Texas Self Storage Association has served its self-storage industry members since 1986.  Headquartered in Round Rock, Texas, TSSA is the leading expert in self storage in the state of Texas.  Whether you're an owner, operator, manager or employee,  TSSA's blog will provide you with the latest tips, advice and knowledge for running your self-storage business. 

Ch. 59 Newspaper Ads When There's No Newspaper or Online-Only Version

by TSSA Legal Counsel

Question:

The only newspaper in my county has gone to an online-only version. Does this satisfy the Ch. 59 requirements for newspaper publications for auction sales? Also, we have other facilities in a neighboring county which does have a print newspaper: Can I publish my ads in the online version of this newspaper instead of the print version? What if there is no newspaper at all in a county?

Answer:

The statute does not speak to online vs. print ads. However, because the statute is not entirely clear on this matter, it is best to separate this answer into two parts: (1) Can I publish ads in the online edition of a newspaper that has both print and online editions?, and (2) Can I publish ads in “online-only” newspapers? In my opinion, as long as it is a newspaper of general circulation, online and print are both acceptable choices for publication when a newspaper has both print and online editions. The statue requires your newspaper notices to be published, “Once in each of two consecutive weeks in a newspaper of general circulation in the county in which the self-service storage facility is located.” In my opinion, it would be ludicrous to argue, for example, that the online version of the Houston Chronicle is less of a newspaper than the print version of the Houston Chronicle.

Having said this, the definition of a “newspaper of general circulation” is not a defined term in the Texas Property Code. So, if the “newspaper” is “online-only”, the question must be whether this website is, in fact, a “newspaper”. Other Texas statutes have a more defined term of what a “newspaper” is, which provide that one of the qualifications of a “newspaper” be that it “be entered as second-class postal matter.” The potential argument from an established newspaper would be that an “online-only” website is not, in fact, a newspaper, and is no different from a local broadcast news website or news blog.

Also, remember that, per Chapter 59, notices must be published “in a newspaper of general circulation in the county in which the self-service storage facility is located.” So, even if the printing press or newspaper office is located in a neighboring county, so long as the newspaper is considered a “newspaper of general circulation” in the county in which the facility is located, then this would likely meet the applicable statutory requirements.

If in doubt, ask the newspaper to verify that its online newspaper is a newspaper of general circulation in your county. TSSA form L-1 can be used to obtain this verification from your newspaper.

If there is not a newspaper of general circulation in the county (neither online nor print), Ch. 59 allows you to instead post a copy of the notice at the self-service storage facility and at least five other conspicuous locations near the facility.

 

Read More Blog Posts »

Online Newspaper

A Comprehensive Guide to Eviction
by Mallory Scott, TSSA

Have you been in a position where you need to get a tenant out of a unit, and the only viable option is eviction? Most owners will go through this at some point during their self-storage career, whether it is because a tenant was caught sleeping in their unit, engaged in criminal activity or for a multitude of other reasons. One of the most common scenarios is when a tenant stops paying rent and ceases to communicate but does not have a signed rental agreement—you cannot legally foreclose without a signed contract that includes the required statutory lien language. Let’s dig into the eviction process and learn from members who have been granted a judicial self-storage eviction.

Why Eviction?

There are a lot of reasons why someone might choose eviction over another remedy, but sometimes it is your only safe option. As stated above, if you have a tenant who does not have a signed rental agreement, has stopped paying rent and will not communicate with you—eviction may be the only legal option to rid yourself of the tenant.

The eviction process can be intimidating, mainly because the unknown is scary, and you must appear in court, which can also be nerve-racking, especially if you have never been before. However, if you equip yourself with knowledge (which is the purpose of this article), your TSSA Goldbook© and an extra dash of confidence, your eviction experience should be a successful one.

Notifying Your Tenant

The first and quite possibly the most crucial step is to get all your documentation ducks in a row, and that begins with sending your tenant a notice to vacate the storage space or terminating their contract altogether. You will want to choose which notice to send to your tenant based on the reason you are pursuing an eviction.

