders will permit the President and Governor to bypass certain laws and regulations that would otherwise be applicable, recognizing that time is of the essence. A state of emergency could be declared for hurricanes, wildfires, blizzards, numerous other natural or man-made disasters, or as is currently the case across the country, the COVID-19 pandemic. 

    These orders generally do not require a citizen to take particular action. However, as outlined above and among other things, many states of emergency declarations trigger the state’s price gouging laws. Unlike a state of emergency, the stay-at-home orders required citizens to refrain from activities. Again, for purposes of any potential rent increases operators must look to relevant state of emergency declarations. Do not assume that because your state has lifted its stay-at-home order that price restrictions do not remain operative. Most states of emergency, and by extension the price going laws, are still in effect and will likely continue to be for some time. 

    How Do the Statutes Practically Work? 

    While the price gouging laws are intended to prevent nefarious actors from excessively profiting from disaster (e.g., selling hand sanitizer for $200 a bottle), their impact and practical effect extends beyond those examples. 

    Although no SSA member would intentionally raise their rental rates dramatically during a declared state of emergency, the laws may affect an operator’s ability to implement even standard rate increases. Operators must pay close attention to the language of the relevant statute. Some statutes are what we refer to as “hard cap” statutes. Those state statutes limit price increases on a firm percentage basis. 

    For example, in California, an operator may not charge a rental price greater than 10 percent more than the amount charged immediately preceding the declaration, subject to certain narrow exceptions. If a California operator charged $100 for a unit immediately preceding the declaration and raised the rent to more than $110 during the state of emergency, the operator may be in violation of the law. 

    Other states take a different approach. For example, in Tennessee, upon the declaration of a state emergency, it is unlawful to charge “grossly excessive” prices for food, construction services, emergency supplies, storage services or other vital goods or services. “Grossly excessive” is not a defined term. Therefore, it is more ambiguous as to what constitutes such as increase and by extension what the permissible parameters are for certain rent increases. Operators should be reasonable. 

    Importantly, many of these laws create so-called strict liability offenses. In other words, it only must be proven that the unlawful rate increase occurred, without a valid exemption provided by the law, not that an operator had a specific intent to violate the law or “gouge” the tenant. 

    Beyond specific price gouging laws, many states’ Attorneys General have announced that they will pursue action against gougers under various consumer protection laws. For example, the Illinois Attorney General announced that the state will pursue price gouging claims under the Illinois Consumer Fraud and Deceptive Business Practices Act. The Attorneys General from Washington, Vermont, Indiana, and Colorado have made similar statements. As such, even if an operator is in a state without a specific price gouging statute, they must be cognizant of other statutes that may be applicable and may limit price increases during and after the pandemic. In these states, again, operators should be reasonable. 

    Conclusion 

    During the COVID-19 pandemic, members should consult with their legal counsel regarding the application of their state’s pricing laws before changing rental rates for both current and prospective tenants. Given how dynamic the current situation is, members should also frequently monitor announcements and statements from federal, state, and local officials that could extend, modify, or revise their state of emergency as the COVID-19 situation changes. 

    For a general overview of all 50 states price gouging laws, click here. 

    For an overview of the current “expiration” dates of applicable price gouging laws, click here. 

    For additional restrictions operators must comply with related to lien sales, lock outs, and late fees, click here.


  • Friday, July 17, 2020 11:18 AM | Ross Hutchings (Administrator)

    The California Office of Emergency Services has a chart of various "state of emergencies" to avoid price gouging:

    https://www.caloes.ca.gov/cal-oes-divisions/legal-affairs/price-gouging

  • Wednesday, July 08, 2020 11:19 AM | Ross Hutchings (Administrator)

    CEA Logo

    SPECIAL ALERT

    As with all things COVID-19 related, we once again see an unprecedented move with the passing of a temporary "right to reemployment" ordinance that did not require the mayor's signature. On June 23, 2020, the San Francisco Board of Supervisors voted in favor of legislature requiring San Francisco employers with 100 or more employees to "offer a right to reemployment" to certain workers who were laid off due to the ongoing COVID-19 pandemic.

     

    The ordinance was enacted on July 3, 2020 and obligates covered businesses to comply within 30 days (by August 2, 2020). It will remain in effect through September 1, 2020 unless the Board votes to extend it.

