By Wanda Smith
Leasing a portable-storage container should be pretty simple. You have the space to lease, and someone has items to store. Easy enough, right? Wrong.
The fact that you operate a unit in which someone will store personal belongings brings at least two parties to the table: you and the customer. That's if you own the containers; but what if you lease them? The fact that the containers may be owned by a another company brings a third party into the equation. This brings into play several laws of which you may not be aware.
What if there's a delinquency in payment from your tenant? Do you know how to legally handle that? Most state laws provide a statute with requirements regarding foreclosure. A written notice must first be given to the tenant in default as well as to the lien holders or any other parties having a vested interest in the property being stored. Then the tenant must be given ample time to pay the outstanding balance before the sale of his property.
In other words, if the tenant doesn't pay what's owed in the time allotted per the contact, the storage-container owner or leasing authority (you) has a legal right to sell the tenant’s property as a way to receive payment owed. Technically, this is the tenant going into foreclosure.
Keep in mind a tenant is in default as soon as he's late in making a rental payment to you. However, the foreclosure process doesn't kick in until the statute for the state in which the container is owned and operated deems it legal. This is usually after payment has been in default 30 or 45 days, although it can be longer in some cases. The process begins when you send proper notice to the tenant. Some owners/leasers overlock the container after five or 10 days of default, although many states restrict this until foreclosure is in full effect.
Notice of Default
Most states require that only one demand-for-payment letter be sent through U.S. Certified Mail, stating that the tenant has a certain amount of time to pay the outstanding balance before action is taken. It benefits you as the container owner or leaser to send more than just one notice and to actually make a few calls, send a few e-mails and send additional letters to collect payment. This benefits both parties.
Sometimes the renter just needs a bit more time to get back on track. For you, it’s a lot more work to lock out the renter and attempt to sell his property than to just contact him for payment. It could be a case where the tenant had something significant happen in his life and simply forgot. Often a reminder is all that is needed. However, if you've made several unsuccessful attempts to notify the tenant and collect past-due rent, it becomes obvious that future efforts will be fruitless and legal action should be taken.
Some state statutes indicate that all parties with a secured interest be notified any time a payment on a storage unit goes into default. This would include any lien holders. Every state law is different on this topic, so you'll need to check with your particular state to obtain full lien-law requirements. Some states only require the notice to lien holders if they were actually disclosed in the rental agreement. Others require the notice regardless of disclosure, and still others don’t require notice to the lien holders at all.
Regardless of the property being stored, you need know the agreement you are providing, as you are agreeing to those terms in a legally binding contract with another party. Know your legal rights and limitations. The bottom line is the renter has rights, too.
To view complete state self-storage lien laws, visit www.insideselfstorage.com/lien-laws.aspx. Annotated versions of some lien laws are also available from the national Self Storage Association and its Self Storage Legal Network and can be viewed here.
Wanda Smith is an online writer who covers various topics. Among her clients is Mobile Mini , which provides all-steel storage containers for business and residential use. Started in 1983, the company has 130 locations throughout North America, offering a range of product sizes, types and accessories including patented security features.