You have three options:

  • The safest option is to simply terminate the tenant’s contract by sending TSSA Form E-1, “15-Day Notice of Termination of Storage Space Rental Agreement.” With this notice, you do not have to give a reason as to why you are asking the tenant to vacate, which is particularly helpful in case you are feeling uneasy about providing a reason. If you are evicting a tenant and do not have a signed rental agreement, you will want to give them a 30-day notice to vacate. You can use TSSA Form E-1 and extend the date of move out to 30 days instead of 15. Also, if you use this form, you will want to send the tenant TSSA Form E-4, “Notice to Vacate for Holding Over,” after the 15-day timeframe has expired. This form is a final three-day notice to vacate the space.
  • If you need a tenant to move out because they are not paying rent, you can use TSSA Form E-2, “Notice to Vacate Storage Space for Non-payment of Rent or Other Sums,” which is a three-day notice to vacate.
  • If you find out that a tenant is breaching the lease in some way, such as engaging in criminal activity or sleeping in their unit, you can use TSSA Form E-3, “Notice to Vacate Storage Space for Non-rent Breach of Rental Agreement,” which is also a three-day notice to vacate.

    • Please note: Notices may be sent via regular, certified or registered mail. While not required, it is recommended that you send any notices via certified mail (return receipt requested) so that you will have a certified mail green card as proof that the tenant received the notice on a specific date.

    The best-case scenario is that the tenant will move out after receiving a notice to vacate the storage space, but there is always a chance that they will not receive the notice or just outright refuse to move out. In that case, the next step is to file an eviction petition at your local Justice Court.

    Member Sara LeFlore of Copra Storage says, “Wait to file your eviction petition until you are absolutely certain that you have all your documentation in perfect order. If you show up to court and something is missing or done incorrectly, the eviction process can be delayed by weeks or even months.” LeFlore was unaware that she needed the tenant’s social security number to obtain proof of non-active-duty military status. After much online research, she found a website that allowed her to pay a fee to get the tenant’s social security number, which finally helped to move the process along.

    Taking it to Court

    One thing to note is that you can either hire an attorney to represent your facility or you can choose to represent yourself in court. Larger storage operators may have an entire legal team with an attorney on retainer dedicated to handling evictions and other legal matters. Smaller operators may not have the money to hire an attorney, so they may opt to represent themselves, which is perfectly acceptable.

    After you have sent the required notice/s, the next step is filing an eviction petition at your local Justice Court. There is a fee associated with filing the eviction petition, and sometimes the court will only accept cash or cashier’s checks, so it is wise to call ahead of time to inquire about the specifics. You can use TSSA Form E-5, “Eviction Petition,” however; TSSA has been made aware that most courts in Texas require you to use their forms. This is not something that can be disputed if it is a requirement of your local Justice Court, but awareness is key. The forms provided are often used for residential eviction and not specifically designed for eviction from a self-storage unit, so that could potentially lead to challenges down the line. Pay close attention to the details to prevent any confusion.

    In your sworn eviction petition, you can also sue the tenant for unpaid rent if the amount is under $10,000. Be sure to request 18% interest, compounded annually. This may not be an option on the court’s standard form, so you may need to inquire with the court as to how to proceed. Please note: If you receive a judgement for unpaid rent as well as possession, you will then need to “abstract” the judgement, meaning that it becomes recorded in the county’s property records, and if the tenant should attempt to finance a car or purchase a home, the judgement must be paid before they can obtain financing or sell real property. If you have further questions, contact your local court.

