The following was reprinted with permission from the California Self Storage Association (CSSA). It was distributed to members and other California self-storage operators by CSSA Executive Director Ross Hutchings on March 24, 2020. To reach Ross directly or learn more about the association, e-mail ross@californiaselfstorage.org or visit www.californiaselfstorage.org.
As you know, on March 19, 2020, California Governor Newsom declared a shelter-in-place order for the entire state. We have been receiving several calls and e-mails at the CSSA office from self-storage professionals seeking guidance. Below we have attempted to provide some information that will hopefully help as you continue to move forward doing business under these circumstances.
This information is NOT meant as legal advice, only suggestions. You should check with your legal counsel to ensure you are abiding by the law and local ordinances. As this pandemic is changing daily, new orders are also changing. CSSA will attempt to keep you up to date by posting information on our “Coronavirus Information” page.
What does the shelter-in-place order say?
- See the March 19, 2020, executive order here. You can also find this on the CSSA “Coronavirus Information” page.
- On March 21, 2020, California Governor Newsom signed a new executive order that supplements and expands certain healthcare mechanisms and can be accessed via the same website.
Can I keep my self-storage business open during this time?
- Self-storage is considered essential under the March 19, 2020, standards as a recognized business under the Federal Critical Business Sections, “Commercial Facilities Sector.”
- There has been a new list distributed that does not name the commercial facilities sector. We are inquiring to determine if self-storage still has remained essential. Our recommendation would be to contact your county/local agency to receive that determination.
- Please be aware that some cities and counties have issued local ordinances. You should research your county and city COVID-19 information and comply with those orders in addition to the statewide order. CSSA recommends that all operators comply with whichever order is more restrictive and seek guidance from counsel as to what is required by law.
- Here is a list of all essential businesses as defined by Federal standards.
- If you keep your office open, follow the CDC guidelines and any additional requirements set forth in any orders. For example, you might want to provide items to ensure a healthy environment (disinfectant, hand sanitizer, disposable gloves, etc.) and have employees and customers abide by the six-foot social distancing and limited-gatherings rules.
- If employees state they are feeling sick or exhibit any signs of potential illness, they should stay home.
- If employees are reluctant to come to work for fear of contracting the virus, you might want to consider allowing them to stay home, especially if you can continue to operate your business without them. As to whether they can continue to be paid, that is a business decision typically handled by an HR (human resources) professional and/or labor-law counsel; any withholding of pay should be considered by your HR or PEO (professional employer organization) and confirmed by your attorney.
Do I need to keep my business open?
You are not required to keep your business open. You have a right to control access, just as you would in any natural disaster.
Can I close my office but continue to keep the remainder of the facility open with automatic gate entry?
This might be a good alternative, as you are providing protection to your employees and access to your tenants. Some operators aren’t so inclined due to security concerns and the inability to perform basic essential business functions on site.
What if tenants have been affected (lost job, wages, etc.)? Are they still required to pay rent?
Yes, tenants are currently still required to honor the terms of the lease. You have the right to continue to conduct business with your normal, standard business practices, and similarly have the right to alter those practices as you deem appropriate.
Some of my tenants pay in cash. Am I required to take it?
- You have the option to ban cash payments, except in any city or county that has implemented a so-called “cashless ban” policy. There is no statewide ban in California, so check with your local authorities.
- If you decide to take cash payments, you might want to consider a drop box or another way to transfer money. Employees should use disposable gloves when handling any cash.
- If you’re closing your office but the remainder of the self-storage facility remains open and accepts cash, you might want to consider a lock box. This demonstrates you provide a variety of methods for all types of payments.
Can I raise rents on my units?
- California has very strict guidelines related to raising prices during a state of emergency. California’s price gouging laws are codified in Section 396 of the California Penal Code, and non-compliance carries both criminal and civil penalties. California’s price-gouging laws apply to the self-storage business and, thus, compliance is required.
- California allows a maximum rent increase of 10 percent during the state of emergency.
- There are numerous states of emergency in effect in California. More information can be accessed here and here.
- The COVID state of emergency in California took effect on March 4, 2020, which means rents charged on March 3, 2020, will be the baseline, threshold date, for purposes of calculating the 10 percent limitation. Check with your attorney on this and all other price issues.
Can I still charge a late fee?
If the late fee was agreed to by the tenant as set forth in the lease, you’re probably legally permitted to continue with this practice. Again, check with your attorney on this and all other price issues.
If I offer a discount or complimentary rent for new tenants, will I be able to increase beyond the 10 percent after the discounted time period?
As standard practice and published business practice, if you offer a discount for new tenants that is increased after a certain period, you should be able to continue that practice as long as the increase was agreed to by the tenant when obtaining the promotion. Again, check with your attorney on this and all other price issues.
What about liens during this state of emergency and shelter-in-place order?
Currently, there is no direct prohibition from continuing with lien auctions. Although it might be legal to go through the lien process for delinquent renters, some operators have expressed an interest in suspending lien auctions while this COVID-19 pandemic continues to develop. Check with your attorney.
Where can I find additional information about self-storage business issues during this shelter-in-place and state of emergency?
- The CSSA is providing information via our “Coronavirus Information” page.
- The national Self Storage Association is providing information here.
- CSSA members are invited to share questions and comments on our member discussion board. This is not suggested as any form of legal advice, it is just an opportunity to share information with each other if you choose.
