Tuesday, March 18, 2014

Changes to Self Storage Legislation in 2014

BRIGHTON, Mich -- As many as twenty states have recently made changes to their legislation in regard to facility operation and responsibilities to tenants. These legislative changes are brought about by the efforts of the national Self Storage Association and multiple state associations as well. The affected states are as follows: 
  • Arizona
  • Arkansas
  • Colorado
  • Connecticut
  • Florida
  • Georgia
  • Illinois
  • Kansas
  • Maine
  • Michigan
  • Nevada
  • New Jersey
  • North Carolina
  • Ohio
  • Oregon
  • Rhode Island
  • Tennessee
  • Texas
  • Utah
There are other states apart from this list that are scheduled to be targeted for changes later this year. It is crucial for self storage owners who operate within these affected states to review the revisions to the laws and make necessary changes to their leases and other operating procedures in order to comply with the new requirements. The majority of these changes fall into five main categories. These categories include notice to tenants, late fees, limitation of value of stored goods, vehicle towing, and online sales and advertising. As with the rest of Michigan Storage facilities, MySpace Self Storage will be affected by these legislative changes too.

Notice to tenants is one of the biggest changes we are seeing in affected states. New legislation is pushing the use of an alternative method for notifying clients of impending lien sale of their stored belongings. Older laws required that notices such as these be sent via certified mail, although many states now allow the use of email or other verified mail. Email use for this process varies from state to state. Of states that permit the use of email, its implementation is inconsistent. There are a number of states that require proof of receipt from the tenant. There are a plethora of software options available that offer this functionality to self storage operators. If the email message is unable to be confirmed, then it must be resent as certified mail. These new laws are factoring into account that many storage  tenants may be mobile, and therefore unreachable at physical addresses.

Changes to late fee laws in the affected states have seen the implementation of a "safe harbor" of fair and reasonable late fees. This late fee zone encompasses $20 per month or 20 percent of the monthly rate, where tenants pay the greater of the two. These updates have recently occurred in Arkansas, Illinois, Maine, Maryland, Nevada, North Carolina, Ohio, Oregon and Tennessee. Facilities in these states that are charging more than this amount need to reduce their late-fee charges or be able to demonstrate the fee being charged is tied to the actual costs incurred by the facility associated with late paying tenants.

Changes to the limitation of value of stored goods provide statutory support of contractual obligations already seen in most self storage agreements. In applicable scenarios, the tenant is limited to the maximum amount in the event of filing a damage or a loss claim. Many of these states have seen the addition of a towing right in lieu of having to enforce a lien against a titled property. With this new legislation in place, operators can now have a licensed towing company remove the vehicle from the site and eventually process the vehicle for sale. In the event of this type of situation, the facility is no longer liable for any damage to the vehicle after having it towed and the facility still retains the right to collect the unpaid rent through regular methods of collection. Colorado, Georgia, Illinois, Maine, Maryland, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, Tennessee and Utah are among The states that have added this towing right.

Arizona, Colorado, Michigan, North Carolina, and Ohio have allowed the use of online advertising in lieu of newspaper ads and other print ads as long as they are considered to be "commercially reasonable". Commercially reasonable has been defined in most instances to be a method of advertising that results in obtaining a minimum number of potential bidders. If online advertising, which arguably attracts more visitors than print, is able to attract a minimum numbers of bidders to attend the auction, then it will be considered sufficient. In addition to the use of online or alternative advertising for lien sales, a number of states, including Georgia, Maryland, North Carolina and Oregon, have statutorily clarified the right of operators to conduct their lien sales via the use of online-auction sites.


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