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The Risks of Sale and Disposal: Words of Caution and Guidance for Self-Storage Operators

Michael Rice Comments

Selling or disposing of the stored belongings of a delinquent tenant is one of those responsibilities no self-storage owner enjoys. It’s also an action fraught with potential liability if you fail to do it according to the law. All property is not created equal, and you may need to take special precautions when dealing with vehicles or other titled items.

Know the Law

Your right to lien, seize, sell and dispose of property belonging to tenants is spelled out in statutes beyond the language of your rental contract. Applicable laws include state lien laws, consumer-protection statues, the federal Fair Debt Collection Practices Act, the federal Servicemembers Civil Relief Act and other consumer-protection vehicles. Add the fact that consumer protection is a complex and evolving issue that may take various forms depending on your state and individual circumstances, and it becomes clear that you must carefully consider your right to sell and dispose of property stored in your facility.

When it comes to deciding whether to act on your lien against a delinquent tenant’s property by selling or disposing of it, it’s strongly suggested that you do the following: 

  • Consult with your attorney and insurance agent
  • Obtain a copy of your state’s lien laws and consumer-protection statutes
  • Prepare a timeline for the statutory notice requirements to your delinquent tenants
  • Follow the statute conservatively in implementing your rights under your storage contract

The consultation with your attorney and insurance agent should be ongoing, not merely for a certain time period or a particular circumstance. The law dealing with consumer rights is continuously being refined by the legislatures and courts, and it’s important that you keep abreast of developments that may affect the manner in which you do business. 

The Risk of Lawsuits

Lawsuits are a real concern in the wake of a sale and disposal action. Many people store personal items in their units such as heirlooms, memorabilia, photos and important documents. As a result, the sale and disposal of this property may be seen as a personal assault, and tenants often become upset when their items are auctioned to strangers. The current economic climate may be an aggravating factor for potential litigation. Tenants who are struggling to make ends meet may be particularly sensitive to perceived wrongdoing on your part and seek legal action in response.

Additionally, if you have commercial tenants storing business-related articles on your premises, you run the risk of exposing their clients’ business records and personal information in the auction, thereby inviting additional claims not only from your tenants but also their clients. This is not the forum for a discussion of privacy issues in this country, but you need to be aware that, should it be alleged that someone’s identity was stolen as a result of an auction, there will likely be adjunct lawsuits against you arising from people with whom you have no contractual business relationship.

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