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When a Vehicle-Storage Tenant Defaults on Rent: Can You Tow Rather Than Go to Lien Sale?

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When a self-storage tenant fails to pay rent, the facility operator has a legal remedy: the lien sale. But what if the stored item is a vehicle? In that case, things can be a bit more complicated. Fortunately, many states now offer a towing option. Learn more below.

Reprinted with permission from the “Legal Monthly Minute July 2021” Newsletter.

It’s become common for self-storage facilities to offer vehicle storage for cars, boats and RVs, whether in an uncovered, outdoor lot or fully enclosed units. While the overall business concept is the same—the tenant rents the space to store their personal property—there’s big difference between self-storage and vehicle storage in that a vehicle is generally titled under a legal registration process to clarify the ownership rights. It’s that fact that makes the lien process more difficult if the customer defaults.

To solve this title obstacle, the national Self-Storage Association (SSA), with cooperation and support from multiple state industry associations, has successfully modernized many of the applicable laws to include the option of having vehicles towed from the facility and disposed of by a licensed towing service. In states where this is possible, you can avoid the headaches of the title process involved in the sale of cars, boats and RVs and enjoy a faster, more economical remedy.

State-Specific Guidelines

More than 40 states have now adopted some sort of towing option as a remedy to self-storage tenant delinquency when a vehicle is involved. But as with all statutory changes that are handled on a state-by-state basis, the towing exceptions are not uniform. Even if they’re similar, many of these laws must be carefully reviewed and complied with based on the state where the facility and personal property are located. You must be careful to meet the requirements of your specific state to avoid statutory violations.

The SSA has recently had success in updating a number of state lien laws to include towing options. The following are good examples of the language found in these updated regulations.

Alabama, Section 8-15-46 (d). If the personal property subject to the operator's lien is a vehicle, watercraft or trailer and rent and other charges remain unpaid for 60 days, the operator may have the vehicle, watercraft or trailer towed from the self-service storage facility. The operator shall not be liable for any damages to the vehicle, watercraft or trailer once a licensed and bonded tower takes possession of the property. Removal of any vehicle, watercraft, or trailer from the self-service storage facility shall not release the operator's lien … At any time before a sale is held under this section or before a vehicle, watercraft or trailer is towed under this section, the occupant may pay the amount necessary to satisfy the lien and redeem the personal property. The operator shall have no liability to any person with respect to personal property redeemed pursuant to this subsection.

North Dakota, Section 35-33-19. If the personal property subject to a lien under section 35-33-02 is a motor vehicle, watercraft or trailer, and rent or other charges under the rental agreement remain unpaid for 60 days, the owner may have the motor vehicle, watercraft or trailer towed from the self-service storage facility property by a commercial towing service as defined in section 23.1-15-01. An owner may not be held liable for damage incurred to an occupant's motor vehicle, watercraft or trailer after the owner relinquishes possession of the personal property and the personal property is removed from the self-service storage facility property. Removal of personal property from a self-service storage facility does not release the owner's lien under section 35-33-02.

Texas, Section 59.052. Notwithstanding Subchapter C, a lessor who takes possession of property to which this subchapter applies to enforce a lien under this chapter may transfer possession of the property and have the property towed to a vehicle storage facility for disposition by the vehicle storage facility under Subchapter D, Chapter 2303, Occupations Code, if:

  • The transfer of possession and towing is authorized under a written rental agreement between the lessor and tenant;
  • The lessor gives written notice of the lessor's claim to the tenant as required under Section 59.042(a) in the manner prescribed by Section 59.043;
  • The tenant fails to satisfy the claim on or before the 14th day after the date the notice required under Section 59.042(a) is delivered in the manner prescribed by Section 59.043; and
  • The vehicle storage facility agrees in writing to accept possession of the property.

Texas, Section 59.053. A lessor's lien on property towed to a vehicle storage facility under Section 59.052 is extinguished when the property is towed from the self-service storage facility.

Texas, Section 59.055. A lessor is not liable to a tenant for any damage to property that the lessor has towed under Section 59.052 that occurs during the tow or after the property is towed from the self-service storage facility.

Again, each state law that permits a towing option in lieu of lien sale stipulates unique obligations for the self-storage operator. Even though an alternative has been provided, you must be careful to comply with the law. Further, as with all situations in which property is being removed or disposed of, take lots of pictures to establish the condition of the goods before they leave the premises.

Scott I. Zucker is a founding partner in the Atlanta law firm of Weissmann Zucker Euster Morochnik & Garber P.C. Practicing law since 1987, he represents self-storage owners and managers on legal matters including property development, facility construction, lease preparation, employment policies and tenant-claims defense. To reach him, call 404.364.4626, or email [email protected].

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