    Oftentimes, members go through eviction because they do not have a signed lease, and most likely do not have a current address. The court is required to serve the tenant with a citation, and member Tiffany Nichols of Move It Self Storage shared an interesting method her company employs to ensure that there are no issues during that step. Nichols says, “If you go into it knowing that you do not have a good address, contact the court a few days after you file and ask if the tenant has been served—if the answer is no, request alternate service.” After significant delays during her first attempt at eviction due to address issues, Nichols quickly learned that due to the lack of overall knowledge of self-storage eviction, she was going to have to take the lead. Nichols explains,” I ask for alternate service, meaning they serve the tenant at the facility by placing a notice in a weatherproof sleeve on the tenant’s unit door.”

    On the opposite end of the spectrum, LeFlore ran into an issue with the tenant’s address being in a different county than the court where she filed the eviction. The court where she filed refused to attempt to serve the tenant with a citation, and she had to rely on the two courts to coordinate service. “There was no motivation for either court to get on the ball, so I had to contact both courts multiple times to ensure that my case wasn’t falling through the cracks,” says LeFlore.

    After the tenant has been served, you will be required to appear in court on the specified date with all related documentation in hand. Pro tip: Bring your TSSA Goldbook with you to your court date. Justice Court judges are not always “up to snuff” on self-storage eviction law, so having TSSA’s legal reference guide with applicable eviction statutes and step-by-step instructions could very well play an integral role in the acceptance or denial of the eviction case. Nichols takes her Goldbook with her to every court date, explaining that “It’s just part of my routine.”

    If the tenant does not show up on the court date, the judge will likely automatically grant the eviction with little else required. If the tenant does show up, you will be required to testify as to why you are seeking to evict the tenant and provide evidence to the court. The judge will either grant or deny the eviction at that time. If the eviction was denied, you should be provided with a reason, and you may have to start from the beginning and correct any issues identified by the judge. If the judge grants your eviction, you may not be given any additional instructions. But please remember this…the process does not end here.

    LeFlore described her experience after being granted a default judgement in court, “After the eviction was granted, I was not provided with any instructions regarding next steps. I thought it was over and did not realize that I needed to request a Writ of Possession.”

    What Happens After the Court Date?

    After you receive a favorable judgement, you must then request a Writ of Possession from the Justice Court judge. Next, you should contact the constable to make an appointment to meet at your facility to evict the tenant’s possessions.

    It is possible for you to get lucky and not have to request a Writ of Possession. Every situation is different, and according to member David Fisher of Imperial Storage, “The judge granted my eviction, and the tenant showed up the next day and moved out of the unit.” Fisher went on to describe that his case was unique in that the tenant was stealing from the facility and there was video evidence that was later shown to the judge during the court proceedings. The tenant showed up on the court date, and the judge not only granted the eviction, but also recommended that the tenant move out immediately because of the damning evidence.

    The constable will come to your facility on the day of your eviction appointment and direct you as to how to proceed. The constable will not physically remove the items from the tenant’s unit, but instead supervise and instruct you on where to move the contents.

    Nichols has experience with an eviction that involved a trailer, and in that case, she says that communication was key. She relayed the information to the judge and the constable. “The constable was aware that there was a trailer, so he made arrangements for a licensed towing company to come out to the facility on the day of our appointment to remove the trailer,” describes Nichols. She also said that for larger units, especially those with heavy items, Move It Self Storage hires movers to help remove the contents. “We like to use movinghelp.com because they require little notice and the fee is minimal.” Another option may be to require “all hands on deck” during the eviction appointment, or you can probably hire a couple of strong college kids in a pinch. The point is to ensure that you can remove the contents quickly (and without throwing out your back).

    With the constable’s permission, the property may be placed outside of your facility at a nearby location, but not blocking a sidewalk, passageway, street or parking area, and while it is not raining, sleeting or snowing. Nichols agrees with that sentiment and says, “If there is bad weather of any sort, even light rain, be prepared to reschedule.”

    Once you have moved the entirety of the tenant’s contents out of the unit and to a location approved by the constable, you have officially wrapped up the eviction process and may now rent the unit to a new, paying customer.

