The combined efforts of the national Self Storage Association and state associations have led to significant and substantive legislative developments that directly affect the rights of self-storage operators and their responsibilities to tenants. As many as 20 states have recently amended their laws regarding facility operation, including:
- New Jersey
- North Carolina
- Rhode Island
A number of other states are targeted for changes this year. It’s critical that operators in states where laws have changed review the revised legislature and amend their leases and operational procedures to match the current requirements.
Most of the changes have been focused in five main areas: notice to tenants, late fees, limitation of value of stored goods, vehicle towing, and online advertising and sales. Here’s a look at these changes and how your self-storage operation might be affected.
Notice to Tenants
One of the most significant shifts in the majority of states with legislative changes is the use of an alternative method for notifying tenants of impending lien sale of their stored property. In most prior laws, lien notices were required to be sent via Certified Mail. Now many states permit the use of either verified mail (the sending of a First Class letter with a U.S. Postal Service certificate of mailing or other method of sending that confirms mailing) or e-mail.
However, not all states are consistent on the use of e-mail. A number require that if e-mail is used, there must be proof of receipt by the tenant. Fortunately, there’s self-storage management software available to meet this requirement. If the e-mail is unable to be verified as delivered, the operator is required to resend the notice via verified mail.
This shift recognizes that many self-storage tenants are mobile, and using e-mail may be a much better way to notify them an impending sale than the use of Certified Mail to a physical address at which they may no longer reside. The burden remains on the tenant to provide a valid last known address to the operator for notice purposes, as well as to update the operator about any changes to that address, including the tenant's e-mail address.
The recent changes to late-fee laws have generally resulted in states creating a “safe harbor” of fair and reasonable late fees to be charged to tenants of $20 per month or 20 percent of the monthly rental rate, whichever is greater. These updates have recently occurred in Arkansas, Illinois, Maine, Maryland, Nevada, North Carolina, Ohio, Oregon and Tennessee. Facilities in these states that are charging more than this amount need to reduce their late-fee charges or be able to demonstrate the fee being charged is tied to the actual costs incurred by the facility associated with late-paying tenants.
It’s very important to note these late-fee provisions don’t relate to the fees incurred by a facility as part of its lien process. These amounts are limited only to those that can be charged to a tenant that arise from his rent delinquency prior to the enforcement of a facility’s lien rights.