A question was asked at the recent Inside Self-Storage Expo in Las Vegas about using a self-storage facility for garage sales, flea markets or charitable events. One operator answered that he has had a lot of success with garage sales vs. going through the lien-sale process. I’m sure many people left this discussion wondering, Why not host a garage sale instead of a lien sale?
In my opinion, it's not legal to conduct a garage sale in lieu of a lien sale, as provided by your self-storage statute or, in states without a self-storage statute, the Uniform Commercial Code (UCC). Let’s examine why.
In summary, all self-storage statutes discuss that after a period of default and other prerequisites—such as certified mail, notices in opposition to a lien sale, advertising in a newspaper of general circulation or posting notices around the town—an owner is entitled to exercise a lien against the stored property by selling the contents of a unit.
A garage sale to me indicates that you have put the stored contents out on display, with a price tag on each item, and are willing to sell the item for a certain price. Whether or not haggling is allowed, if someone meets "your price," the item is then sold.
Unfortunately garage sales are not designed to begin and end within a short period of time like an auction or public sale where all bidders are gathered around to look at an item, then everyone gets an opportunity to bid against others until a winner (who will pay the highest price) is declared. The problem is you will never know whether you could have sold the items for more money had you waited for another buyer to come along. That’s the advantage or importance of having an auction or public sale; you know you will fetch the highest price any buyer will pay for that specified unit or item during a scheduled auction.
In California and some other states, self-storage statutes generally say that a sale must be conducted in a commercially reasonable manner. Statutes, such as in Georgia, specifically mandate the items must be sold to the highest bidder, indicating the requirement of an auction or a public sale.
Let’s Be Reasonable
In any case, all state statutes have requirements that are essentially the same: You are required to sell the items for as much money as you can reasonably fetch. What makes a sale commercially reasonable? I’ve covered this topic in great detail in a previous ISS article (July 2006). So, without reiterating all the stipulations of that piece, let me summarize: The UCC in most states sets out a 12-part test on what makes a sale commercially reasonable. Of course, the test has nothing to do with self-storage in particular; it just looks at what makes a sale generally commercially reasonable.