Understanding the Self-Storage Lien Process

KEY TAKEAWAYS

▸ Storage facilities can legally sell your belongings through auctions when you fall behind on rent, following state-specific lien laws and notice requirements.

▸ You can stop the auction until sale day by paying past-due amounts, but once items are sold, they cannot be recovered.

▸ Communication is crucial – don’t ignore notices; contact the facility early to negotiate payment plans or avoid losing your belongings.

Sometimes the tenant hits a financial rough patch. Other times, they just plain forget to make their storage payments.

Either way, once the past due payment reminders start stacking up, it’s a matter of time before the storage facility threatens to sell off your belongings in an auction sale.

Can a self-storage business sell your stuff when you fall behind on rent?

Yes, storage lien laws allow self-service storage facilities to lock tenants out of their units and sell their stuff at storage auctions as part of the self-storage lien process.

The self-storage operation typically sells the unit contents at an in-person storage auction, where bidders can view the unit in person. But with the self-storage industry going remote, more and more unit sales are conducted via online self-storage auctions.

Regardless of how the particular storage facility’s self-storage lien process unfolds, if you’re behind on your payments and fail to take action, they will lock you out of your unit and sell your belongings. And self-storage laws allow them to do so.

Before you move into one of the self-service storage facilities’ storage spaces, you must have an understanding of storage unit auction laws in your state.

Understanding the state law variations of self-storage laws will help you avoid the unpleasant situation of having your personal property auctioned off.

This guide will explain the self-storage lien process timeline from start to finish. We’ll cover the general self-storage laws, whether the storage facility needs a court order, and how to stop the auction before the auction date.

We’ll also reveal how SpareFoot.com can help you empty your storage unit before you get locked out.

But remember, while our guide covers the general lien process, the specifics differ from state to state.

These state law variations include the lien process timeline that all storage services have to follow when executing a lien foreclosure on your stored property.

This information should also be outlined in the rental agreement tenants sign when leasing self-storage spaces.

What is a Self-Storage Lien?

From the day you move your belongings into self-storage and sign the lease, a lien is in place against those items as security for rent, according to Scott Zucker, an Atlanta attorney who specializes in all matters related to self-storage service. That lien lets the storage facility sell your unit’s contents in a storage auction to recoup any unpaid rent. 

The facility can’t hold an auction right away, though. There are legal requirements the storage facility has to follow, starting with notice requirements.

For example, if the storage facility hasn’t provided payment reminders before the due date and late payment notices after, they’re not in lien compliance.

There are other variations as well, especially if the tenant is in active duty military service. 

• The Servicemembers Civil Relief Act states that facilities can’t enforce liens and lock a servicemember out of their storage spaces during their military service or for 90 days thereafter without a court order.
• Self-service storage facilities are against lien compliance if they lock an active servicemember out of their unit without a court order endorsed by the court clerk.
• If the tenant was storing a motor vehicle in the unit, it gets a bit more complicated, though again, the legal processes vary state by state.

In many states, the self-storage facility owners need a legal document called an affidavit of self-storage facilities lien sale before they can sell motor vehicles as security for rent. 

This document is a necessary step in the self-storage lien process, resulting in a certificate of ownership over the motor vehicle. Once they have the affidavit, they have to submit it and other required documents to the Department of Motor Vehicles, the Department of Public Safety, or a similar local authority.

Every state has different self-storage lien laws in place, but most follow a similar timeline. Let’s take a look at the basic flow of the storage lien process. 

1. Default

Default is the first step in the self-storage lien process. If you’ve received adequate payment reminders and fail to pay your self-storage rent in full and on time by the due date, you risk going into default.

Your storage lease defines the point of default, with notice requirements varying from state to state. That said, a unit typically goes into default between 5 and 30 days after rent is due.

When you default, a self-storage operator can deny access to your storage unit.

“After five days, the gate automatically locks out, so we make phone calls at that point,” said Jennifer Bloomer, manager of National Storage Centers in Southfield, MI.

You can regain access by paying the past-due amount, including any late fees that you have incurred.

2. Notification

Once you are in default, the storage company is required to issue an official notification. This letter is to inform you that the storage owner intends to auction off your belongings. The notification should include the total past-due amount, any additional fees, and the scheduled auction date.

State law varies widely on the rules that storage operators must follow when sending notices. Most states allow notifications to be sent by email, while a few still require notification by certified mail.

In any case, it is extremely important that you make sure you provide the storage facility with your correct contact info, including email address, street address, and phone number. 

Make sure to update this information if it ever changes to avoid missing a notice in case you accidentally default.

3. Public Notice

In addition to sending a notification to the tenant that a lien sale will be taking place, storage facilities are also required to provide public notice.

Most laws require public notice to be “conspicuous.” Some states require notices to be published in a local newspaper, while others permit operators to post notices online instead. 

