The world our businesses operate in has never changed at such a breakneck pace. As countries across the globe and states across the US have gone into lockdown, the ramifications have spread deep and wide. But one of the major areas that storage operators need to pay close attention to are changes to the legal landscape brought on by the COVID-19 outbreak.
Before we go any further, we want to make it clear that this article is not legal advice. We’re simply sharing information with our perspective that we think operators may find helpful. If you have any pressing legal questions, we’d advise asking a lawyer.
The legal issue of price gouging emerged early on during the outbreak and continues to be an area of consideration for self-storage operators. Now, in almost all states, price gouging laws are meant to prevent unduly raising prices during emergencies like hurricanes or wildfires. These laws go into effect once a state of emergency has been declared at the state level to prevent sharp increases in the cost of goods and services.
As more and more states declare states of emergency in response to the COVID-19 outbreak, storage operators across the country need to be aware of how these laws may or may not impact them. As this crisis is unprecedented in breadth and economic impact, some states that have not previously had these laws are quickly putting them in place.
Price gouging laws typically fall into four categories.
- Hard cap laws like in California where anything above a 10% increase would be illegal.
- Any increase at all. Some states are declaring that any increase at this time is illegal.
- Open-ended. Outlawing any increase that’s deemed “unconscionable.”
- No law, for now. States like Maryland and Washington haven’t previously had these laws but have or are quickly legislating them into the book.
Even if you’re operating in a state without a price gouging law, it’s still advisable to be cautious regarding any rate increases. Your state may soon have such a law in place. After reviewing any legislation that pertains to you, if you’re concerned about potential recommend consulting your legal counsel. But, in an effort to retain good will with your tenants, now may not be the best time for a rate increase.
As you know, storage operators are granted liens on the property their customers store at their facilities. This allows operators to auction or sell that property in the event a tenant fails to meet their rental obligations and they need to be evicted. Most states have enacted moratoriums on evictions during the ongoing state of emergency. These laws are mostly residential specific, so they’re targeted more at landlords who could evict tenants from a house or apartment. You should confirm with your own legal counsel before moving forward as these laws have been passed quickly and differ from state to state. But, for now, it appears storage operators are free to proceed as normal in eviction situations.
If you are going to proceed with a lien sale and auction, it’s important that you are adhering to any local orders regarding the size of social gatherings. Especially if you’re holding in-person auctions. Right now, it’s pretty consistent that states and local jurisdictions are requiring social gatherings to remain at 10 or fewer people.
Also, we think it’s best to use sound judgment regarding all of this. Just because you can do something doesn’t mean you should do it.
Unfortunately, many insurance companies are saying their policies don’t cover this kind of business interruption. As the pandemic is easily the most significant interruption most business owners have ever faced, that’s not great news. Typically, an interruption claim has to be related to physical harm caused to your building or facility. Not a global pandemic and government-ordered shutdowns.
However, there’s nothing preventing you from filing a claim. It’s highly likely you won’t be paid but it never hurts to go through the process. Also, some states are considering legislation that would force insurance companies to pay out those policies in response to this crisis. But, as of now, we haven’t seen anything official in that regard.
Paid Sick Leave
A major piece of the recent stimulus package, the CARES Act, was federally mandated paid leave for employees affected by the COVID-19 outbreak. Now, not everyone will qualify for this paid leave. It’s mostly for employees affected by the virus directly or indirectly. You can read the full breakdown of who qualifies and how the program works here.
As always, you should consult your legal counsel before making any decisions regarding COVID-19 related leave for your employees.
Do Your Homework
Now, we’re only scratching the surface of the dynamic legal landscape operators are trying to navigate during this time. But we feel these areas are the most relevant, at this time. In the end, we can only advise that you do your own due diligence regarding any of the topics we’ve covered, or for any legal questions you have pertaining to operating your business during this crisis.
For even more in-depth coverage and clarity around legal issues, you can always contact your state SSA for more information. And, for a better idea of how SSA is handling this situation you can watch this fireside chat between Storable CEO, Chuck Gordon, and SSA President & CEO, Timothy Dietz.
And, as always, we hope you’re happy, healthy and safe.