Rental Properties Not Exempt From Price Gouging Laws – Real Estate and Construction – United States – Mondaq News Alerts

United States: Rental Properties Not Exempt From Price Gouging Laws

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While PPE, toilet paper, and groceries make price gouging
headlines, consumer goods are not the only goods covered by price
gouging laws in many states. Less publicized, but equally
important, lodging or housing may be found on lists of products
covered by many price gouging statutes.

A recent case in California offers a glimpse. In California, the
statute prohibits selling, or offering for sale, a lengthy list of
goods and services “for a price of more than 10% greater than
the price charged by that person for those goods or services
immediately prior to the proclamation or declaration of
emergency.” Among other things, California’s price gouging
statute covers “housing.”

In February, the City of Santa Monica filed suit against a
property owner alleging a violation of the state’s price
gouging law. The City alleged the owners of a multi-unit apartment
building in Santa Monica had raised tenants’ rent by more than
the allowable 10%. On December 23, 2019, the California Governor
extended a state of emergency declaration in relation to the
California wildfires. The Governor also declared a state of
emergency in response to the spread of COVID-19 beginning March 4,
2020.

The City’s complaint alleges that a tenant at the apartment
building had been paying $865 per month in rent in December 2019
and January 2020. According to the City, that price increased to
$2,336 in February 2020. The City also alleges that the property
owners raised the rent prices again in March 2020, from $2,336 to
$3,000. The property owners deny wrong-doing, and stated that the
City’s suit is in retaliation for the property owners’
filing suit against the City on another issue. The case is
scheduled for a hearing on March 24, 2021.

California is not alone in prohibiting price increases on
housing during an emergency. Arkansas, Kentucky, Tennessee, and
West Virginia also explicitly list “housing” in their
price gouging statutes. Similarly, Kansas and Vermont include both “housing” and “lodging.” Texas is the lone
state to mention only “lodging.”

While most of these states simply include “housing” or “lodging” in the longer list of covered items, others,
like South Carolina include a specific provision for housing. 
South Carolina prohibits “impos[ing] unconscionable prices for
the rental or lease of a dwelling unit, including a motel or hotel
unit, or other temporary lodging, or self-storage facility within
the area for which the state of disaster is declared.”

In light of the restrictions in place and the ongoing
enforcement, property owners, landlords, and hoteliers should
consider how their prices have changed or may change in response to
the COVID-19 pandemic. These business should use best practices, conduct a price gouging audit, and assess the
risk of price gouging claims when managing their compliance efforts
and measures.

Rental Properties Not Exempt From Price Gouging
Laws

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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