These advertisements typically will include your name, a description of the unit contents, and the date of the auction.

4. Lien Sale (aka Auction Time)

The time span between default and the time your personal property is auctioned varies by state, ranging from 30 to 90 days. You can always pay what you owe until the day of the auction to stop the sale; however, once the auction is over, you can’t get the sold items back.

At auction, the top bidder is awarded the contents of your self-storage unit. In some cases, storage unit buyers will relinquish personal items such as photos or documents.

Sale proceeds go toward your storage debt, and self-storage businesses usually notify tenants of any leftover money. The tenant then can claim that money within a specified time, ranging from months to years. Unclaimed proceeds generally are turned over to a state or county agency.

In order to finalize the sale, the owner of the storage unit or storage services company needs what’s called a self-storage facility lien sale form.

• A self-storage lien sale form is a legal document and public record of the self-help remedy. 
• The self-help remedy in this case is selling the contents to the bidder and using the earnings to settle the balance owed by the tenant, who owns all the stuff being sold, which once belonged to them.

The lien sale form includes details about the unit, including the sale price. In some cases, the form needs to be signed by both the facility owner and auction bidder to validate the lien sale and keep the self-storage operation in lien compliance. 

How Can I Stop or Delay the Lien Process?

• Pay Up. The best approach is to pay the past-due amount to stop a sale and be prepared to move out immediately to avoid continuing charges, Zucker said.
• Communicate. Don’t ignore letters and phone call,s and then call the day of the auction to negotiate. “At that point, our hands are tied,” Bloomer said. “If people communicate with us, there is more we can do to help.”
• Be an informed consumer. Some states let tenants oppose a lien sale in small claims court. This won’t stop the sal,e but can delay the process for a month or two. Be sure to check out your state’s lien laws.
• File for bankruptcy. This will postpone the auction, but the bankruptcy court still will sell your items eventually.
• Know the law. If a self-storage operator does not follow the rules pertaining to notification and advertisement to the letter of the law, then you may have cause to delay the sale or seek damages. Consult a law firm to review your options.

‘Remedy of Last Resort’

The auction is a self-storage owner’s “remedy of last resort,” Zucker said. The lien itself won’t be reported to a credit agency, but any deficiency will. “If the tenant owed $500, and the sale recoups $200, the $300 balance is generally reported to credit reporting agencies as an unpaid debt,” he said.

Everything a tenant needs to know about the lien and auction timeline is in your lease, Bloomer said. “We make sure we’re very explicit when going over the rental agreement,” she said.

How SpareFoot Can Help You Avoid a Lien Foreclosure on your Storage Unit

By now, you should have a pretty good idea of the storage auction lien process. If you’re reading this guide and you’re already locked out, your best bet is to communicate with the storage facility as an informed customer who knows the local laws and is willing to pay at least a portion of what you owe. 

You can try sharing your pay schedule and promising to make payments as soon as you cash your check. 

They may want you to pay at least part of what you owe before you up front. But remember, you likely have until the day of the auction to settle up.  

If you’re reading this before being locked out, either just after receiving your notice of delinquent payments or expecting one soon, brace yourself. SpareFoot is here to help, and we’ve got some pro tips and tricks to share.

Your safest bet is to move out as soon as you know you can’t make your monthly payment. Then, you can settle what you owe as soon as possible, while its still a manageable amount. 

But the clock is ticking. Where can you put all the contents of your storage unit on a moment’s notice?

That’s where we come in.

Use our signature SpareFoot search tool to find a storage unit near your current facility, where you can crossload all your stuff. Our tool will iterate your search results using the parameters you set. 

We actuaries have a separate Storage Deals Search Tool that finds storage units in your area that offer the first month for free. Find a second storage unit close by that offers a free first month, and move all the contents of the first unit to the second. 

Cancel your lease on the first unit and pay your balance off as soon as you can afford it. Then stay on track with your monthly payments on your new unit, and you’re goods are in the clear. 

And if you need help moving your stuff from one unit to the other, some storage units offer discounts and deals on moving trucks. Some even offer free vans for loading and unloading stuff locally. 

Ask about available options when you’re signing your new storage unit lease. 

Falling behind on payments happens to the best of us. SpareFoot can help you move on from your mistakes. Learn what you can from the experience and try your best not to fall behind on the second unit. 

Michael Ta’Nous

Michael Ta’Nous is a full-time writer who works and lives with his wife in Taos, New Mexico. “Mikey” spent his early twenties living either out of a van as a touring musician or out of a backpack on motorcycle trips writing from cafes–these rigorous adventure years polished him into a master packer. In addition to managing storage units full of catering supplies and outdoor gear professionally, Michael has used storage units as a band rehearsal space and a motorcycle garage.