Popularity of Self Storage Auctions Spurs Change

 Change in Tennessee Lien laws

Self storage auctions are getting swamped with attendees in recent months as popularity has grown, causing many states to look at streamlining their lien laws. Earlier this week, both Nevada and Florida legislators reviewed proposed changes to their states’ self storage lien laws. Now Tennessee has joined the ranks by introducing legislation that would lift the newspaper advertising requirement for self storage lien sales.

Due mostly to the popularity of A&E’s “Storage Wars” reality show, novice bidders have begun to flock to self storage auctions hoping to find treasure amongst the boxes and bins. The demand for storage auctions has grown exponentially and many states are looking to smooth the process by taking a more modern look at what some self storage associations are calling outdated and overly stringent lien laws.  Auctions and lien laws are of such great interest that the Inside Self-Storage World Expo, March 14-16 at the Paris Hotel & Resort in Las Vegas will be conducting two special seminars and a workshop that will focus on lien laws and auction sales.

The proposed Tennessee state legislation known as Senate Bill 1293 and House Bill 1265 would allow facilities to contact auctioned tenants by verified mail, which would include e-mail and hand delivery. The new advertising requirement would still require facilities to post clear auction information, such as time, date, place and manner of the sale. To be commercially reasonable an auction would require at least three bidders but no newspaper ad would be required.

For lien-sale notification, the new Tennessee law would allow for hand-delivered notices and verified mail which is far less costly than previously required Certified Mail. The bill also approved e-mail notification and does not specify an e-mail proof-of-receipt requirement. Based on a Tennessee Self-Storage Association survey with 350 respondents some interesting numbers arose:

• 80 percent said they do not subscribe to a local newspaper. 

• 83 percent said they do not read the legal notices in a newspaper. 

• 80 percent said they had regular e-mail and Internet access. 

• When given four choices for preferred methods of receiving notifications if they default on their rent, 53 percent of respondents chose e-mail, and only 2 percent chose via a publication.

 “The law should enhance communication between businesses and consumers,” said Sherry Cole, a member of the Tennessee Self-Storage Association Board of Directors and chair of the legislative committee. “The current law does not allow us (self storage owners) to use a more efficient means. In fact, the law is doing a disservice to operators and consumers. The law needs to be modernized. Technology has changed in the past 31 years.”

The proposed changes in Nevada law include legal e-mail auction notifications with confirmation of tenant receipt, as well as newspaper-free advertising requirements and new procedures for handling delinquent tenants’ protected property. Introduced by Sen. Mike Schneider, the bill would allow self storage owners to notify tenants of an auction by “verified” means, including traditional mail or electronic communication with evidence of receipt. Pre-auction newspaper advertising would be removed. However, the bill requires at least five bidders who are unrelated to the owner to attend the auction in order for it to be considered commercially reasonable.

Regarding Florida law, the Self Storage Association and the Florida Self Storage Association (FSSA) also aim to save self storage operators money by changing the mail-notification and newspaper requirements of a lien sale. One bill, HB 459 revises the notice requirements relating to lien enforcement and addresses limitations on liability. SB 1772 also affects notice requirements by allowing postal notice by First Class Mail with a certificate of mailing as well as an e-mail notification. The bill would also get rid of provisions that relate to advertisement requirements while clarifying provisions that relate to the right to create contractual liens or limitations on liability.

Sources Used:

“Tennessee Bill Proposes Changes to Self-Storage Lien-Sale Process.” Inside Self-Storage. March 9, 2011.

Stevens, John. “Two States Tackle Proposed Changes to Lien Laws.” Self Storage Industry News. March 8, 2011.