Santa Monica Landlords Charged With Price Gouging During Pandemic

Santa Monica has just signaled it will not tolerate rent gouging during a state of emergency.

Last Friday, the SM City Attorney's Office announced it filed a criminal complaint charging the owners of an apartment building at 1433 Euclid Street with "unlawfully raising a tenant's rent by more than the allowed 10 percent during a declared emergency," caused by the Coronavirus pandemic. 

The landlords, WS Communities, LLC and 1433 Euclid Street, LLC, have been charged with three counts of price gouging, city officials said in a press release. They are scheduled to be arraigned on March 24, 2021, in Los Angeles Superior Court, West Judicial District.

The complaint alleges that a tenant at 1433 Euclid Street was paying rent in the amount of $865 a month until the defendants increased her rent to $2,336 in February 2020, and $3,000 in March and April 2020. "The tenant paid the increased rental amounts under protest," city officials said.

California law prohibits businesses and owners from advertising, offering, or charging a rental price for housing to existing or prospective tenants, that has been increased by more than 10 percent upon a proclamation of a state of emergency, or during a period the proclamation is extended by the President of the United States, Governor of California, or local officials.

A violation of California's price gouging law is a misdemeanor punishable by imprisonment in a county jail up to one year, a fine up to $10,000, or both a fine and imprisonment.  Additionally, a violation of the law is deemed to constitute an unlawful business practice and an act of unfair competition, subject to civil penalties of up to $2,500 per violation, injunctive relief, and restitution, city officials said.

In 2017, then-Governor Jerry Brown declared an emergency in various counties in California in response to the devastating wildfires that caused massive property destruction, threatened homes, and required residents to evacuate. That emergency has been extended several times, including in December 2019 when Governor Gavin Newsom issued an order extending price gouging protections related to the wildfire emergency to December 31, 2020, in the counties of Los Angeles, Ventura, Santa Barbara, Napa, Mendocino, and Butte. 

Gov. Gavin Newsom declared a state of emergency on March 4, 2020, in response to the Covid-19 outbreak; that remains in place. On December 30, 2020, Governor Newsom issued an order further extending the price gouging protections of the wildfire emergency to December 31, 2021, thereby ensuring that rent gouging protections are in effect in Santa Monica and in the rest of Los Angeles County for the remainder of 2021.

WS Communities is subsidiary of Neil Shekhter's NMS Properties, which has developed and managed a large portfolio of apartment buildings and commercial properties in Santa Monica, the Westside and the San Fernando Valley since 1988.

WS Communities has reportedly put up for sale its entire 23-parcel portfolio, which is entitled for the development of over 2,100 units and more than 200,000 square feet of commercial space.