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Self-Storage Operators BEWARE: Wrongful-Sale Scam!

I recently had lunch with a friend who is an insurance adjuster, and his company handles a lot of self-storage claims. He told me about a new type of insurance scam that relates to self-storage lien sales.

The scam looks like this: A person moves into a unit at a facility that offers the first month for free or at a very low charge. The renter moves in with virtually nothing, usually some type of garbage, and then intentionally fails to pay rent when it comes due. His motive is not to use the facility as a dumpster; rather, he waits for the facility operator to sell the contents of the unit, and then hopes to discover the operator did something wrong during the lien-sale process. If he finds any kind of glitch, he sues for wrongful sale.

These cases, while more prevalent in states like California and Nevada where lien-sale statutes are more complicated, are happening all over the county. The goal is not necessarily to regain the value of the junk in the unit, but to sue for an incorrectly performed sale. Some renters claim to have lost many thousands of dollars in property. Others are just looking for the statutory damages that get awarded in some states, regardless of the property’s value.
Lien Sales by the Book

The best way to avoid being a victim of this scam is to be ever vigilant, perform your lien sales carefully and accurately, and steer clear of emotion during the sale. The state statutes that discuss lien sales are loaded with technical requirements, and this article cannot begin to cover all of them. But every day, operators make simple mistakes when conducting sales that can cost them dearly.

For example, let’s say the statute requires a detailed inventory, but the operator doesn’t even cut the lock and simply uses “household goods” to describe the unit contents. Here’s another example: Many statutes require an itemization of your claim in your default notice. This means you have to list by date and amount what is owed to you. Many operators put rent due, late fees and other charges without itemizing them.

Also, there are limitations―mostly minimum time requirements―in state statutes. Operators often ignore those time frames, or put the right length of time in their notice and advertisement, but then sell on a different date altogether.

Finally, many operators allow the emotional aspect of a sale to get in the way of logic. For example, one operator had a tenant who moved in on a first-month-free special, and then filed bankruptcy shortly after the second month’s rent came due. The operator was upset that he couldn’t conduct a lien sale until obtaining a relief from stay from a court, and believed the tenant was taking advantage of the situation.

If you aren’t sure if you should proceed with a lien sale, don’t move forward until you are. Many operators get swept up in their views of right and wrong vs. the views of the judge who will be looking at this case, detached from emotion, down the road.
Avoid Concessions

Another way to avoid being scammed is to avoid the offer of free or cheap rent. I won’t discuss the evils of self-storage concessions, because I’m certain everyone is doing what they can to survive in these tumultuous economic times. But consider this: Instead of offering a discount on your rates, offer something else, such as waiving the administration fee, giving a free lock, etc.

If you do offer free rent, give it later in the lease term, after the initial period of the lease is completed. For example, offer the sixth month of rent for a dollar rather than the first month for free. This way, the tenant has to fulfill five months of your lease before the concession. This alone should discourage these types of shenanigans at your facility.
Learn the Law

If it’s been three months or longer since you reviewed your lien-sale statute, it’s time for a refresher. If you never understood your state’s statute, it’s time to get educated. If you’re doing something that doesn’t seem right under the law but you do it because it’s the way you’ve been trained, or you’ve always done it that way and it’s never come back to haunt you, consider yourself put on notice. There are people out there looking to make an easy buck. The next time, it could be at your expense.

There are many ways to learn more about lien sales. Consider attending the legal seminars at the upcoming Inside Self-Storage World Expo in Las Vegas, March 1-3, researching the topic online, or contacting your state self-storage association. Another option is to sit down with your attorney and address your questions and concerns.

As tenants get smarter, you have to get smarter, or these types of suits are going to continue. Once someone finds a way to make money and discusses it on the Internet, you can bet others are going to copy.