    Final Thoughts

    When asked if she had any advice for other members regarding eviction, LeFlore said, “Don’t acquire a facility where the tenants do not have signed TSSA leases.” All joking aside, she reiterated the importance of having signed rental agreements (and TSSA agreements, if possible). LeFlore and Nichols both acknowledged that the first time they went through eviction, there was a steep learning curve, but after they knew what to expect, the process was fairly straightforward. While eviction can seem daunting at first, it can also be a realistic remedy in certain situations. If you have questions about eviction, you can read the full step-by-step eviction procedures legal article in the TSSA Goldbook, or you can contact the association at 888-259-4902 or info@txssa.org.


    Read More Blog Posts »

    Comprehensive Guide to Eviction

    How Does My Facility Banning Guns Affect My Tenants’ Rights to Store Guns?

    by TSSA Legal Counsel

    It’s not entirely clear how posting “no open carry guns” or “no concealed carry guns” signage would affect your tenants’ right to store guns under the language of the Penal Code. Our best guess is that the ban would/could also apply to what is put into storage in units (since we do not find language to the contrary).

    The Sections of the Texas Penal Code related to postings for banning guns aren’t entirely helpful on this subject. Sections 30.06 and 30.07 merely say that you cannot carry “on the property of another” without effective consent. Section 30.05 provides a bit more guidance, saying that it is considered a criminal trespass if a person enters or remains on or in the property of another “including residential land, agricultural land, a recreational vehicle park, a building, a general residential operation operating as a residential treatment center, or an aircraft or other vehicle, without effective consent…” While this language does not include “storage units” (or even common areas on a property), it also does not exclude such items, which leads me to take a broad definition of “property” as meaning the entire facility.

    Additionally, while the penal code has carveouts for certain types of properties (e.g., owners of condos, owners of apartments within condos, tenants of condos/apartments within condos, carrying a handgun to and from the parking lot and the rental unit, etc.), there is no such carveout for storage units in storage facilities.

    From a practical standpoint, you typically would not know if your tenants were storing guns since those guns would be either inside a gun case or packed inside a box or other container and generally not visible to others as the tenant transfers their belongings into a unit. The TSSA lease restricts the storage of ammunition in Paragraph 36(3), mainly because of the fire hazard it presents, but there is no such specific restriction against the storage of guns other than storing “anything illegal…under any law”(Paragraph 36, subsection 11), for example, machine guns and sawed-off shotguns. (These are just two examples of weapons that are illegal to possess; there are others.) You as a facility owner would have to determine whether you really want to turn away customers who want to store guns as part of the contents of the unit.

    Having said all of this, we are of course in Texas, so gun laws are generally viewed more favorably to carriers versus business owners. Also, in order for this to be enforceable, the property owner must (a) post the required signage and (b) after seeing a violation, personally gives the license holder notice by oral communication of such violation (and, if the violator fails to leave, they are subject to a Class C misdemeanor). So, practically speaking, a tenant could only get in trouble for this if (a) the required signage is posted, (b) the owner knows that they are storing these weapons, and (c) the owner decides to give them such notice. Ultimately, it will be up to the owner on how they enforce these provisions.

    Additional Blog Posts Related to Guns

    How Does My Facility Banning Guns Affect My Tenants Right to Store

    Restricting Handguns at the Facility

    by TSSA Legal Counsel

    Question

    Under Texas law, can a self-storage or RV/boat storage facility owner prohibit an employee from bringing a handgun onto the property? We already have a prohibition against handguns at the facility (and a sign that says so) but the manager has asked to carry a gun to work and has a concealed handgun license.

    Answer

    Can you restrict an employee from bringing a gun onto the property? The answer is both “Yes” and “No.”

    Because of the media coverage on the topic, most Texans know that a new state law went into effect in 2021 addressing an individual’s right to legally “open carry” handguns in Texas. In short, individuals may now open-carry handguns in Texas without a “license to carry” or a “license to conceal,” subject to certain requirements.

