There are challenges in every business. Lien laws and auctions are the less attractive parts of self-storage. In a perfect world, every tenant would never fall behind on rent, and no lien notices would be required. All rent would be collected in a timely manner and without incident.
The truth is the opposite, though. There are some tenants, as described above, who fall behind or break their contract entirely and leave behind a full self-storage unit for owners to deal with.
To begin, it’s important to know the lien laws specific to your state. Owners can quickly search online and find links to each state where the full statute can be found.
Additionally, most states have a governance organization similar to the Florida Self-Storage Association or the Georgia Self-Storage Association, but specific to each state. These organizations provide information and explanations of the laws surrounding the self-storage business within that state.
When a tenant falls behind on rent, there are specific steps outlined in each state to enable the owner of the self-storage facility to collect money owed to them. It is essential to follow those steps exactly. We have written other articles about lien laws and auctions here and here.
Owners have the right to collect, and tenants are responsible for timely payment and working toward a solution to collect their belongings. When they are unable to meet their financial obligations, the lien process begins. A recent discussion on the Inside Self Storage forum related to storage auctions and personal items found therein prompted the writing of this article on the best practices and legal steps regarding personal information in a storage unit.
The original discussion is available here.
Personal information in a storage unit might include anything with identification, addresses, medical bills, birth certificates, or other sensitive, personal information. While there are limits to what people can store in self-storage, there is no limit to the crazy things that people will store.
The discussion centered around the responsibility of the owners/operators to ensure that there is no personal, sensitive information in a storage unit that is sold at auction. If that information is found, what is the responsibility of the owner/operator to contact the tenant and save it for them?
The questions here are both ethical and legal. The ethical question is this: is it kind or compassionate to allow personal, sensitive information to be sold to strangers in a self-storage auction? The legal question is: Is it legal to require the purchaser of the unit contents to return the sensitive information to the self-storage facility?
Self-storage owners do not go through the units of tenants. It is illegal to do so. As a result, it would be impossible for owners to know what material is stored in a unit. When a unit is auctioned off, it is sold as is with all contents unlocked and untouched at the sale. This puts the responsibility of sorting on the purchaser of the unit.
One owner commented that they ask purchasers to return any private information, and they make an effort to return it to the owner. The question then becomes, how long must the self-storage owner hold the information? What is the right amount of time? Do they open themselves up to legal liability in doing so?
This is where lien laws are helpful and necessary. Each state may require a different process for dealing with this kind of property. Wise owners will consult the legal statutes before deciding how to proceed.
One owner commented that secure shredding of sensitive documents is a necessary, legal step to take. Proper documentation of that process would be beneficial to keep as a receipt.
Many owners express frustration at having to deal with tenants who have abandoned their belongings that include personal, private information. As a result, they strictly follow the law in their state to avoid accusations of mishandling property.
At Coastal Storage, we strongly encourage membership with local self-storage associations as a way to stay on top of new developments and legal issues statewide. When owners and operators equip themselves with knowledge, they are able to operate efficiently and effectively even in difficult situations.
Call us today at 904-591-0140 to work with our team of self-storage experts. We would love to help you find your next investment.