Please
Support HB 2574
Alternatives to Mandatory Newspaper Advertising for Lien Sales
Please support HB
2574 by Rep. Stan Lambert (R) of Abilene.
Chapter 59 of the Texas
Property Code outlines the processes which facility owners must follow for
conducting lien sales for units abandoned by or otherwise no longer paid for by
tenants. The purpose of advertising lien auctions is to attract bidders
for the sale. Print newspapers are no longer an effective way to attract
bidders in most cases.
- This bill provides alternatives for publishing Public
Notice. It does NOT eliminate print newspapers as a way to
publish that notice. Operators
will still be able to use print newspapers if that is the best method in
their county for notifying potential bidders.
- This is a way to finalize the lien/foreclosure process to
get the unit cleared by having a sale, most often with units containing
items of little value. This Public Notice of Sale takes place at the end
of the process, AFTER all phone calls, emails, texts, and other attempts
to contact the tenant to work with them on curing the delinquency that has
occurred.
- The required claim notice (Notice of Claim) to the
delinquent tenant will not change with this bill. The tenant will already have
been sent direct notice from the facility owner since that claim notice is
required by statute. A delinquent tenant is not going to miss direct notifications
but somehow see a newspaper advertisement.
- 32
states already allow for alternatives to newspaper advertising, including six that do not require any
form of advertising before a sale. Also, legislative efforts are taking place
to make this change in 9 additional states. If successful, that would bring the
grand total of states with alternatives to newspapers or no advertising
requirement to 41.
- Some counties in
Texas have no printed newspapers. “The State of Local News,” a
Northwestern University analysis, states that 27 counties in Texas have no
newspaper of any kind. That means facility owners in those counties have
to seek out the alternative of physically posting notices around town. At
present, there is no other alternative.
- Self-storage auction bidders do not look for lien sale
advertisements in the newspaper. They go to auction websites and other
online resources. This is part of a larger trend where private sector
advertisements have migrated online – for example, for buying cars, real
estate, merchandise, or for political campaigns, etc.
- There is no public interest in following lien sales in the
newspaper. These ads are unlike public notices for government meetings and
school district contract decisions. Self storage is a private contractual
relationship governed by the parties’ rental agreement.
- Lien sales are not a profit source and are typically a last
resort to clear the space in order to rent the space to a paying customer.
Data from national online auction providers such as StorageAuctions.com
and SelfStorageAuction.com indicate that the 2021 average for a unit was
approximately $150, with many selling for $10-$25 or not receiving any
bids at all. Operators are fortunate to recoup a fraction of the
outstanding debt. If there are excess proceeds beyond the outstanding debt,
the tenant must be allowed to claim that excess.
- Depending on the market, the cost of running two ads in the newspaper can often exceed the proceeds from selling the unit. Regardless of the outcome of the sale, the newspapers always benefit financially from lien sales, while facility owners almost always lose money.