|The Inside Scoop|
Lien-Process Precision: Not a Joke
A recent blog written for Lawyers USA, a monthly publication providing coverage of court decisions, legislation, litigation trends and practice-management information for attorneys, highlighted Low v. Penn Self-Storage, yet another case in which a self-storage tenant was awarded substantial damages because of errors made by the facility operator during the lien-sale process. Thankfully the damages were somewhat mitigated by the presence of a value limit in the rental agreement.
The blog in question, titled “Benchmarks,” is written by Ohio attorney Pat Murphy, who analyzes recent court decisions for readers. With nearly 20 years of experience in legal publishing, he provides insights to the nation’s courts. His point about Low v. Penn? The self-storage “damage cap” is enforceable.
In the case, the plaintiff’s good were sold at auction for $20, and then the self-storage operator took her to small-claims court to recover the balance of what she owed. In return, Jane Low claimed that not only was the rental agreement deficient in informing her of what would happen in the instance of default, but the operator violated state law in the manner in which he advertised the sale.
The court sided with Low, agreeing that Penn failed to observe procedural protections and awarding the plaintiff $22,000 in compensatory damages. But thanks to a value limit built into the rental agreement, which said Low could not store property in excess of $15,000 without prior written permission, this is all Penn was ultimately obligated to pay. Though Low appealed, the court concluded that nothing in the state’s self-storage statute prohibited Penny from exercising a restriction on the value of stored property.
So that’s a semi-happy ending for a story to which we all know the moral: Follow to the letter every procedure outlined in your state’s lien-law statute, and further protect yourself with a value limitation in your lease.
And yet, says self-storage legal expert Jeffrey Greenberger, he consistently sees self-storage operators failing to exercise every possible precaution when it comes to lien sales. In an article to be published in the March issue of Inside Self-Storage, he writes, “Wrongful-sale lawsuit verdicts rendered against self-storage owners and some courts’ refusal to enforce the value and negligence limitations in your rental agreement continues to be of great concern. Most of the large-dollar verdicts have come from cases in which the tenant’s property shouldn’t have been sold in the first place.”
He goes on to say that if you don’t believe you’re selling properly, you haven’t read your state statute in a long time, or you’re ignoring parts of the statute because they’re inconvenient or difficult, then you should buy yourself some legal advice and learn how to do sales properly. Now is your chance to get that advice in person and at a tremendous value. The industry’s two foremost legal experts will be at the Inside Self-Storage World Expo in Las Vegas, March 14-16, to teach attendees about the legal risks they face in 2011, most particularly as they relate to lien sales.
On March 15, Jeff will teach his Legal Learning Live seminar, in which he’ll cover the critical issues affecting self-storage operators today. He’ll talk in detail about lien-sale process, including steps to follow in the event of a sale-related lawsuit. He’ll also teach best practices for handling customers' personal information, strategies for dealing with abandonment, and proper procedures for vehicle storage.
Jeff will also present a seminar on “Revising Your Self-Storage Rental Agreement: Important Changes for 2011” on March 14. This seminar will teach the most common problems with self-storage rental agreements, the mistakes that make agreements unenforceable, the best "new" clauses to add, and changes you may need to make if your state laws have changed.
Also on March 14, self-storage attorney Scott Zucker will present a seminar titled “Lien Sales: Understanding a Self-Storage Facility’s Legal Liabilities.” He’ll cover the do’s and don’ts of handling self-storage lien sales and ways a facility operator can protect himself from mistakes. He’ll talk about current updates to lien laws around the country, strategies for avoiding lien sales, common mistakes made in the sale process and more.
Don’t reach a new “Low” and be the self-storage operator in 2011 who gets slapped for an improper sale. Inform yourself and protect yourself. Be smart at sales, and keep the money you make.
Got a scary lien-sale story to share? Maybe a situation in which you goofed and feared you’d pay the price? Or even better, a set of circumstances in which you saved a sale from taking a bad turn? Please write your comments on the blog and let others benefit from your experience.
- Insights From a First-Time Self-Storage Developer: Designing a Marketing Strategy for a Facility in Lease-Up
- Self-Storage REIT CubeSmart Buys Storage Deluxe Facility in Coney Island, NY, for $49M
- Extra Space Self-Storage Development Opposed in Lisle Township, IL
- Recipe for Success: Packaging Your Self-Storage Loan Request
- Sovran Self Storage Announces $398M in Property Acquisitions