    However, private properties can still ban the general public from carrying firearms on their premises (if they choose to do) so by giving appropriate notice.

    As to the general public, if a facility owner chooses to prohibit firearms/handguns on their property, property owners should provide appropriate signage at their property providing notice of such prohibition. There is certain statutory language in the Texas Penal Code that dictates what must be included on signage.

    The Texas Penal Code dictates the requirements for three options for signage prohibiting firearms on a privately-owned business:

    1) Section 30.05 dictates what must be on a sign prohibiting people from entering onto the property with any firearm;
    2) Section 30.06 addresses prohibiting people from entering onto the property with a concealed handgun; and
    3) Section 30.07 deals with prohibiting people from entering onto the property with a handgun that is carried openly.

    Additionally, 1) the signage must be displayed in both English and Spanish; 2) appear in contrasting colors with block letters at least one inch in height, and 3) must be displayed in a conspicuous manner clearly visible to the public (i.e., outside of the front door/gate/entrance to the property). Examples of the different signs are readily available for sale online.

    However, as to the member’s specific question (“Can an employer prohibit an employee from carrying a handgun?”), the answer is both “Yes, to an extent” and “No, not completely.” Under Section 52.061 of the Texas Labor Code, a private employer may not prohibit an employee who (a) holds a license to carry a handgun, (b) otherwise lawfully possesses a firearm, or (c) who lawfully possesses ammunition, from transporting or storing a firearm or ammunition the employee is authorized by law to possess in a locked, privately-owned motor vehicle in a parking lot, parking garage, or other parking area the employer provides for employees.

    An opinion from the Texas Attorney General’s office in 2012 effectively says that this Labor Code law is superior to the Penal Code law (relating to firearms signage) so that, regardless of whether an employer has the appropriate signage prohibiting firearms/handguns on a property, an employee may still keep their firearm in their locked car in the parking lot for employees. However, if the property owner has the appropriate signage, then the employee would still be barred from bringing a handgun/firearm into the building located at the property.

    A resource on this issue (including specific references to Penal Code/Labor Code references and signage language) can be found on the following link to the Texas State Law Library’s website here.


    EXAMPLES OF SIGNAGE

    Please note: If you reproduce these signs, there are size and readability requirements that must be considered. We recommend you purchase signs from a professional sign provider.


    EXAMPLE OF SIGN PROHIBITING ALL FIREARMS (30.05):


    EXAMPLE OF SIGN PROHIBITING CONCEALED CARRY HANDGUNS (30.06):


    EXAMPLE OF SIGN PROHIBITING OPEN CARRY HANDGUNS (30.07):

    Question

    What if an employee discharges a firearm at the facility’s property in an act of self-defense: Is there any potential liability that would extend to the facility/facility owner?

    Answer

    In such a scenario, it would be unlikely that a business would be held civilly liable for such acts. Generally speaking, if someone uses force or deadly force in an act of self-defense in Texas, then that person is immune from civil liability for personal injury or death as a result of such force, per Section 83.001 of the Texas Civil Practice and Remedies Code. However, there does not appear to be any law that would protect a private business from civil liability from the use of deadly force which occurred on the grounds of the private business. In other words, there is a potential of being sued for damages should the hypothetical incident occur at your storage facility.

    However, there is a clear difference between being “sued” and being “successfully sued” (i.e., held liable for damages). The plaintiff in any such case (i.e., the third party who instigated the incident via deadly force against the facility’s employee) would have to prove a cause of action against the facility owner. Generally speaking, Texas follows the doctrine of “respondeat superior” (i.e., an employer is responsible for the actions of its employees). In those cases, an employer could be held civilly liable in the event that an employee caused an injury by its own negligence or tortious acts. However, if in the hypothetical situation here, the employee was acting in self-defense (and was not found to be negligent or causing a “bad act”), it would be a heavy lift to say that the facility would be liable (given that, by statute, the employee would not be civilly liable).


