You probably don’t want to be in the business of selling people’s property—otherwise, why would you be in self storage?
That said, it’s almost inevitable that you’re going to have to get involved with auctions and understand your state’s self storage lien laws at some point. Sometimes people just don’t pay. There are different schools of thought on how to handle it, but the end game is to resolve the delinquency and open the storage unit for a paying tenant to move in. Not all hope is lost, though! There are a number of ways to reduce the chances of reaching that point, and there are also ways to make the whole process easier on you if it does get that far.
The first step to making the lien process and storage auctions easier to handle is keeping it from happening to begin with.
If you’ve tried everything and the lien sale is inevitable, don’t worry—we’ve got advice on that in a bit.
First, let’s look at ways we can keep tenants from getting as far as storage auctions, to begin with!
In a perfect world, all of your tenants would pay on time. You’d never have to worry about lien laws and auctions, and all of your time and effort could be devoted to more pleasant aspects of the business.
The reality, of course, is that this doesn’t always happen. Very often, you’ll end up with at least a few tenants paying late or not paying at all.
What if we told you that you could reduce the chances of this happening, though?
Here are three ways you can help reduce how often you need to initiate the self storage lien process:
Have you ever had a bill and no idea when it was due?
The biggest reason for unclear due dates is a misunderstanding of whether the payment is due a month from the start of service or on a set date each month.
The best way to keep this from becoming an issue for your self storage tenants is to set these expectations right at the start.
Don’t just expect your explanation in the rental agreement they signed to be enough notice, either. Sure, that may be enough legally, but the vast majority of people will not read all of the information in their agreement.
If your goal is to reduce confusion and late payments, then deliver that information in another way alongside the rental agreement. This could be in a welcome package, texted, or even emailed to them.
Make sure the information is clearly expressed regardless of your delivery method!
These days, we’re all suffering from ridiculously busy schedules.
The fact of the matter is that many people who aren’t on autopay simply forget to make a payment because they’ve got so much else going on.
Reduce your number of late payments—and help out your self storage tenants, leading to a better customer experience—by sending payment reminders!
The best part is that these reminders can be automated.
There are different services that allow you to automate payment reminders, but the likelihood is that you’re already using some self storage software that accomplishes this task: your self storage PMS.
You can make these reminders especially effective by choosing to set up text reminders. Text reminders have a 98% open rate, and this means that people are less likely to forget about their payment!
Be honest: How many times have you received a late notice and immediately completed the task the notice was for?
Late notices light a fire under us.
Through some combination of reminding us (and maybe making us feel a bit of shame!), they are extremely effective at getting us to do what we were supposed to do days ago.
This works on the same principle as payment reminders—sometimes, people just need a reminder that they were supposed to pay.
Simply sending these reminders, which are easy to automate with self storage software, you can significantly reduce how often you need to worry about self storage lien laws and storage auctions.
You can’t always avoid initiating the storage lien process.
Eventually, you’re going to run into a tenant that just doesn’t pay. They probably even drop off the face of the Earth, not responding to any forms of contact you try.
Depending on your self storage market, you may run into this once a month. In some areas, you could go many months without this issue.
But eventually, it’s going to happen.
There are a few steps before you get as far as initiating the lien sale process:
Once you’ve exhausted those avenues, though, what do you do?
Your business’s individual processes should both adhere to all relevant laws and work for you and your market.
Each state has its own set of lien laws. Those are ultimately your “minimum requirements.”
You can create a lien process that is more lenient for the tenant than the law requires, but you need to provide, at minimum, what your state’s lien laws demand.
For example, storage lien laws in Texas might state the number of days from the missed payment to initiation of the auction process. You could choose to wait however many more days than that to start the process instead, but you could not legally start it before that legally-established minimum.
Also, make sure your lien processes are outlined in your rental agreement and follow them as outlined!
Pug Pro Tip: You should never rely on advice from the internet or other unlicensed sources of information regarding lien laws. Always consult an attorney and/or your state self storage association to stay in compliance with state laws!
So, how do you make it easier for yourself to follow the lien process through to the end?
Two words: Utilize technology.
There are all kinds of ways that software can help you manage these processes and stay compliant with all applicable self storage lien laws, even if you don't use any of the very few self storage lien software programs:
The list goes on, but these are three key ways that properly-utilized self storage software can make your life easier.
For example, SiteLink sends its users reminders for each step of the lien process. Even though much of the process is physical and can’t be handled automatically—such as overlocking units, listing them for auction, and so on—the property management software reminds you to do what you need to!
These settings are often set to a default in the software for the timing of each step, but you should be able to edit the settings to customize it for your own business as needed.
So, you’ve made it as far as auctioning off the storage unit.
Your state laws will define exactly what the entire auction process looks like, from announcements to the platform.
Once upon a time, in-person auctions were a common part of the self storage industry. These days, online self storage auctions—on sites such as StorageAuctions.com or StorageTeasures—are increasingly the chosen route for self storage owners and operators. With some property management systems, you can even automate your online self storage auctions!
StorageTeasures reported 17,000 online auctions in 2013. By 2021, that number increased to just under 550,000 online auctions.
Many states have even gone out of their way to list online auctions as legal ways to auction a self storage unit.
When it comes to using online auctions, the process will be very similar to live auctions: follow all state laws regarding notice, ads, and other requirements. Make sure to also keep a record of the sale! For the location of the auction, you would direct bidders to the online auction site of your choice instead of a physical address.
Simply sending these reminders, which are easy to automate with self storage software, you can significantly reduce how often you need to worry about self storage lien laws and storage auctions.
Few of us in the self storage industry really want to be auctioning off storage units.
Self storage lien laws are complicated, and you open yourself up to a lot of liability if you don’t follow them to the letter.
By taking steps to reduce delinquencies, you can reduce how often you are forced to recover overdue rent via auction. With the average online auction recovering just barely half of the overdue rent, there’s no doubt that taking every measure to avoid that outcome is the best plan of action for self storage owners.
Whether it’s automating payment reminders to reduce delinquencies or helping you navigate storage lien laws and actually auctioning off a storage unit, modern software can play a huge hand in making your life easier on the lien sales front!
Check out these other great posts for advice on running your self storage business!
At StoragePug, we build self storage websites that make it easy for new customers to find you and easy for them to rent from you.