    Employers in San Francisco should be aware of the following criteria:

    • Who is covered? Applies to any for-profit or non-profit business operating in San Francisco on or after February 25, 2020 with 100 or more employees. Many healthcare businesses are exempt.
    • How is layoff defined? For purposes of this ordinance, a layoff is considered a separation of employment affecting 10 or more employees within a 30 day period, including business closures. The layoff must have occurred because of the San Francisco's emergency health declaration and/or due to orders to shelter in place during the COVID-19 pandemic.
    • Who is an eligible worker? An "eligible worker" is an individual who had been employed for at least 90 days at or before the time of layoff.
    • What notice(s) are required? While the ordinance is in effect, employers must provide notice to all "eligible workers" in a language the individual understands which includes the effective date, rehire rights, and the Economic and Workforce Development (OEWD) hotline number. Employers must inform the OEWD within 30 days of the layoff the total number of employees affected with job classifications, original hire dates, and separation dates.
    • Are there record retention requirements? Employers must keep records of each layoff for 2 years including the worker's legal name, job classification, hire date, last known address, email, phone number, and copy of the layoff notice.

    READ MORE DETAILS >>

    Please continue to check our Additional Resources page for updated information.

    CEA is here to support you during the COVID-19 Crisis.

     

    Call 800.399.5331 or email us at CEAinfo@employers.org

    California Employers Association
    1451 River Park Drive, #116
    Sacramento, California 95815
    (800) 399-5331   employers.org

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  • Tuesday, June 16, 2020 12:05 PM | Ross Hutchings (Administrator)

    REMINDER - LA CITY NOTICE TO TENANTS DUE NO LATER THAN THIS THURSDAY - JUNE 18, 2020

    Self Storage Owners and Operators in the City of Los Angeles, 

    The Los Angeles self storage ordinance requires that operators provide notice of the ordinance to their tenants by June 18. The notice must be provided in English and Spanish.

    Click HERE for the mandatory notice in English and Spanish.

    Thank you, 

    Ross Hutchings, CAE
    Executive Director – California Self Storage Association
    5325 Elkhorn Blvd., # 283, Sacramento, CA 95842
    ross@californiaselfstorage.org
    888.CSSA.207 (888.277.2207) – toll-free office, 949.554.3292 – mobile


  • Tuesday, June 02, 2020 8:27 AM | Ross Hutchings (Administrator)

    Despite significant opposition from the self storage industry, the Los Angeles City Council passed an ordinance requiring self storage owners to defer rent if a tenant is unable to pay for a COVID-related reason and provides documentation to the owner no later than seven days after the rent is due. The deferral lasts until three months after the local emergency period. The ordinance also prohibits late fees on deferred rent and requires that owners provide notice of the ordinance to their tenants.

    We expect the Mayor to sign this ordinance soon. 

    CSSA strongly encourage you to consult with legal counsel before proceeding with lockouts or lien sales in the City of Los Angeles. 

    Additional Moratoriums & Restrictions

    In addition to the new Los Angeles Ordinance, we know of three other cities that have moratoriums or restrictions:

    • Ontario - Moratorium - specially mentions self storage 
    • Livermore - Moratorium (banned) self storage lien sales
    • Pasadena - Eviction Moratorium - "tenant" definition includes self storage 

    New ordinances are being drafted each week. We strongly encourage you to check with both your city and county HERE to see if any such ordinance or moratorium has been passed that would restrict you from lien process, late fees, or imposes repayment timelines.

    CSSA is working closely with SSA to track these ordinances as they arise and attempt to make our case for exempting self storage or challenging the validity with regards to the Self Storage Act. Current sentiment still remains in favor of those tenants who have been financially affected by the Covid-19 restrictions. 

    For more information and updates on Covid-19 restrictions and various articles for help in managing your business during these challenging times, please follow the information on the CSSA website CORONAVIRUS INFORMATION.


  • Tuesday, June 02, 2020 8:13 AM | Ross Hutchings (Administrator)

    California Cities and Counties Eviction Moratoriums

    Governor Gavin Newsom issued an EXECUTIVE ORDER that authorizes local governments to pause evictions for tenants – both residential and commercial – when the basis for the eviction is non-payment of rent arising out of a substantial decrease in household or business income or substantial out-of-pocket medical expenses caused by the COVID-19 pandemic, or by any local, state, or federal government response to COVID-19.

