Joseph G. Ballstaedt
801.365.1021
joe@snjlegal.com
In Utah, the owner of a self-storage unit can sell a tenant’s property that is stored there to pay outstanding rent or other amounts owed by the tenant. Below is a more detailed explanation of how this process works.
A Lien on the Stored Property
Self-storage units are used to store personal property, which is essentially property that is not land or connected to land. This includes items such as cars, boats, furniture, antiques, documents, equipment, electronics, toys, etc. Utah statutes explain that when a tenant places personal property in a self-storage unit, this act alone automatically gives the owner of the unit a lien on the property. A lien is essentially the right to sell property to satisfy a debt or obligation. For example, when a bank extends an auto loan, it obtains a lien on the vehicle, giving it the right to repossess and sell the vehicle to recover the amount owed if the borrower doesn’t make all the payments. In the self-storage context, owners of self-storage units in Utah automatically have a lien on the property stored there, and if the tenant does not pay rent or other charges, the owners can sell the tenant’s property.
Preparing to Sell Property from a Self-Storage Unit
The fact that a self-storage facility in Utah has an automatic lien on property stored there does not mean that the owner can sell the property in any way it wishes. Rather, an owner of a self-storage unit must follow certain steps before selling a tenant’s property. These steps protect the tenant, his property, third parties, and even the owner of the facility. First, the owner must include in the rental agreement with the tenant—among other things—a statement explaining that the owner has the right to sell the property stored at the facility if the tenant breaches the rental agreement. The owner also must search for third parties who may have an interest in the stored personal property (i.e. a bank with a lien on a car or boat), and it must then provide these third parties written notice of the owner’s plan to sell the stored property. The owner also must give the tenant notice and an opportunity to pay the outstanding amounts owed prior to the sale, and if the tenant pays up, the sale is cancelled, and the owner must return the property to the tenant. Before the sale can occur, the owner must also publish notice of the sale date and other information in a newspaper in the county where the self-storage facility is located. If the property isn’t sold in this manner, the tenant may have a legal claim against the owner.
The Sale of the Property
After jumping through all these hoops, the owner can sell the property by auction at a place near where the property is being stored, or it can sell the property online. The proceeds of the sale are used to satisfy the owner’s lien (which is the amount it is owed). If the sale of the property fully satisfies the debt to the owner, any excess money from the sale goes to the tenant or a third-party lienholder (e.g. a bank). Buyers of self-storage property sold at auction should be careful. If the buyer knows about a pre-existing lien (e.g. a bank lien on a stored vehicle), the buyer purchases the property subject to that lien, so he risks that the property will later be repossessed by the original lien holder and sold to somebody else. On the other hand, a buyer who doesn’t know about a pre-exiting lien generally purchases the property free and clear of any such lien.
Dealing with Vehicles
It may be that an owner of a self-storage unit does not want the responsibility (and the liability) of dealing with a vehicle of a tenant who owes money. If this is the case, and if the owner chooses not to sell the vehicle, Utah’s self-storage lien statutes allows the owner to have a towing company take the car away. After providing the proper notice to the tenant, the owner is not liable for any damage to the vehicle after the towing company removes the car from the storage unit.
Assistance with Self-Storage Issues
Self-storage legal issues in Utah trigger a unique set of
laws. There are other requirements not discussed above that any self-storage
facility owner should be aware of when conducting its business and enforcing
its lien rights. Also, there are many defenses that a tenant can raise if the
owner attempts to sell property improperly. If you have any questions regarding
liens on property stored at a self-storage facility in Utah, feel free to
contact me and discuss these issues. I am happy to help. My direct dial is
801-365-1021, and you can e-mail me at joe@snjlegal.com.
