Nevada Considers Changes to Self-Storage Lien Law
Copyright 2014 by Virgo Publishing.
By: John Carlisle
Posted on: 03/04/2011



 

The Nevada state lawmakers are considering Senate Bill 150, which would amend the state statutes governing self-storage (NRS 108.4733) and make several changes to existing self-storage lien law. These include legal e-mail auction notifications (with confirmation of tenant receipt), newspaper-free advertising requirements, and new procedures for handling delinquent tenants’  “protected property.”

The bill, introduced by Sen. Mike Schneider, allows owners to notify tenants by “verified” means, which includes traditional mail or electronic communication, as long as there is evidence of receipt.
In addition, the pre-auction newspaper advertising requirements are removed. The only requirement is at least five bidders who are unrelated to the owner must attend the auction for it to be “commercially reasonable.”

 “This allows storage operators to use more modern means of communication than what was available in 1983 when the law was originally written,” said Travis Morrow, president of the Nevada Self-Storage Association. “Verified” is intentionally broad in its definition of electronic communication, deeming it as communication between two computers. Morrow said the broad usage creates flexibility so that in 10 to 15 years, the law won’t need to be redrafted to include new technological advances.

“The operator can still use Certified Mail if that’s what makes them more comfortable,” Morrow said. “But the U.S. Postal Service offers other proof-of-mailing options that are far less expensive.”

In regard to protected property, or property illegal to sell in a lien sale, Morrow said the new law would decrease operators’ liability because it requires tenants to disclose in advance if they’re going to be storing protected property and specify what exactly it is. Examples of protected property include:

  • Documents or electronic data containing Social Security numbers, credit or debit card information, bank account information, passport numbers or information, and medical or legal documents
  • Pharmaceuticals and prescription drugs
  • Alcoholic beverages
  • Firearms

In the past, for example, if a manager inadvertently sold a firearm to a convicted felon at an auction, the manager and operation would have broken the law. This new stipulation is designed to remove that possibility, Morrow explained.

Furthermore, SB 150 specifies how an operator is to dispose of or turn over protected property. Destruction must be in accordance with the law. Another option is to ask local law enforcement to remove the items. The self-storage representative forfeits all liability once law enforcement has assumed possession.

The bill went through a senate judiciary hearing March 1. Morrow was present and said the hearing went well and the association will have the chance to work on the minor changes the judiciary committee suggested.

In other changes, the bill would eliminate the distinction between personal property and items for which a title is required (most often, boats and other vehicles) in regards to the type of lien held, giving the facility a possessory lien for all personal property from the first day of late rent. Because motor vehicles, boats and personal watercraft would now be included among “personal property,” they are subject to possessor’s lien status.

The “possessor’s lien” wording may give some operators pause, as evident in the Self-Storage Talk thread “Nevada SB 150.” [http://www.selfstoragetalk.com/nevada/4653-nevada-sb150.html]. But Morrow said this kind of lien is common among self-storage laws and emphasizes why it’s extremely important to overlock units headed to auction. Otherwise, if property is removed from the facility, the lien can end. He also reminded operators that liens and lien sales are not operators’ only recourse in collecting debt, citing collections agencies and lawsuits.

Though it’s not new legislation, climate-controlled facilities and their managers should take note of Section 21: “If an owner or a person acting on his or her behalf fails to indicate the range of temperature and humidity of a facility in any advertisement that refers to it as being ‘climate controlled’ or fails to maintain the temperature and humidity of the facility within the advertised range, the owner is guilty of a misdemeanor and is liable to the occupant for any damages that are caused to the occupant’s personal property.”

Morrow clarified that this rule has been codified for some time and, though it’s not ideal that an operator can be charged for something they didn’t put in an advertisement, changing this section was not something the association wanted to pursue at this point. He added many operators are unaware of this rule and that joining the state association will help them in compliance with finicky rules such as this.

“We’ve still got a long way to go and a lot of battles to fight, perhaps against other industries and interests who are affected,” Morrow said, specifically mentioning newspapers. But overall, Morrow feels good about the progress this bill would make.

The most recent draft of the proposed legislation can be found at http://www.leg.state.nv.us/Session/76th2011/Bills/SB/SB150.pdf.