    It is the opinion of CSSA and SSA that neither California law nor the Governor’s order allows local governments to affect the lien rights of self storage operators. California’s self storage lien law is in a different part of the state code and is separate from the state’s eviction laws.

    Nevertheless, we strongly recommend that California operators review each LOCAL ORDER or ORDINANCE carefully – looking for all applicable city and county orders / ordinances – and determine the effect that each has on issues such as self storage lien sales, late fees, and unlawful detainer actions. Although some orders / ordinances have overlapping language, they often have significant, and occasionally subtle, differences such as definitions, repayment periods, and requirements for the tenant to claim the protection of the order / ordinance. We also strongly recommend consultation with experienced legal counsel when dealing with tenants who fail to pay in full. 

    CLICK HERE for California Cities and Counties Eviction Moratoriums

      


  • Tuesday, June 02, 2020 8:07 AM | Ross Hutchings (Administrator)

    Moratoriums on Commercial Late Fees, Liens, and Evictions

    As the coronavirus (Covid 19) spreads throughout the United States, several states and localities have enacted restrictions on foreclosures and evictions. Many of these orders that have been issued to date exclusively cover residential evictions and foreclosures. However, as the situation evolves, more states are expanding those restrictions to cover commercial evictions as well. Some of the commercial eviction or foreclosure moratoriums may prevent operators from conducting self storage liens sales, performing overlocks, or imposing late fees.

    Although self storage lien sales are not evictions in the usual sense of that word, the SSA urges all operators to exercise great caution if they operate in an area covered by a moratorium on commercial or non-residential evictions or foreclosures.

    First, self storage lien sales are a form of non-judicial foreclosure. Therefore, an order that imposes a foreclosure moratorium may apply to self storage lien sales. Second, the overall intent of many government restrictions at this time is to keep people at home as much as possible. It arguably frustrates the intent of the orders if a landlord creates a situation that forces a tenant to leave home for a non-essential purpose. Third, the orders are often hastily drafted and vague and do not define the term “eviction”, “foreclosure”, or other key terms in the orders. The overall intent, coupled with the vague wording, indicates that the term “eviction” or “foreclosure” is meant to cover any unilateral action by an operator that terminates a rental agreement. This certainly covers lien sales, even if the primary purpose of a lien sale is to recover unpaid rents.

    The volume of new orders issued daily makes it difficult to provide a comprehensive list of jurisdictions, especially local governments, that have enacted eviction or foreclosure moratoriums. Additionally, in the interest of space, we did not include local orders that affect only residential evictions or lawsuits filed to evict a tenant.

    California

    • Governor issued an order, issuing a statewide moratorium on residential evictions. 
    • Governor also issued an executive order that authorizes local governments to pause evictions for renters. The protection is in effect through May 31, 2020. Tenants are still obligated to pay rent, and landlords can still recover rent that is due. The order only applies to the imposition of limitations on evictions when the basis for the eviction is nonpayment of rent, or a foreclosure, arising out of a substantial decrease in household or business income (including, but not limited to, a substantial decrease in household income caused by layoffs or a reduction in the number of compensated hours of work, or a substantial decrease in business income caused by a reduction in opening hours or consumer  demand), or substantial out-of-pocket medical expenses; and the decrease in household or business income or the out-of-pocket medical expenses was caused by the COVID-19 pandemic, or by any local, state, or federal government response to COVID-19, and is documented.
    • Evictions and foreclosures are suspended only as set forth by local governments. Many localities in California have imposed such restrictions on commercial leases. Additionally, many have restricted the ability to impose any late fees. A complete list of California orders is forthcoming.

    Late fees - If it does not violate your local order (see below) late fees may continue to be assessed as part of your normal business practice. However several operators have reported that they are assessing the late fee but giving their tenants a grace period before it is due.

    Lockouts, liens, auctions - We have heard form several operators that have put a halt on lockouts and/or lien notices/auctions for the month of April, yet others are still pressing forward. If you decide to move forward with auctions, you will need to hold them online as in-person auctions violate the non-gather order for the state of California. 

    Check your local order in place - Whether or not an operator is permitted to assess late fees, liens, lockouts or auctions depends on the orders in place in the city/county where your facility is located within the state of California. You must review your local orders in place, and then make a business decision depending on what is allowed. We also suggest you consult your attorney before making a decision. 

