A self-storage owner or operators most valuable asset is their space - so what happens when a tenant falls seriously behind in monthly payments and can’t be found? Typically, a situation like this triggers the start of a “lien” process, which allows the self storage owner or operator to cut off locks and sell the contents of delinquent storage units, in an attempt to recoup their losses. While this is often the correct way to go about the process, what happens if you accidentally sell off the unit of a military customer on active deployment? You’ll want to read on to avoid discovering this well after the fact, when the unit contents are well and truly gone.
You followed all the legal policies and procedures for a legal sale of a delinquent unit. This isn’t your fault right? WRONG. You could be in for any number of penalties under the protections offered to our military service members under the Servicemembers Civil Relief Act. Let’s dig a bit deeper into what the ServiceMembers Civil Relief Act (SCRA) is, and how to make sure you don’t violate it. Speaking of legalities, I am not a lawyer, and nothing below should be taken as legal advice. For specific legal advice, see our referral at the end of the article, or find your own lawyer!
Most self storage owners and operators have heard of the SCRA, but few have read the actual verbiage. Straight from the Servicemembers Civil Relief Act website, here it is in part:
"‘‘SEC. 307. ENFORCEMENT OF STORAGE LIENS.
‘‘(a) LIENS.— ‘‘(1) LIMITATION ON FORECLOSURE OR ENFORCEMENT.—A person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.
‘‘(2) LIEN DEFINED.—For the purposes of paragraph (1), the term ‘lien’ includes a lien for storage, repair, or cleaning of the property or effects of a servicemember or a lien on such property or effects for any other reason."
Now, take a look at the following section dealing with penalties for violating these rights:
303. ‘‘(c) PENALTIES.— ‘‘(1) MISDEMEANOR.—A person who knowingly takes an action contrary to this section, or attempts to do so, shall be fined as provided in title 18, United States Code, or imprisoned for not more than one year, or both. ‘‘(2) PRESERVATION OF OTHER REMEDIES.—The remedy and rights provided under this section are in addition to and do not preclude any remedy for wrongful conversion otherwise available under law to the person claiming relief under this section, including any consequential or punitive damages. ‘‘SEC. 308. EXTENSION OF PROTECTIONS TO DEPENDENTS. ‘‘Upon application to a court, a dependent of a servicemember is entitled to the protections of this title if the dependent’s ability to comply with a lease, contract, bailment, or other obligation is materially affected by reason of the servicemember’s military service.
In a blog article entitled “Self Storage and the SCRA,” Randy Smith and Roy Kaufmann of the Servicemembers Civil Relief Act Centralized Verification Service out of Washington D.C., discuss all the legalities you could face for violation of the SCRA. Mr. Kaufmann says, “If you don’t comply with the law and you take matters into your own hands, then you’re going to have a very expensive lawsuit that can result in fines. That lawsuit can result in court costs, and as we’ll talk about later, there are criminal implications. This could be a misdemeanor under the federal statute that can be quite serious. And the most important thing to the industry is just terrible public relations implications.”
No, the SCRA protects servicemembers and their families from being hounded by creditors for credit card debt, mortgage payments, pending court cases, tax issues, evictions or terminations of lease, or cancellation of life insurance. In short, you as self storage owners and operators are in good company, and have no good excuse for selling off a servicemembers belongings if even banks and landlords can’t do the same.
I set out to find out what questions to ask every self storage renter before they move-in, to avoid violating the SCRA. In a lucky break, I ran across a SCRA checklist published by the Office of Financial Readiness for the 5th Force Support Squadron to help servicemembers determine if they were covered under the SCRA. To see the original checklist, click above, but read on to check out the adapted checklist to determine if a potential or delinquent renter is under SCRA protection.
☐ Need to postpone an administrative proceeding or civil court case while serving on active duty or within 90 days after completing an active duty assignment ☐ Need to terminate a rental lease that was entered into before: (1) being called to active duty; (2) receiving orders for a permanent change of duty station; (3) deploying with a military unit for 90 days or more; or (4) separating or retiring from the military ☐ Need help with a creditor threatening to terminate an installment contract for the purchase, lease or bailment of real or personal property, such as an automobile (or self storage unit), that you entered into before serving on active duty ☐ Needs help with a mortgage or lien holder attempting to foreclose a mortgage or enforce a lien on property you acquired before serving on active duty (like a self storage unit)? ☐ Has had difficulty paying private professional, health or life insurance premiums, or had insurance terminated while on active duty ☐ Has had a court judgment been entered against them while on active duty, or anticipate that a judgment might be entered against them while on active duty
Once you’ve asked these questions, follow up by confirming the answers using the Department of Justice database of active service members. Having the right property management software installed will really help you here, as there are ways to trigger reminders to check the DOJ database automatically, to ensure all managers and employees get the info you need.
It’s sad but true - this is a full stop situation and the ball is in your court if you believe you have discovered a customer lying about their military service for a discount or extra benefits. This is called “Stolen Valor” and it’s punishable as a federal misdemeanor.
I had the pleasure of attending the SSA Fall Conference 2023 in Las Vegas, Nevada last week, and attended the brilliantly named “The Craziest Self Storage Stories and How to Avoid Being the Next One,” presentation, given by Jeffrey Greenberger of Greenberger & Brewer, LLP. He brought up the subject of elderly military members and their wives' tendency to identify their family as “active duty” long after discharge and even after death. Typically, they innocently live their lives proud of their service, and also love the perks of that service. There is nothing more uncomfortable, Mr. Greenberger said, then standing across from a 90 year old lady who you’ve dragged into court on a fraud charge because she clicked “Active Duty Military” on a rental agreement.
Protect yourself, your self storage business and our service members by asking the right 3 questions, and do your research on the SCRA before auctioning off a servicemembers’ belongings! For more information on everything self storage management, visit us at ManageSpace, and learn how to see your self storage space differently using technology.
Disclaimer: Nothing in this article is intended to be taken as legal advice. I am not an attorney. Contact a professional if you have any questions!
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