Whether you change your concessions or their timing, at the end of day, what will rid you of this problem is making sure you conduct your lien sales properly and to the letter of the law. If you can’t, find other ways to remove tenants from your units through settlements, evictions or another avenue. Given what is going on in this day and age, if you’re not sure you can do your lien sales correctly, you should not be doing them at all.
This column is for the purpose of providing general legal insight into the Self-Storage field and should not be substituted for the advice of your own attorney.
Jeffrey J. Greenberger is a partner with the law firm of Katz, Greenberger & Norton LLP in Cincinnati and is licensed to practice in Kentucky and Ohio. Mr. Greenberger primarily represents the owners and operators of commercial real estate, including self-storage owners and operators. To reach him, call 513.721.5151; visit

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ISS Blog

ISS Factbook 2010 Coming!

For the past couple of weeks, ISS Editorial Director Teri Lanza and I have been assembling the ISS 2010 Factbook. The compilation of the year's best articles is a huge undertaking. One reason for this is there are so many incredible features and columns from which to choose.

Over the past year, self-storage industry professionals have tackled a slew of topics from finding financing to the slowdown in construction to improving your facility's curb appeal. These articles focused on today's challenges and gave real-world solutions.

Now we're putting it all together in one convenient package—the 2010 Factbook. We've assembled this year's tome in a logical order, with financing—a hot topic this past year—leading the way. We follow with seven more sections on everything from handling day-to-day operations to improving your marketing methods.

Regardless if you're new to the self-storage industry or a pro, the ISS Factbook is a valuable resource. While it won't be available for a few more weeks, you can order it online when it is ready. We hope you'll find this resource a valuable addition to your self-storage education.

Bermuda Public Storage Slated to Open April 2010

Bermuda Public Storage will soon open in the budding Bermuda market. The 50,000-square-foot self-storage facility joins two other recent projects. Bedrock Secure Self Storage recently opened in Ferry Reach and Island Self Storage is currently under construction in Pembroke.

Troy Burrows, owner of Burrows Construction, plans to build a seven-story facility. The project has already attracted several business tenants including Bermuda Ocean Shipping, insurance companies, law firms and local retail and restaurants.

The climate-controlled facility will have a loading dock for containers, two freight elevators and packaging materials for sale, such as boxes and locks. The facility will have two underground floors and five above-ground floors, including a mezzanine level. A variety of unit sizes will be available. Units can also be customized. The facility, slated to open in April, will have 24-hour access and a backup generator in case of power failure.

Source:  The Royal Gazette, Burrows Sets Out to Meet Growing Demand for Storage

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Kansas Self Storage Association Hires Executive Director

The Kansas Self Storage Owners Association has hired Shawn Herrick as executive director. Herrick has 20 years of experience in trade-association management and currently heads up the Mid-America Tire Dealers Association, the Kansas Landfill Association and the Kansas Land Title Association. She is based in Topeka, Kan. To reach her, call 785.286.1110; e-mail [email protected].

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New Propane-Valve Security Lock

Lock America International of Corona, Calif., a manufacturer of security hardware for the self-storage, coin-op, gaming and vending industries, now offers a valve-locking system for retail, residential, and industrial propane tanks. The technology will be useful for self-storage operators who rent propane tanks out of their facility as an ancillary service or those who rent space for RVs that have propane tanks. 
The patent-pending lock, with a unique registered key code, blocks the outlet valve of a propane tank, preventing the release of gas. The key-operated plug lock serves as a valve block for the tank valve. Residential and industrial tanks can then be “locked-up” for non-payment or to protect against unauthorized access. The valve also protects propane tanks on RVs against theft. 
The valve can be easily removed when a tank is sold or rented, or when a delinquent customer pays his bill. It can also be reused on other tanks.
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Uncle Bob's Opens Self-Storage in Midlothian, Va.

