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The Evolution of the Self-Storage Lien Process and the New World Order for Facility Operators

Auction Gavel Cash
Self-storage lien sales have changed dramatically in recent years. New legislation has altered the way these sales should be handled, and new auction methods have emerged. Here’s how the process has evolved and how the ‘new world order’ is affecting facility operators.

By Cheli Rosa

Self-storage lien sales have changed dramatically in recent years. New legislation has altered the way these sales should be handled, and new auction methods have emerged. Here’s how the process has evolved and how the ‘new world order’ is affecting facility operators.

The Auctioneer

Ten years ago, self-storage managers conducted their own auctions. There were three or four buyers at the sale. They all knew each other and worked together to keep the sale prices down. You were lucky if you could get $100 for a unit.

Then there was a transition toward using professional auctioneers. It’s interesting to note that in the auctioneer world, there was never really such a thing as a “storage auctioneer.” However, some facility operators began to see the advantage to using a licensed professional to conduct their lien sales. Auctioneers had multiple methods for advertising sales and generally brought a greater return on the debt owed. They also often had relationships with the buyers, which took pressure off the manager to bring in bidders.

TV Sensation

Five years ago, self-storage lien sales were forever changed with the launch of reality TV show “Storage Wars.” When I first heard about it, my response was, “Why would anybody want to watch a show about storage auctions?” At the time, I worked at a storage facility and viewed auctions as boring, boring, boring! I doubt it was compelling for most operators.

It turns out I wouldn’t be very successful in television because I was wrong about “Storage Wars.” It became a very popular show, and the sensation only grew, even spawning spin-offs.

This is when we really started to see the emergence of storage auctioneers. By that time, I was working for an auction company, and we were receiving more interest in our sales. The increase in profit was great, but auction day became insane. Events were taking three or four hours. Fortunately, the “looky-loos” started to wane, and we were eventually left with a larger buyer base than we had previously. But auctions would never return to the quiet days before the show aired.

The Online Advantage

Once the popularity of self-storage lien sales began to rise, a new method of selling and purchasing unit contents emerged: online auctions. From an operator perspective, it was hard to believe online sales would become a trend. However, with the madness “Storage Wars” and other shows brought to the process, online started to look like a great alternative. These auctions offer several advantages, including a broader bidder pool and quicker sales. Today, there are several companies providing various platforms.

The Fallout

Unfortunately, all of these changes weren’t without consequences, the biggest being the entire world is now watching our industry, including tenants. There are now easily accessible links to lien laws on auction websites. Everyone is armed with more information.

State statutes are designed to give operators relief without judicial intervention; thus, most companies don’t have legal counsel on staff. There also aren’t very many attorneys who specialize in self-storage. This means it can be difficult to get legal advice on the lien process right when you need it. Sometimes you have no choice but to jump into the deep end and hope for the best.

Self-storage is also becoming a breeding ground for class-action lawsuits related to lien sales. Operators follow specific steps for every part of their sale process. They generally do things the same way over and over, so if there’s a mistake, it’s often repeated several times. This makes our industry an easy target for class-action filers.

One area of the lien process that seems to elude facility operators and create a liability risk is how to deal with tenants in active military status. Owners and managers should educate themselves on the Servicemembers Civil Relief Act to know what they can and can’t do in regard to these customers. You should also know the options available to verify a person’s active military status.

Another element of lien sales that stumps operators is tenants who file for bankruptcy. Bankruptcy laws are vague and written in the debtor’s favor. You should know a 90-day stay is issued when a person files for bankruptcy and all collection procedures must stop. A tenant bankruptcy might be one of those times when it’s necessary to consult legal counsel.

It’s really important for anyone who owns or operates a self-storage facility to keep up with the lien laws. They’re changing rapidly across the country. A good way to do this is to join your state association and subscribe to the industry’s many publications and blogs.

The whole world is watching. Self-storage has become part of pop-culture. That’s fun and exciting and weird, but it’s also scary and dangerous. There’s no way to know what’s coming next. It’s important that your business be above reproach when the world starts looking in on you.

Cheli Rosa is director of marketing for StorageStuff.Bid, which provides online storage-auction services. She’s a former high school teacher turned storage professional turned auctioneer. She’s worked in all areas of self-storage. Her constant desire for additional knowledge led her to immerse herself in the lien-foreclosure process. For more information, call 877.758.4243; visit www.storagestuff.bid.
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