Legislative Update 2 Self Storage Lien Law

At the end of March, OpenTech Alliance reported recent lien law changes taking effect in Kentucky, Utah, Arkansas and North Dakota. If you missed that article, check out those lien law updates here. As stated in the last post, we will continue to keep our partners abreast of legislative changes around the country that may impact your self storage auctions.

The National Self Storage Association continues to be a busy advocate for the self storage industry. We have recently seen improvements made to the self storage statutes in several other states. If you own or operate a facility in Alabama, Kansas or Virginia, read on to find out what changed and how these new lien laws impact your business.

Law book with a gavel - 2021

1. Alabama

This legislative update has been a long time in the making. As far as we can tell, Alabama lien law was last updated in 1981. There was a failed attempt to modernize Alabama’s statute in 2014, but none of the elements of the lien enforcement process have been updated in 40 years. The governor did sign a bill introducing limited lines insurance, but this did not include any changes to the day-to-day auction processes.
Senate Bill 140 (House Bill 329) was signed into law by Governor Ivy on April 1, 2021. It will go into effect on October 1, 2021. The bill contains many new provisions.

New provisions under the updated legislation:
  • The bill explicitly states lien sales can be held on a publicly accessible website.
  • Email can now be used to send Notice of Sale Letters. If you receive a notice that the email was undeliverable, verified mail must be used.
  • Verified mail replaces Certified Mail. Verified mail is any mailing that provides evidence of the mailing. A popular option for verified mail is first-class mail with a Certificate of Mailing. You can get more information about a Certificate of Mailing at your local post office.
  • At least seven days before the sale, you need to run a legal ad one time in a newspaper of general circulation, UNLESS “the operator determines, based on previous experience of the operator, that the content of the leased space have a value of $500 or less, then an advertisement in any commercially reasonable manner shall suffice.”
    • The ad will be deemed commercially reasonable if it is likely to attract at least three independent bidders.
    • The legal ad must contain the time, place, and manner of sale.
    • If you feel the unit’s contents are worth $500 or less, you could use your StorageTreasures listing as your legal ad. Please note, your listing will need to be visible on StorageTreasures for at least seven days before the sale.
    • StorageTreasures has a feature to ensure each listing receives at least three independent viewers. Reports containing this data can be found in your StorageTreasures account.
  • Any vehicle, watercraft, or trailer may be towed after the tenant has been in default for more than 60 days.

Link to bill — https://legiscan.com/AL/text/HB329/2021

2. Kansas

House Bill 2112 was signed into law on April 9, 2021 by Governor Kelly. The bill allows for several benefits to operators. It gives the operator an option to provide a value limitation on the goods to be stored. To impose the value limitation, the rental agreement must “include the claim limitation.”

Additionally, all rental agreements must now include a section for the tenant to name an alternative contact. If the tenant refuses to list an alternate contact, the operator still retains all rights outlined in the rental agreement.

The bill also explicitly states self storage lien sales can be conducted online or in person. Finally, the bill allows for alternative advertising methods. Seven days before the sale, you must advertise one time in a newspaper of general circulation or any other commercially reasonable manner. A sale is considered commercially reasonable if attended or viewed by three independent people. StorageTreasures tracks independent viewers in our Commercially Reasonable Assurance feature. If a sale did not have three independent viewers, it would be canceled, and you would be notified.

Your StorageTreasures online auction listing could be considered your advertisement. There are no specific requirements that must be included in your legal ad. However, you will need to make sure it is visible on StorageTreasures at least seven full days before the sale. Reports are available in your StorageTreasures account that show how long a unit was listed, should you need verification.

This bill goes into effect as soon as it is recorded in the statute book.

Link to bill — http://www.kslegislature.org/li/b2021_22/measures/documents/hb2112_00_0000.pdf

3. Virginia

The Virginia Bill, Senate Bill 1160, was signed into law by Governor Northam on March 25, 2021. This bill was not directly targeted at the Virginia Self Storage statutes to lien keepers of vehicles. In simple terms, this bill gives operators the ability to have a vehicle towed if the tenant is in default.

The language in this bill is complicated to follow, but the bill itself grants the self storage operator a lien. Further, it is established that anyone with a lien can relinquish said lien to a tow company into the bill. You are required to do a Title Search with the Virginia Department of Motor Vehicles to verify the existence of any additional liens on the vehicle.

The bill also states you can transfer the vehicle to an unaffiliated truck driver, towing and recovery operator, or a keeper of a garage located within the same locality of the bailee. It is advised you establish a relationship with a local tow company. Usually, tow companies require you to have their tow signs on your property for them to tow the vehicle. Often, they will need the sign to be in place for two weeks before they remove a vehicle, so it is advantageous to you to establish the relationship right away.
Unfortunately, this bill does not go into effect until Jan 1, 2022.

Link to bill — https://lis.virginia.gov/cgi-bin/legp604.exe?212+ful+CHAP0374

Look for more lien law updates in the weeks to come on the OpenTech Alliance blog as there are still several states with pending legislation.

 

Author: Cheli Rosa

This blog post was authored by licensed auctioneer Cheli Rosa. Cheli is an Auctioneer and Marketing & Communications Manager for StorageTreasures, managed by OpenTech Alliance. She helps clients at StorageTreasures have successful auctions and increase debt recovery percentages. Cheli regularly speaks at national and state self storage association events and contributes to many industry publications on the topics of lien law and self storage auctions. She served on the Board of the Florida Self Storage Association and has been in the self storage industry for nine years. She was formerly the Director of Marketing at StorageStuff.Bid Online Storage Auctions and the Social Media Manager for Sentry Self Storage Management. Her passion is helping clients figure out what they need before they know it themselves. She is a Mom, an avid reader, and a Pinterest addict. 

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