By Deb Hipp
Reprinted with permission from "The Storage Facilitator" blog.
Self-storage owners have enough to worry about when it comes to lien sales. Don’t increase your stress by hiring an auctioneer who doesn’t know the legalities of storage auctions or how to deal with troublesome bidders.
“The wrong auctioneer could cost you everything,” says Casey Cole, owner of BC Cole Auctioneers in Glendale, Ariz. When hiring an auctioneer, look for someone who’s honest, dependable and “above all, knows the laws,” he says.
Before you hire any auctioneer to conduct your storage auction, check out these seven pointers for finding the right professional.
1. Require Self-Storage Experience
It’s easy to run into trouble if you use an auctioneer who’s unfamiliar with storage auctions, offers Thomas Hayward, owner of Thomas Hayward Auctioneers in Reno, Nev. “If I open up a storage unit and there are piles of medical records in it, I know right away that I can’t dispose of them due to HIPPA [Health Insurance Portability and Accountability Act] laws,” Hayward says.
An auctioneer who doesn’t know self-storage lien laws could also miss the significance of a stack of Army camos in a unit and violate the Servicemembers’ Civil Relief Act, a federal law that prevents auctioning units rented by tenants who are on active military duty. Additionally, an experienced storage auctioneer will catch items that can’t be legally sold or simply thrown away, such as firearms, cremated remains and hazardous materials.
2. Find Someone With a Good Reputation
Find an auctioneer who has an established following in your area. Along with being reputable, he’ll probably draw a big crowd. Most regions have at least one or two auctioneers who specialize in storage. “You can usually get a referral from another self-storage facility,” Hayward advises.
3. Ask for Documentation
Make sure any auctioneer you hire provides proof of being bonded and licensed. If a lien sale goes to litigation and the owner hired an unlicensed auctioneer, the sale probably won’t hold up in court.
It’s also essential the auctioneer is bonded. Operators can check state-by-state licensing requirements by reviewing auction laws or consulting an attorney.
4. Put It in Writing
It’s best to enter a written agreement with the auctioneer, outlining roles and responsibilities of both sides regarding the lien sale, says Scott Zucker, a self-storage legal expert and a partner with the law firm Weissmann Zucker Euster Morochnik P.C.. Be sure to designate:
- Who’s accountable for collecting sales tax, if applicable
- Who’ll ensure bidders sign in and agree to the rules of sale
- Who carries the insurance for a wrongful-sale claim
“None of these issues should be left unclear, and a standardized agreement should be used to address all of these issues and others prior to any third-party auctioneer being hired,” Zucker says.
5. Consider Conflicts of Interest
Some auctioneers run auction houses and also buy goods at lien auctions to sell at their own businesses. “They’re sort of double-dipping. A lot of bidders don’t like that,” Hayward says.
6. Inquire About Recordkeeping
Hayward maintains all records of lien sales for a full audit trail. Make sure the auctioneer keeps track of everyone who purchased items, including their street address, e-mail address and phone number, so you can prove an auction was on the up-and-up. Tax documentation should be maintained in places that require collection of sales tax.
Accurate records are especially important if a tenant files a wrongful-sale lawsuit. “If an auctioneer has all the records and somebody attempts to file suit, that will usually scare them off right away,” Hayward says.
7. Think Twice Before Playing Auctioneer
Even if you’re not legally required to use a licensed auctioneer, it’s still a good idea to hire one for lien sales, Zucker advises. Experienced auctioneers generally handle issues such as sales-tax payments and exemptions, difficult bidders, and even unhappy tenants better than facility personnel. Also, a storage auctioneer most likely will bring in more money than if the manager conducts the sale. Hiring a storage auctioneer is “an extra buffer to keep the whole process honest,” Cole says.
Deb Hipp is a freelance writer in Kansas City, Mo. She contributes frequently to “The Storage Facilitator.”