The devastation wrought by Hurricane Ian led governors in several Southeastern states to declare a state of emergency—a move that has a big impact on self-storage operators when it comes to setting prices.
The declarations triggered price-gouging laws that could put temporary limits on self-storage rental rates in some jurisdictions, according to a newsletter recently published by the national Self Storage Association.
The recent declarations were made in Florida, Georgia, North Carolina,South Carolina and Virginia. All 50 states have price limiting measures that go into effect during a state of emergency, however not all are applicable to self-storage operations. For this reason, the SSA advises any operators affected by a state of emergency to consult with an attorney before making rate changes.
For operators not currently impacted, now is a good time to review the law in your state so you are aware of your limitations the next time a disaster strikes. Conducting a review of the law now will help you mitigate your risk of running afoul of any anti-gouging laws unintentionally in the future.
Anti-Gouging Laws in Effect
According to Inside Self Storage, the anti-gouging laws currently in effect following Hurricane Ian are as follows:
- Florida: The price-gouging statute is in effect statewide and prohibits charging an “unconscionable price” for self-storage units. Violators are subject to $1,000 per incident up to $25,000 for multiple violations.
- Georgia: Businesses are prohibited from selling at higher prices, unless the increase reflects an increase in costs incurred by the seller for providing specific goods or services.
- North Carolina: Prices cannot exceed the average amount charged by the seller during the 60-day period preceding the emergency declaration.
- South Carolina: Self-storage facilities may not charge an unconscionable price during the duration of the state of emergency.
- Virginia: Storage facilities may not charge an unconscionable price for 30 days following the declaration of a state of emergency.
Avoiding Financial and Reputational Risk
Remember, customers can submit complaints to the state if they believe your business is violating the anti-gouging laws. The best way to avoid fines is to:
- Avoid raising rental rates during a state of emergency until you consult with an attorney first.
- Pause automatic rental increases on existing customers during the state of emergency.
Potentially worse than government fines is the reputational damage your company could face if caught breaking price-gouging laws. Such an event could be a PR nightmare for your company and erode the trust you’ve worked hard to build with your tenants.
Navigating Anti-Gouging Laws
If you want to avoid such a predicament, be very cautious about raising rates during a state of emergency. A slight miscalculation could end up being a costly mistake in terms of fines and lost business due to negative publicity. Avoid this major financial risk by consulting with your legal counsel before you raise storage rents.