2021 has been a very busy legislative year for the SSA, working in conjunction with state associations and advocating for amendments and updates to self storage lien laws in more than 20 states. To date, and as outlined in more depth below, SSA-backed bills have passed in Alabama, Arkansas, Kansas, Kentucky, Louisiana, Maine, Minnesota, Montana, New Hampshire, North Dakota, Texas, Utah, and Virginia.
As background, the SSA typically seeks seven core amendments to laws in states that have not previously adopted them. Overall, these amendments aim to reduce costs, streamline operations, and limit liability for the operator.
Click here for a state-by-state overview that explains the new mandatory and optional provisions and provides analysis and recommendations for implementation.
Below is a brief snapshot of victories achieved to date:
Newspaper advertising. Many state lien laws require advertisements in the newspaper before an operator may proceed to sale. Generally, in those states, the operator must advertise once or twice in the newspaper before the sale. This requirement is a relic from the pre-internet era when many more citizens received their news from print newspapers. In recognition of the decline of newspaper readership and the growth of online channels, the SSA seeks to allow storage operators to advertise online through auction websites and sites such as Facebook Marketplace and Craigslist.
In 2021, SSA successfully obtained alternative advertising amendments in Alabama, Arkansas, Kansas, Kentucky, Louisiana, North Dakota, and Utah. A bill to reduce the required number of advertisements from two to one remains pending in Pennsylvania. Bills stalled in Vermont, Florida, Illinois, and Missouri. SSA intends to pursue these changes in those states again in 2022. Now, the majority of states have adopted alternative advertising or have no advertising requirement at all.
Notice by verified mail. In 2021, both Alabama and North Dakota amended their respective laws to eliminate the requirement that lien notices be sent via certified mail and instead permit those notices to be sent by verified mail. Verified mail is a term of art and includes U.S. Mail with certificate of mailing. U.S. Mail with certificate of mailing provides proof that the notice has been sent and automatically forwards to a new address. This provides a greater assurance that the tenant will receive the notice and is less expensive than certified mail. Now, 46 states permit operators to send lien notices via verified mail as opposed to certified mail.
Notice by email. Many self storage tenants are in transition and prefer to receive lien and other notices via email. Unlike physical addresses, email addresses typically remain the same when an individual moves. The SSA’s lobbying efforts resulted in favorable amendments in Alabama, North Dakota, and Ohio. Now, approximately 40 states permit operators to send lien notices exclusively via email.
Contractual value limitation. Certainly the most obscure sounding, but perhaps the most important of the changes that SSA seeks. Many operators include in their rental agreement a limitation of the value of the property that the tenant may store in the unit. Value limitations are a necessary tool for operators because they have no reasonable means to know the type or value of property that customers are storing on a self-service basis. SSA seeks statutory recognition of these value limitations to prevent courts from ignoring the limitations. In the event of a lawsuit, this is a powerful tool to reduce any potential damages owed to a tenant. Alabama, Kansas, and North Dakota all recognized these provisions in statute in 2021. Now, 37 states have established statutory protection for this provision.
Online sales. Online sales can expand the audience of potential bidders by allowing bidders to submit bids without attending a one-day sale in person. More bidders increase the likelihood of higher bids. SSA seeks to expressly permit operators to conduct any lien sales online while also retaining the ability to hold those sales “live” at the facility. Alabama, Kansas, North Dakota, and Ohio expressly adopted language to permit online auctions in 2021. Legislation to recognize online auctions remains pending in Pennsylvania. Now, 36 states expressly permit auctions to be conducted online.
Optional towing. Many storage operators do not want to go through the process for selling property. The process can be cumbersome, and many operators are not frequently called upon to conduct these sales. Towing avoids the need for a sale and allows operators to return the space to inventory faster. SSA successfully amended the laws in Alabama, North Dakota, Virginia, and Texas to permit operators to have certain property towed in lieu of going through the sale process. Now, 43 states expressly permit towing.
Late fee safe harbor. Many states have a late fee safe harbor of up to $20 or 20% of the monthly rent, whichever is greater. These amounts strike an appropriate balance to compensate the operator for delinquent payment while not being overly burdensome to the tenant. Alabama and North Dakota adopted the safe harbor language in 2021. A bill remains pending in Pennsylvania. Now, 34 states recognize a late fee in statute.
Tenant insurance. Outside of the lien laws, the SSA has established licensing or licensing exemptions to sell tenant insurance in 42 states. This year, SSA successfully pursued tenant insurance licensing in New Hampshire, Maine, and Montana.
SSA has been busy over the last few years in particular opposing legislative threats to the industry. The COVID-19 pandemic presented unique challenges for all industry sectors, including self storage. As an example, bills were introduced in both New York and Michigan that would have prevented storage operators from enforcing their liens for the duration of the pandemic. The SSA was able to work closely with state associations and legislators to explain why the bills were unnecessary as virtually all operators have worked collaboratively with storage tenants who experienced financial distress during the pandemic to resolve any issues.
Additionally, unique challenges were presented in Maryland, Arizona, Minnesota, and Nebraska.
In Arizona, a bill was defeated that would have required storage operators to permit their tenants and guests to carry firearms on the premises and store their firearms and ammunition in their units. While some storage operators may permit storage of those items, operators, as private property owners should not be required to do so.
In Maryland, HB 581 started as a bill to require many businesses, including storage operators, to pay hazard pay, among other mandates, under certain circumstances. After running into significant opposition from trade groups, including MD-SSA, the bill was substantially amended to remove many of the onerous mandates, including hazard pay.
In Minnesota, a budget bill is currently pending that would, in part, change which occupants can remove certain property following default and lockout. As with current law, the bill would permit any self storage occupant who is in default to remove from the facility personal papers and health aids upon demand. The bill would increase the maximum market value of clothing and tools that may be removed by tenants who are in default to $125 per item from $50. However, unlike current law, an occupant who wants to remove those items must provide sufficient documentation of economic hardship. The bill also consolidates the requirements for lien notices into a single section of the statute, confirming that only one notice is required.
In Nebraska, LB422 was successfully defeated during the 2021 legislative session. The bill sought to impose a five percent tax on storage rentals with potential upward adjustments in 2023 and 2024.
The SSA was proud to serve as the voice of the industry during a difficult operating climate. Self storage has once again shown how resilient and essential the industry is during the COVID-19 pandemic. We will continue our efforts advocating for and protecting the self storage industry.
Please email Joe Doherty or Daniel Bryant if you have questions about the status of legislative initiatives in your state or if you hear of any threats to the industry. Several new books are available in the annotated lien law series that explain the new provisions of the amendments outlined above. Those can be purchased here.
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