Storage auctions occur when a self-storage facility is forced to follow the steps to secure a lien against a tenant who has become delinquent on their rent. Generally, this is a long and costly process that most owner-operators prefer to avoid. When a tenant is unable to pay or fails to pay for whatever reason, the owner must take specific action to collect the rent. Steps vary by state, and some local ordinances also apply. As a result, this is the part of ownership that self-storage operators enjoy least.
There may be a perception that self-storage auctions are lucrative and exciting thanks to popular television shows, but generally, self-storage auctions are a lengthy process that owners try to avoid. The goal of an auction is to complete the lien process and recoup delinquent rent in order to finally rent the storage unit again. How does this work? Let’s discuss.
First, the Florida Lien Law was updated in 2017. Read more about that here. Find the full Florida Lien Law here: Chapter 83 Section 806 – 2018 Florida Statutes. Owners are wise to educate themselves on the full lien law and understand their business rights regarding the operation of their business legally when a tenant is delinquent.
Second, the Florida Lien Law states that written notice must be given to the tenant with an itemized statement of the amount due, demand for payment, and that the contents will be sold if payment is not made. Late fees are permitted and must be included on the written notice and can be up to 20% or $20 of the monthly rent.
Third, vehicles and watercraft can be towed from the property after rent is not paid for 60 days.
Fourth, the Tenants have the right to redeem their property by paying the full amount of the lien and reasonable expenses at any time before the sale.
While television can make self-storage auctions look glamorous and exciting, it is a sad occurrence to get to the point where items can be sold to recover costs incurred with a customer who has defaulted on their rental agreement. At any point prior to the auction, tenants can recover their property by paying the late rent and all associated fees to the self-storage facility. Their personal property will not be sold and must be collected from the self-storage facility.
The goal of self-storage auctions are to recover costs incurred resulting from tenants’ failure to pay rent and the fact that their stored items are prohibiting the owner from renting that space. Self-storage owners may not move or relocate personal property to another space during this process, which can prohibit future renters from using that unit until the lien process is complete.
At Coastal Storage, we encourage owners and operators to familiarize themselves with the specific laws of their state and local municipalities to ensure full compliance with the lien process. It can be a tedious and long process, but businesses can be liable to replace personal property if the lien process is not followed correctly and items are sold before a tenant can collect them. The new updates to the law offer some protection to business owners, and that’s a good thing. Following the law ensures that those protections apply to each situation.
Coastal Storage works with investors seeking their next self-storage property. Schedule a discovery call at 904-591-0140 to learn more about our team of self-storage experts.