It’s no secret that the economy is in poor shape, particularly the finance market. As a result, self-storage operators find themselves faced with more commercial tenants who go out of business or default on their units, leaving behind sensitive records that contain personal information about members of the public.
For example, a defunct mortgage broker might leave behind hundreds of mortgage applications, tax returns, pay stubs, etc., in a self-storage unit. Even some medical professionals are ceasing operation and leaving records that contain health information, Social Security numbers and other documents for the self-storage operator to handle.
I have long been a proponent of excluding from a lien sale any personal items or those that have no resale value to the buyer, such as diplomas, photographs and documents. When people ask me how to enforce this, my general answer is “the honor system.” The sale rules signed by the bidder should exclude these items, and buyers should be required to return these items when found to the facility owner or manager for safekeeping or proper disposal. But what if an entire unit is full of what appears to be business records?
Facing the Issue in Maine
This issue has recently been brought to light in Maine. A mortgage company had records in self-storage and was going out of business. The self-storage operator notified the Maine Bureau of Consumer Credit Protection that it had a storage unit full of files containing clients’ personal information. The mortgage broker had defaulted, and the unit was scheduled for sale.
The bureau’s superintendent tried to obtain the records to prevent them from being lost or falling into the wrong hands. But the facility owner refused to release them, contending he had a lien against the unit’s contents and the right to sell them for a price. The bureau then served the self-storage owner with a subpoena and took the records out box by box.
This scenario contemporaneously played out in the court of public opinion, outraging Maine legislators who then introduced Bill LD 366 in attempt to “over correct” the issue. I won’t describe the bill in detail here because it’s sure to change. (Already the bill has been tabled for at least a year, thanks to the efforts of the state and national self-storage associations.) However, the intent of the bill is to impose legal liability on the self-storage owner for any piece of personal data or record released into the hands of anyone, aside from its rightful owner.