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Amy Campbell

Amy Campbell
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acampbell@vpico.com

Approximating the Real Cost of ‘Storage Wars’ for Self-Storage Operators

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A Guest Installment by Gina Six Kudo

The advent of the reality television show “Storage Wars,” along with other similar fluff, has wreaked its fair share of havoc on our industry. And I have no doubt other reality shows have done the same to their related industries.

For example, I’ve spent untold hours working on an auctioned customer file, partly out of curiosity but also because I want to do things correctly. We auctioned off this particular unit, as is par for the course, after repeated failures of promises to pay over many months followed by the tenant appearing to have simply fallen off the face of the Earth. What choice do we have left? We auction.

The auction for this particular tenant’s unit was insane due to the huge number of potential buyers who showed up. A prior auction caused a mild uproar in our normally quiet, professional business park, so we had to take measures to accommodate our neighbors. We put all hands on deck to handle traffic control and blanketed the business park with $500 worth of new auction-related signage directing buyers where to park to avoid impacting neighboring businesses.

Long before this, I spent approximately 30 hours speaking to nearly everyone at any level related to finance in Santa Clara County, Calif., to get to the bottom of how to handle auction-proceed overages. Why? Because our revised lien law states:

“(E) That any excess proceeds of the sale over the lien amount and costs of sale will be retained by the owner and may be reclaimed by the occupant or claimed by another person at any time for a period of one year from the sale and that thereafter the proceeds will escheat to the county in which the sale is to take place.”

In other words, the amount bid on a unit that exceeds the monies owed by the tenant at the time of auction, including any associated auction costs, such as auctioneer services, locksmith, legal publications of the auction, etc., would need to be returned to the now former tenant. I knew an overage situation was bound to happen sooner rather than later, and I wanted to be prepared.

After a couple of frustrating weeks of trading messages and phone calls and explaining over and over again the lien law in regard to storage auctions to each finance person I spoke to, a decision was reached. To follow the California state lien law, we would have to send any overage to our county. But here’s the “Gotcha!” The county is not equipped to handle this type of payment!

Here’s how we found out. After a long time spent with the post office, the check we issued to the tenant at his last-known address was finally returned to us. Where it spent those several months missing, not being delivered or returned, is anyone’s guess. Tahiti perhaps?

Once the check re-appeared on our doorstep, we issued another check in the same amount to the county along with a letter of explanation. The county then sent back our check and attached its own letter telling us it was “not authorized to accept unclaimed properties.”

By law, we sent our auction-proceed overage check to the county, but the county sent it back, telling us it was “not authorized to accept unclaimed properties.”

Instead, the check is supposed to go to the state’s Unclaimed Property Division, where it will languish for who knows how long before it is claimed by said tenant or ends up in the state’s General Fund.

I’m sure we could have bypassed the little piece in the law about sending the funds to the county, but that wouldn’t be legal, right?

To sum up, the “Storage Wars” reality is we all must bear the costs of the show, and others like it, with no tangible addition to our bottom line. We now have more auction buyers, units sell for inflated values, and self-storage facilities must bear the burden of additional staff time and expenses to handle the throngs of buyers in the ensuing aftermath of the combined sum of all these parts.

Here’s a breakdown of some of the associated costs:

  • Two wasted checks, postage, Certified Mail/return receipt, adjusting our GL, et. al. = Massive headache
  • Signage, which we never needed during our first 15 years at this location = $500
  • Staff time spent dealing with extra people, longer auction times, putting up signage, directing traffic, signing in bidders, unit viewing and money overage issues = Immeasurable
  • County-employee time spent discussing the pros and cons of this issue = Taxpayer dollars at work
  • Legal counsel = $Ouch
  • Hours of life and productive use of work time lost = Priceless

If there was a way to offset these costs against the auction overage, it might take away a bit of the hurt. Or wait! Just maybe we can recoup lost time and money with those boxes the newbie bidder just left behind in the auction unit he bought! Surely, just as we break to commercial, one of us will be able to say: “Whoa! What’s this?”

Gina Six Kudo is general manager of Cochrane Road Self Storage in Morgan Hill, Calif. She has more than 16 years of self-storage experience, and a strong customer-service and sales background.

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