National self-storage provider Uncle Bob’s Self Storage opened a new property at 3830 N. Bailey Bridge Rd. in Midlothian, Va. The 80,000-square-foot facility offers the company’s signature Dri-Guard Plus climate control, which provides regulated temperature and dehumidification to help fight mold, mildew and corrosion. It also includes individual door alarms, a large retail area for moving and storage supplies, and a conference room for customer use.
To mark the opening its new facility, Uncle Bob’s will host a ribbon-cutting ceremony with the Chesterfield Chamber of Commerce on Oct. 28, 3 to 4 pm. Cake and refreshments will be provided as well as free Halloween bags for kids and other door prizes. No purchase is necessary. The company is also offering special discounts to new self-storage customers, including a free truck rental. A larger grand opening is scheduled for early 2010.
Uncle Bob’s is owned by Sovran Self Storage Inc., a real estate investment trust that owns and manages 383 storage facilities in 24 states, including two in the Richmond, Va., area.
Source: Welt Online, Uncle Bob’s Self Storage Opens New Facility in Midlothian, VA

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Fire Breaks Out at U-Store-It in Washington Township

A fire broke out this morning at the U-Store-It self-storage facility on Congress Park Drive in Washington Township, Ohio, burning six units. Firefighters say no one was on the scene when they arrived, and the cause of the fire is under investigation. Traffic was being rerouted, causing a slowdown in the area.
Source:, Fire Burns 6 Units At Self-Storage Center

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Access Self Storage Opens N.J. Facility

Access Self Storage will open its second Bergen County storage center Oct. 28, in Franklin Lakes, N.J. Access will welcome local officials at a ceremonial ribbon-cutting and offer special discounts through December to all customers.

The 78,000-square-foot new facility will offer 768 individually alarmed, climate-controlled storage units in varying sizes. The facility will have easy accessibility, including a weather-protected drive-up area for loading and unloading, and state-of-the-art security.

Owners, Ken and Foy Cooley, expect a mix of commercial and residential users.  “Much of our business comes from residential customers who are moving, renovating or just need more space,” says CEO Foy Cooley.  “No matter how large people’s homes are, they run out of storage space. Especially in northern New Jersey where space is at a premium, self-storage centers fill an important need.”

Under the leadership of its founders, Access Self Storage continues to evolve its services, offering tenants access to moving trucks and supplies. “We’re always trying something different and improving on our ideas to make the moving and storage process easier for everyone,” says Foy Cooley, a past president of the Self Storage Association and a current officer of the New Jersey Self Storage Association. “The big things are still the simplest: Keeping our storage centers immaculately clean and secure, and taking exceptional care of our customers.”

A family-owned business, Access Self Storage opened the first self-storage facility in the greater New York Metropolitan area in 1976. Earlier this year, Access Self Storage purchased a 37,000-square-foot storage center with 350 units in Oakland, N.J. 

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Self-Storage Thief Gets Prison Term in Hammond, Ind.

A man who pleaded guilty to burglarizing several self-storage units at Meier's Self Storage and committing other theft in Hammond, Ind., was sentenced to 12 and a half years in prison. Lloyd Dyvale Taylor III, 37, also admitted to stealing license plates, keys and titles from vehicles in a car lot and stealing items from a local gas station.
Taylor pleaded guilty to burglary and three counts of theft in August when he was apprehended by police on suspicion of breaking into cars. The car he was driving had a false Indiana license plate, and he was arrested. It was later found that he and his wife had other vehicles with fictitious plates.
After getting a search warrant for Taylor’s home in Hammond, police found numerous items that had been reported stolen from storage units.

Source: Post-Tribune, Gary man gets lengthy prison term for burglary

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Safestore Opens Self-Storage Facility in Leicester, England

Safestore, one of the United Kingdom’s chief self-storage operators, opened a new facility in Leicester, East Midlands, England, on Sept. 4. One of the company’s largest self-storage centers, the facility offers a DHL shipping service, a free 24-hour van hire and up to four weeks of free storage for new customers. Customers can also use their Tesco Clubcard Deals tokens to pay for their storage rent.
Safestore has 94 self-storage facilities in the United Kingdom and three business centers. Its Leicester store is its sixth facility in the Midlands.

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