How Do Wrongful Sales of Repossessed Storage Units Occur?

Mar 01, 11 How Do Wrongful Sales of Repossessed Storage Units Occur?

When it comes to auctioning off a repossessed storage unit, both the delinquent tenant and the storage company have strong interest in seeing this process carried out legally. That’s because the tenant usually wants their belongings back or to prevent a sale, whereas the self storage company needs to be careful to protect itself against a potentially devastating wrongful sale lawsuit. Most of the time, when we’re talking about wrongful sale lawsuits pertaining to the storage industry, all it takes is one or two slip-ups on the part of the property manager concerned with handling the delinquent storage locker.

The Law’s Probably on Your Side

Unfortunately for self storage companies, the law caters more to the comfort and protection of the delinquent tenant. Most state laws pertaining to liens and the repossessing of delinquent lockers stipulate that the company must make several well-documented attempts to contact the late tenant directly in order to inform them of their situation and give them a chance to pay their past due rent. The first step in this whole process usually occurs once the tenant passes their grace period (if any should exist) for making a given month’s rent payment. After this point, most self storage companies will apply a late fee and try to get in touch with the tenant to inform them of their tardiness and to lay out the future consequences.

Storage companies do this to encourage timely rent payments that they can count on, as well as to discourage late tenants from thinking they can continue to drag on without making a rent payment. By outlining the future consequences, such as additional (usually larger) late fees and an overlock that prevents the tenant from accessing their belongings, the self storage company makes it clear that being late with the rent payment is not “okay”. It’s also around this time that the company and the property manager must take special care to begin observing every notification procedure to the exact letter of the law. Keep in mind that every halfway decent self storage company will do everything in their power to prevent a wrongful sale of an auction unit. A single wrongful sale suit could cost a company $25-35K on, sometimes before legal fees!

Understanding Your Rights as a Storage Customer

The lien process does not technically begin in most states until 30 days after a missed rent payment. In the meantime, you can expect your storage company to have given you at least one late fee and possibly a 15 day pre-lien fee before you technically fall under the legal constrictions of a lien. While some storage companies try to use an overlock to compel their late tenants to pay up in full, check to make sure you know your state’s lien law well. Many times that a company goes and places an overlock on your unit or locks you out at the electronic entry gate, they will do so banking on the probability that you’re not familiar enough with your state’s lien law to call them on it. If your storage company does not yet have a legal lien on your unit, but they overlock you before the 30 day mark, you may have a legal right to access your things and in some cases compel the company to allow you into your unit.

However, you will still always be obligated for the full rent payment amount, and if you let it go on for too long you will only be increasing the amount you pay through the accumulation of late fees.

So, How do Most Wrongful Sales Occur?

As we mentioned before, the self storage company is almost always nervous about the possibility of a wrongful sale. That’s why they take the various self-protective steps along the way so seriously. In legally enforcing a lien and eventually sending your unit to auction, the company must be able to furnish proof that they attempted to contact you to the best of their ability at every crucial date along the way.

When a company gives you a pre-lien notice, usually at the 15 day mark, they will make two copies: One copy goes out to your last given mailing address and the other gets post-marked and goes right into your hard file. This allows the company to present proof that they attempted to contact you way back when, once the delinquency had just started. This is also one of the biggest ways a self storage company can screw up and leave themselves vulnerable to a wrongful sale suit – one that they’re likely to lose! If you have any reason to believe that a storage company attempting to enforce a lien against your belongings has not been keeping up with their timely postmarking and retaining of all copies of correspondence, you might have a wrongful sale case.

Keeping an Eye on Your Property Manager

The problem is that most of the time you won’t know whether or not the management is on top of their game and dotting all their I’s and they certainly won’t be the ones to tell you they’ve flubbed! One good sign that your property manager has made a major screw up that would leave them vulnerable to a wrongful sale suit is their continued reluctance to actually send your unit to auction and commit to the sale by buying ad space in the local paper and running the announcement. Often times, a property manager who knows they have no legal ground to stand on, most likely because they have screwed up their mailings and records keeping, will just keep using the empty threat of an imminent auction to try and scare some partial payments out of you to keep their facility’s bottom line looking good. Don’t be intimidated. If you ask your property manager to furnish you with proof that they attempted to contact you via regular postal mail and they either stall or refuse for some poor reason, chances are they haven’t kept up their legal obligation to inform you of your delinquency. If they haven’t their sale of your unit via public auction probably won’t stand up in court, meaning you’ll be entitled to pursue them for a wrongful sale.

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