State and Local Restrictions on Lien Sales and Late Fees
When the coronavirus began to spread throughout the United States, several states and localities enacted restrictions on foreclosures and evictions. Although most covered residential foreclosures and evictions that are not applicable to self storage, some states expanded those restrictions to cover commercial or non-residential evictions and foreclosures as well. Self storage lien sales are not evictions in the usual sense of that word; however, SSA urges all operators to exercise great caution if they operate in an area covered by a moratorium on commercial or non-residential evictions or foreclosures.
As of this writing in mid-March 2021, most states and localities have lifted their restrictions on commercial and non-residential evictions. The states and localities with continued restrictions are listed below. Self storage operators are urged to consult with knowledgeable counsel before proceeding with lien sales or imposing late fees in the states and localities with continued restrictions.
SSA offers the following considerations for operators that proceed with the lien sale process:
- Look for options other than a lien sale, particularly if the tenant provides a documented COVID-related reason for non-payment. For example, consider allowing the tenant to remove the stored property by a certain date and waiving part or all of the outstanding payment if the tenant does so.
- If a tenant has filed for bankruptcy or indicates that he intends to do so, the operator must immediately halt all collection efforts and should consult with your legal counsel. The operator may be prohibited even from agreeing to allow the tenant to remove the property.
- Hold the lien sale with an online auction provider. This will eliminate the need to ensure social distancing, mask wearing, gathering limits, and other state and local health requirements during the lien sale.
- If you hold the lien sale in-person, be sure that you or your auctioneer follow all state and local health requirements such as social distancing, mask wearing, and gathering limits.
In addition to the considerations above, operators must ensure that they follow their state’s lien law as written. Operators must follow the lien law even if the stored property appears to have little or no value. Lien law manuals, including sample timelines, checklists, and lien notices, can be purchased here.
Finally, operators should keep in mind that lien sales are a non-judicial remedy (outside of the court system) used solely for non-payment of rent and other fees. If an operator wants to terminate a tenancy for reasons other than non-payment, such as living in the unit or other illegal activity, and the tenant will not leave voluntarily, the operator may need to file an eviction action in court. Eviction actions filed in court may be prevented or slowed due to restrictions put in place by courts and local and state governments. Operators should consult with knowledgeable counsel to discuss their options for handling these troublesome tenants. The Self Storage Legal Network is a members-only resource available to provide this information.
Please email Daniel Bryant and Joe Doherty if you believe any orders are missing or if you have any questions about this document.
See all of the State and Local Restrictions on Lien Sales and Late Fees here (exclusive content for members of the SSA)
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