    Additional Blog Posts Related to Guns

    Read More Blog Posts »

    Restricting Handguns at the Facility

    Should You Rent Storage Space to Gun Dealers?

    by TSSA Legal Counsel

    TSSA is occasionally approached by its members with questions about firearms found in or sold from storage units. The 2021 calendar year was a banner year for such legal questions due to changes made to the Texas Penal Code during the 2021 Texas Legislative Session, combined with a general uptick in gun sales. This article is intended to address a question TSSA members may increasingly start to face: Should I rent space to someone who wants to sell guns for profit at my storage facility?

    WHAT IS GENERALLY REQUIRED FOR SELLING FIREARMS IN TEXAS (AND THE UNITED STATES)?

    If an individual or business wishes to be “engaged in the business” of selling firearms, then they are considered a “dealer” and are required to obtain a Federal Firearms License (an “FFL”) from the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”). In order to apply for an FFL, the applicant must submit an Application for Federal Firearms License with the ATF, together with a fee appropriate for the license type.

    In addition to submitting the application, applicants are also required to undergo a background check. The timeline for issuing an FFL is approximately 60 days.

    Texas does not require holders of an FFL to submit to any further licensing requirements. However, applicable local laws and ordinances should be reviewed to determine if there are any additional municipal or county restrictions on licensing requirements.

    Most relevant to TSSA members, however, are questions surrounding a dealer’s “business premises.” In addition to the other items required on the FFL Application, an applicant is required to submit the business address of the premises and, if the premises are leased/rented, the name, telephone number and address of the property owner. It is also likely the case that the lease or rental agreement will need to be attached to (and submitted with) the FFL Application. (1)

    Prior to being granted a license, however, TSSA has been advised by the ATF that, in the event that the applicant desires to sell guns out of a rented space, the ATF will generally require either (a) a copy of a commercial lease permitting the sale of such firearms or (b) written permission from the landlord of the space stating that they know the space will be used to sell guns and ammunition.

    From a practical standpoint, members should probably not permit businesses to operate out of storage units, since a commercial lease would be more appropriate given Texas landlord/tenant laws and, for the reasons discussed below, it is likely that it would run afoul of the terms of the TSSA lease.

    DOES THE TSSA LEASE PROHIBIT GUN SALES FROM UNITS?

    In most cases, the TSSA lease will prohibit guns sales from units.

    First, Section 36(a) of the TSSA lease strictly prohibits the storage of “ammunition” and any “prohibited weapons under the Texas penal code” (such as machine guns sawed-off shotguns, etc.). This prohibition also applies to other explosive materials, such as gasoline and fertilizer.

    But more to the point, Section 36(c) of the TSSA lease prohibits (unless lessor’s prior written consent is given) a tenant from using the space (a) for direct sales or (b) for a business office or full-time work area.

    In addition, unless the lessor explicitly gives prior written consent to the tenant saying otherwise, tenants are strictly prohibited from making direct sales from a unit or using the unit as a business office or workplace. Unless (a) the tenant does not sell ammunition from the unit and (b) the lessor has expressly given permission for the dealer to make sales from the unit, the TSSA lease will prohibit selling guns from a unit.

    Another major red flag for such a tenant would be the lack of insurance coverage for such activities. First, standard tenant (renter’s) insurance would not cover this type of activity (i.e., selling and distributing guns from the property). Additionally, lessor’s insurance would also not cover activities arising from gun sales at the self-storage facility, leaving the lessor open to personal liability.