    Here is one link that might help you find your local order: https://www.covid19.ca.gov/state-local-resources/#top  

    Consider the optics - Before making a final determination, you might also want to consider the optics or how this looks to your community. You may want to consider some leniency if other businesses in your area are delaying payments to give those negatively affected by these restrictions, including being furloughed or loosing their job.

    Additional advice is given by Joe Doherty and Daniel Bryant from SSA:

    "Although self storage lien sales are not evictions in the usual sense of that word, the SSA urges all operators to exercise great caution if they operate in an area covered by a moratorium on commercial or non-residential evictions or foreclosures.

    First, self storage lien sales are a form of non-judicial foreclosure. Therefore, an order that imposes a foreclosure moratorium may apply to self storage lien sales. Second, the overall intent of many government restrictions at this time is to keep people at home as much as possible. It arguably frustrates the intent of the orders if a landlord creates a situation that forces a tenant to leave home for a non-essential purpose. Third, the orders are often hastily drafted and vague and do not define the term “eviction”, “foreclosure”, or other key terms in the orders. The overall intent, coupled with the vague wording, indicates that the term “eviction” or “foreclosure” is meant to cover any unilateral action by an operator that terminates a rental agreement. This certainly covers lien sales, even if the primary purpose of a lien sale is to recover unpaid rents."


  • Tuesday, June 02, 2020 8:06 AM | Ross Hutchings (Administrator)

    On April 7, 2020 the City of Ontario, California passed an eviction moratorium which expressly refers to storage unit auctions. CLICK HERE for a copy of the ordinance press release can be accessed Here The formal order will be made available to Members upon CSSA’s receipt of same.

    Carlos Kaslow, CA attorney and author of California (and many other states) lien laws made the following suggestion:

    "The city of Ontario recently put a hold on using the lien remedy and operators should know this and comply.  It might be helpful if owners put more time discussing delinquency problems with their customers.  There are a number of ways the parties can resolve a payment problem and the lien remedy is the most drastic. If a customer will be hopelessly behind on the rent in 2 or 3 months it might be in everyone's interest to make a deal.  For example, the tenant moves out and the owner waives rent.  If done early the cost to the owner is relatively low.  A tenant who is already behind two or three months may want to abandon property if the owner agrees to waive the outstanding rent. Now is a good time for owners be to looking for solutions other than the lien remedy, even in cities that have not taken Ontario's approach." 


  • Tuesday, June 02, 2020 8:01 AM | Ross Hutchings (Administrator)

    Governor Gavin Newsom signed an executive order on April 4, 2020 expanding consumer protection against price gouging as California continues to respond to the COVID-19 pandemic.

    The order generally prohibits sellers of any kind from increasing prices on food, consumer goods, medical or emergency supplies, and certain other items by more than 10 percent. The order also gives additional tools to the California Department of Justice and Attorney General’s Office, among others, to take action against price gougers.

    “This crisis has impacted every Californian and our normal way of life, and we are ensuring that all consumers are able to purchase what they need, at a fair price,” said Governor Newsom.

    A copy of the Governor’s executive order can be found here, and the text of the order can be found here.


  • Tuesday, June 02, 2020 8:01 AM | Ross Hutchings (Administrator)

    Governor Gavin Newsom issued an executive order on March 30, 2020 banning the enforcement of eviction orders for renters affected by COVID-19 through May 31, 2020. The order prohibits landlords from evicting tenants for nonpayment of rent and prohibits enforcement of evictions by law enforcement or courts. It also requires tenants to declare in writing, no more than seven days after the rent comes due, that the tenant cannot pay all or part of their rent due to COVID-19.

    The tenant would be required to retain documentation but not required to submit it to the landlord in advance. And the tenant would remain obligated to repay full rent in “a timely manner” and could still face eviction after the enforcement moratorium is lifted. The order takes effect immediately, and provides immediate relief to tenants for whom rent is due on April 1st.

    Today’s action builds on Governor Newsom’s previous executive order authorizing local governments to halt evictions for renters impacted by the pandemic. 

     A copy of the Governor’s executive order can be found here and the text of the order can also be found here.


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California Self Storage Association
5325 Elkhorn Blvd., #283 
Sacramento, CA 95842

P: 888-CSSA-207 or 888-277-2207

EMAIL: info@californiaselfstorage.org

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