Limitation of Value of Stored Goods
The change to statutes to add a limitation of value to stored goods provide statutory support for the contractual provisions that are already common in most self-storage rental agreements. Pursuant to the state laws now included in Arkansas, Georgia, Illinois, Maine, Maryland, New Jersey, Oregon, Rhode Island and Tennessee, if the rental agreement contains a provision limiting the value of stored goods, the tenant is limited to that maximum value if he makes a loss or damage claim. The following is a typical provision that should be included in a rental agreement (the $5,000 amount is a generally used value but may not apply in all jurisdictions):
Limitation of Value: Occupant agrees that in no event shall the total value of all property stored be deemed to exceed $5,000 unless Owner agrees in writing to a higher value. Occupant agrees that the maximum value for any claim or suit by Occupant, including but not limited to any allegation of wrongful or improper foreclosure or sale of the contents of a storage Space is $5,000. Nothing in this section shall be deemed to create any liability on the part of Owner to Occupant for any loss or damage to Occupant’s property, regardless of cause.
The addition of a towing right in lieu of having to enforce a lien against titled property like a car, boat or RV has lifted a significant burden for many self-storage operators, especially those who permit vehicle and boat parking on their property. Without such towing rights, operators would typically be required to not only fulfill the notice and advertising requirements of their state’s self-storage law, but to comply with motor vehicle lien-sale laws (or watercraft/vessel laws).
With this statutory exception, operators are able to request a licensed towing company to tow the vehicle from the site and require the towing company to then process the vehicle for eventual sale. The facility, by statute, is not liable for any damage caused to the vehicle after it’s towed, and the facility still reserves its rights to collect the unpaid rent through regular collection methods. By invoking the towing right, the facility simply releases its claim over the stored property as collateral held pursuant to its lien. The states that have added this towing right include Colorado, Georgia, Illinois, Maine, Maryland, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, Tennessee and Utah.
Online Advertising and Sales
Many of the recent legislative changes in states such as Arizona, Colorado, Michigan, North Carolina and Ohio have included provisions that permit online advertising in lieu of newspaper ads or alternative announcements of the sale as long as they are deemed to be “commercially reasonable.” Commercially reasonable has been defined in most instances to be a method of advertising that results in obtaining a minimum number of potential bidders. If online advertising, which arguably attracts more visitors than print, is able to attract a minimum numbers of bidders to attend the auction, then it will be considered sufficient.
In addition to the use of online or alternative advertising for lien sales, a number of states, including Georgia, Maryland, North Carolina and Oregon, have statutorily clarified the right of operators to conduct their lien sales via the use of online-auction sites. These few states have recognized the efficacy of selling a tenant’s property online. Such a determination supports a similar approach in other states.
These recent changes have a direct effect on how self-storage operators conduct business. If your state recently adopted new statutes, it’s up to you to ensure they’re followed. More changes are likely to come as the national and state associations continue to push current legislation that will benefit the industry. Keep up to date on the legal changes in your state, and then follow them accordingly.
Scott Zucker is a partner in the law firm of Weissmann & Zucker P.C. in Atlanta. He specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. He’s a frequent lecturer at national conventions, author of “Legal Topics in Self-Storage: A Sourcebook for Owners and Managers,” and a partner in the Self-Storage Legal Network, a subscription-based legal services for self-storage owners and managers. To reach him, call 404.364.4626; e-mail email@example.com.