Nearly all states have a self-storage statute that gives an operator the right to claim a lien against a delinquent tenants stored property. If he properly follows all the steps, hell eventually get the space back and sell the goods contained to help defray the outstanding rent and related expenses. But sometimes a lien sale is not your best option.
No matter which state youre in, there is some type of eviction statute (sometimes called a Forcible Entry and Detainer) that permits landlords to turn out tenants for reasons including nonpayment of rent. Selfstorage operators often lose sight of the fact that they are landlords. They do not provide the service of storagethey rent space to be used for storage. At the end of the day, there is always an eviction option available in a nonpayment of rent or other leasedefault situation.
General Principles of Eviction
While every state has a different procedure, there are general principles that hold true in every eviction action:
- There is generally some sort of preliminary notice to commence the procedure.
- The court or clerk of courts handles service of the complaint on your tenant.
- There is some sort of trial or adjudication on your right to remove the tenant from the premises, thus giving some legitimacy to the eventual removal of the property from your facility.
- The court often supervises or has some sort of procedure whereby court-appointed officials supervise removal of the property.
- In many states, you can file a claim for money damages as a supplement to the eviction complaint or immediately after the eviction is granted. If you find something of value in the unit, you can often lay claim to it.
Eviction vs. Lien Sale
Why would you consider an eviction over a lien sale? There are five scenarios in which it makes sense:
1. You believe your tenant is particularly cantankerous or litigious and will sue you for selling his property, even if you were in the right to do so.
This is particularly true if you are renting, for example, to a lawyer or politician. If you have a tenant likely to sue you even if he defaulted 10 different ways, the eviction route will cause a court to conduct a hearing that will determine your right to remove the property. It is then difficult (if not barred by statute) for the tenant to come back and sue you over the eviction. This action eliminates the potential claim that you did not follow every requirement in your states selfstorage statute.
It also potentially bars any claim for wrongful dispossession of the space and disposal of the property. By the time of the hearing, the tenant will have been properly served a summons by the court. If the court rules in your favor, youll receive an order allowing you to remove the tenants property from your unit.
I have seen too many cases in which a tenant sued an operator after a lien sale and the operator made one small mistake that gave the court reason to award damages to the tenant. But with an eviction, the court has heard the case and granted the order for removal itself. It sends out a bailiff, constable or other official to supervise the removal of the property. In some states, this is accomplished by a prepaid, approved moving and storage company and, in some cases, the property is simply removed to the street or another place for storage.
If you work under court authority and supervision, in accordance with court procedures, it will be difficult for a tenant to level allegations against you. An eviction can greatly reduce your risk of a tenant claiming you mishandled or improperly disposed of his property.
2. You have concerns about or have had past failures in serving notices to the last known address for the tenant, and you have been unsuccessful in finding a new address.
This is less of an issue in states where the self-storage statute requires you to only serve the tenant at his last known address. Many self-storage statutes are ambiguous about what to do if a tenant is difficult to serve, for example, his certified mail is returned as undeliverable. The advantage in filing an eviction is every state has what are called Civil Rules, or Rules of Civil Procedure, which set forth legal methods of obtaining service against a party in litigation. These are often much broader than the guidelines outlined in self-storage statutes.
Depending on your state, a tenant can be served by standard mail, certified mail, posting, bailiff, a process server, or even by such legal fictions as publication in a newspaper of general circulation, by what is called a Warning Order Attorney. He can sometimes be served via other methods by which the court attempts to warn the tenant of a pending lawsuit.
In many states, even if these efforts fail, the rules are written to say that by trying these methods, the service of the complaint is deemed to have occurred, and the court will proceed with the eviction. This is much different than sending out a certified notice, getting it back as undeliverable, and proceeding with a lien sale with your fingers crossed. There have been many cases in which a tenant claimed he provided an updated address, and the facility claimed to know nothing about it. The final advantage to eviction in this case is the clerk of the court handles the issues of service and maintains a record for court review.
3. You have a tenant in default for a reason other than nonpayment.
This is especially important if your state statute is not clear about whether you have lien rights for any type of default other than delinquency. There are times when you just want to get rid of a tenant, even though he pays rentfor example, the tenant leaves a lot of garbage around the facility, or you suspect he is causing building damage or engaging in criminal activity.
What do you do if you notify the tenant that you wish to terminate the lease and he tenders rent anyway? Can you overlock the unit, lien the property and sell it? Perhaps. But you can always evict for holding the unit after expiration of the lease term.
4. Youre storing a vehicle, particularly if the vehicle has a lien on the title, and especially in states that do not provide a remedy for vehicle disposal.
You need not give up hope that, by performing an eviction, you have relinquished all rights to make claim against property stored on the premises. Operators often file for a money judgment, either with the eviction or as soon after as possible. If you go to perform a set out and find property of value in a unit, you can file for what is called an Execution Against Property or Live Execution. This asks the court to seize the property and sell it on your behalf to satisfy or partially satisfy your judgment.
Except for a few states that have a provision about how to re-title a vehicle in a self-storage default situation, most are left with a patchwork of lawsfrom mechanic, warehouse, towing, parking and artisan businessesto fashion a remedy. One of the best ways to actually remove a vehicle from your unit is to evict it and simultaneously include a claim for financial reparation. Arrange the eviction so you know where the vehicle is (on another part of your property or in an impound lot), then obtain a judgment on your claim. You simply ask the court to attach the vehicle and sell it at a sheriffs or constables sale.
The advantage is that rather than trying to patch together various laws in compliance with your states title requirements and Department of Motor Vehicle rules and regulations, a sheriff or constable gets the vehicle re-titled and sold. The court official is liable for any mistakes he makes in the retitling of the vehicle, removing liability from the self-storage operator.
5. Your state statute requires the tenant be in default for a long, continuous period.
For example, Indiana requires 90 days of continuous default before you can exercise your lien rights. In states with similar delays, an eviction action may be quicker than a lien sale. Every jurisdiction varies in the amount of time it takes to secure an eviction, however, so check with your local legal counsel.
When you consider the liability involved in missed statute deadlines, incorrect sale of tenant property, failure to notify a tenant of pending sale and claims for wrongful disposal, it pays to consider eviction. If a tenant is difficult or there is an asset of value in his unit, an eviction may not only be an answer to your problem, it may be your best possible solution.
Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including self-storage. Mr. Greenberger is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine and the tradeshows it sponsors. For more information, call 513.721.5151