An important question being asked by self-storage operators these days is: How long do I keep the private information of former tenants who move out voluntarily, or business records left in abandoned or auctioned units?
Unfortunately, this article doesn’t contain a hard and fast answer because state laws vary. However, it covers factors to consider when making this critical decision.
It’s imperative that you establish a policy about how long to keep former-tenant records. (For the purpose of this article, former tenants are those who moved out voluntarily, abandoned a unit, or had a unit sold at auction.) Once you have a policy in place, adhere to it in all cases. Sporadic disposal of records when you have a formal policy will be questioned if you’re ever sued.
Statute of Limitations
The first factor to consider is how long a lawsuit can be brought against you in your state, known as a “statute of limitations.” The statute of limitations will vary for different types of actions. For example, the statute of limitations on a medical-malpractice claim may be longer or shorter than the one for a personal-injury claim.
You need to be familiar with your state’s statute of limitations for breach of a written contract. This is the most common type of lawsuit a self-storage facility faces because most operators have written contracts with their tenants. There can also be other claims, such a wrongful conversion.
However, the breach-of-contract statute of limitations tends to be one of the longer ones and serves as a good guide for the time you may need to keep records. In most states, this statute ranges from five to 15 years. Thus, one solution would be to keep records until the statute of limitations for breach of contract runs out, which would be a set amount of years after move-out, sale or abandonment.
The Internal Revenue Service can audit a tax return for up to seven years after a filing. If a tenant moves out in January 2009, for example, the seven-year audit statute of limitations is the tax return filing date for that year, generally April 15 of the following year. If you file for an extension or fail to file on time, the calculation doesn’t begin until the filing occurs. Keeping records for seven years after the tax filing date of the year after move-out (eight years, really) could be your policy.