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Self Storage Auctions

Posted by 15789465 on

I've received a number of questions lately regarding self storage lien laws in Alabama. As some of you might know, my husband and I are self storage developers and also operate a self storage management company.  So, I have a good bit of experience on this topic. The Alabama self storage lien law can be found at Alabama Code Sections 8-15-30 through 8-15-38. You can click on the link HERE and browse through the sections if you want. The "heart" is in 8-15-34. It says:
  • No enforcement action shall be taken until the occupant has been in default continuously for a period of 30 days.
  • Prior to taking any enforcement action, the self storage owner must determine if any financing statements have been filed on the property in storage. In other words, does a lender have a lien on the property and have they filed the correct paperwork to enforce that lien.  If there is a lien, it is legally and automatically in second place behind the self storage lien.  But, if the auction or other sale results in enough money to pay the self storage bill in full, then the remaining money goes to the lien holder until it is paid in full, and then the balance to the storage occupant.
  • After the occupant has been in default for 30 days, the self storage owner may begin enforcement action if the occupant has been notified in writing, via certified or registered mail to the last known address. Also, any lienholder discovered because of the rental application requiring that information, or through the lien search requirement, must also receive notice. The notice must include:
    • an itemized statement of the amount due and the dates when each amount became due;
    • a brief and general description of the personal property in the unit, which must be reasonably adequate to allow the occupant to identify the property.  If anything is secured (locked, fastened, sealed, etc.) in boxes or other containers, you do not have to describe the contents. I've noticed that most self storage companies describe the unit contents as "household goods" and that is all. I think that is insufficient, but no court has ruled on this issue, so nobody knows for sure.
    • a notification that the occupant has been denied access to the property (but only if the rental agreement provides for denial of access). The notice must provide the name, street address and telephone number of the owner of the self storage facility or their designated agent, so the occupant can contact that person;
    • a demand for payment within a specified time limit that is at least 15 days after delivery of the notice;
    • a conspicuous statement that if the bill is not paid, the property will be sold;
      • BTW, this notice is presumed delivered as of the date it is placed in the US mail, properly address with correct postage. (I recommend these notices always be sent by certified mail)
  • After the expiration of the time period to pay the bill, the self storage owner can publish a notice of "the sale or other disposition" once a week for two consecutive weeks in a newspaper of general circulation in the county where the self storage facility is located. The advertisement must include:
    • description of the personal property (the same as in the notice letter to the occupant);
    • address of the self storage facility;
    • the unit number(s) of the space where the personal property is located;
    • the name and last known address of the occupant;
    • the time, place and manner of the sale or other disposition.  That cannot be earlier than 15 days after the first notice to run in the paper.
I hope this helps.  The law says that if you follow its requirements, you can't be sued for wrongful disposition of the stored property. If you do not follow the law's requirements, you are on your own--you can be sued and the occupant might win, even though they owed you money!  Most companies that insure self storage facilities require a copy of your written lien sale procedures before they will write insurance for you.  If they insure you, though, it doesn't necessarily mean you have their "stamp of approval" on your procedures being correct. You might want to hire a lawyer, or a obtain forms from a management company, to make sure you are in compliance with the law.

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