April 17, 2008
SELF-SERVICE STORAGE FACILITIES
By: Daniel Duffy, Principal Analyst
You asked for a brief summary of the law establishing the procedure for a self-service storage facility owner to follow when a renter defaults on rental payments.
The law gives a lien on all property stored in a self-service storage facility to the facility's owner when a renter defaults on his payments. It also sets a procedure for the facility owner to satisfy the lien. It requires the owner to (1) send notices of his intent to do so to the occupant (personal delivery or to last known address) and to others who have filed security interests in the property and (2) advertise his intent to sell or dispose of the property. If the property is sold, it sets rules to allocate the proceeds of the sale. It establishes the right of an occupant or holder of a valid security interest to redeem the property at any time before the property sale or disposition.
The lien is for (1) the amount of rent, labor, or other valid charges the facility owner incurs in relation to the property; (2) valid expenses incurred in the necessary preservation of the property; and (3) any expenses reasonably incurred in its sale or other disposition according to law. The lien attaches on the day of the default and has priority over other liens or security interests subsequently attached (CGS § 42-160).
By law, a “self service storage facility” is real property designed and used to rent or lease individual self-contained storage units to occupants who have access to them to store personal property. “Default” means a failure to meet any obligation or duty imposed by a rental agreement. The “rental agreement” is a written agreement or lease establishing the terms, conditions, rules, or other provisions about the storage unit's use and occupancy (CGS § 42-159).
NOTICE TO OCCUPANTS
The law requires a facility's owner to send written notices notifying the occupant and anyone with a security interest in the property on file with the secretary of the state of the intention to satisfy the lien. Notices must be delivered in person or sent by registered or certified mail, return receipt requested, to the occupant's last known address (CGS § 42-161).
The notice must include:
1. an itemized statement of the amount due the owner;
2. a property description sufficient to identify it;
3. a notice that the occupant is denied access, if the denial is allowed by the rental agreement;
4. the name, address, and telephone number of a person the occupant may contact;
5. a payment deadline that cannot be sooner than 14 days after notice delivery;
6. a conspicuous statement that unless the debt is paid within 60 days after the default the owner will advertise the property for sale and sell or dispose of it; and
7. the time and place of the property sale or disposition (CGS § 42-162).
The law requires the sale or disposition to conform to the terms of the notice and to be held at the facility or at the nearest suitable place (CGS § 42-163).
ADVERTISEMENT AND DISPOSITION OF PROCEEDS
The law requires an owner to advertise the sale or disposition in a newspaper with substantial circulation in the community in which the facility is located. It must be published at least twice within 10 days before the sale and include:
1. a property description;
2. the occupant's name;
3. the facility's address; and
4. the time, place, and manner of property sale or disposition.
If there is no such newspaper, the law requires the advertisement to be posted for at least 10 days before the sale or disposition date in at least six conspicuous places in the facility's neighborhood.
The sale or disposition cannot take place in less than 10 days after the first publication or more than 60 days after the date of the default.
If the property is sold, the proceeds must be used first to pay the costs of the sale, then to pay holders of prior liens or security interests, and then to the owner (CGS § 42-164). If there is a balance remaining, the law requires the facility owner to hold it for two years for return on demand to the occupant or to pay anyone else having an interest in the property. If it remains unclaimed after two years, it becomes the owner's property (CGS § 42-167).
The law allows the occupant or anyone who proves a valid security interest in the property, at any time before the sale or disposition, to pay the amount due and reasonable expenses incurred and redeem the property. Once paid, the law requires the facility owner to return the property and provides that he or she has no further liability to anyone with respect to it (CGS § 42-165).
RIGHTS OF PURCHASERS
Anyone who purchases the property in good faith takes it free of any rights of any lienholders, even if the facility owner has not complied with this law (CGS § 42-166).
The law states that it does not impair or affect (1) the right of parties to create liens by special contract; (2) other liens arising at common law, in equity, or by other statute; or (3) other rights affecting debtors and creditors (CGS § 42-168).