    CONCLUSION

    For the reasons set forth above, TSSA members should not lease storage space to tenants who intend to sell guns for profit from their units. Even in the rare circumstances where selling firearms from a unit would be legally–and contractually –permitted, there are other areas of concern: If word were to spread that a self-storage facility had declared “open season” for gun sales from units, it could lead to a rush of dealers to the facility, since self-storage units would be cheap alternatives to setting up shop at retail sites. This problem could be exacerbated by an environment where there has been a spike in gun sales. Further, future problems could possibly plague a self-storage facility, including issues arising out of thefts from a storage unit containing firearms, unhappy tenants (and potential tenants) knowing that gun sales are occurring at the facility and other unforeseen liability issues. One final note: This article does not discuss the ability to sell any firearms in connection with an auction sale. Generally speaking, the preceding licensure provisions would not apply in the case of a public auction since a firearms “dealer” must be someone who is “engaged in the business of selling firearms.” For further discussion on selling firearms and ammunition in connection with a foreclosure sale, members are encouraged to review the article entitled “Sale of Firearms and Ammunition: Is It Legal?” in the TSSA Goldbook©.

    Additional Blog Posts Related to Guns

    Should You Rent Storage Space to Gun Dealers

    Answers to Your Legal Questions Are Hiding in Plain Sight in the TSSA Lease

    by Mallory Scott, TSSA

    TSSA members frequently reach out to the association staff with what they consider “legal questions” about scenarios involving tenants. We don’t have any attorneys on staff so we can’t give legal advice, but often, just getting instant validation about the way they interpreted something they read in the Goldbook© from the person on the other end of the phone is what members are looking for. Sometimes, members just want a “quick answer” about what the lease contract says. Many of those straightforward answers are hiding in plain sight within the TSSA lease, where many might not think to look.

    Pro tip: There is a lease word index in the TSSA Goldbook© to help you find just what you’re looking for—look for the tab in the back of the book.

    Am I liable if a tenant complains that the contents of his/her unit are damaged due to vermin, flood, fire, theft, etc.?


    Paragraph 20, Nonliability and Release for Loss and Injury; and Insurance, states: Lessor is not liable for any loss, damage or cause of action of any nature, including bodily injury and damage of property stored in or transported to or from tenant’s space, regardless of who owns such property and regardless whether the loss or damage is caused in whole or in part by fire, smoke, dust, water, weather, insects, vermin, explosion, utility interruption, equipment malfunction, unexplained disappearance, negligence of lessor or lessor’s agents, theft by others, or any other cause—to the fullest extent allowed by law.

    This statement is echoed in Paragraph 27, Indemnity and Subrogation, and again in Paragraph 35(c), Tenant Responsible for Locks, Insurance and Losses.

    Does my tenant need to obtain tenant insurance, or do I need to require that they have insured the contents of their unit?


    Paragraph 20, Nonliability and Release for Loss and Injury; and Insurance, states: Tenant will purchase fire, theft, and casualty insurance on all of tenant’s property if its value exceeds $1,000. The purpose is to protect Tenant, other tenants, Lessor, and others in the event of loss by theft, damage, fire, flood, explosion, natural disaster, or other harm caused by weather, accident, or negligence of such parties or their animals.

    Tenant will self-insure all contents not covered by tenant’s insurance. Self-insurance means that Tenant will bear the entire risk of loss in the event of damage or loss to such contents from crime, casualty or other harm or loss listed above. Lessor does not and legally cannot carry insurance on the contents of Tenant’s space.

    Can I enter a tenant’s unit if there is an emergency or if I need to make repairs inside a unit?


    Paragraph 18, Lessor’s Right of Entry, states: Lessor may enter the space under any of the following circumstances:

    1. Lessor has express written or oral authority from Tenant to enter;
    2. Lessor reasonably believes there is an “emergency,” including without limitation an imminent danger or health hazard to persons or property because of danger of fire or water damage, broken doors, broken locking mechanisms, ammunition, spoiled food, carcasses, volatile chemicals, or fuel not in containers approved by Lessor. Lessor will promptly notify Tenant after entry for emergency purposes;
    3. Lessor has reasonable grounds to believe that criminal activity is occurring in the space;
    4. Lessor has made written request to Tenant for access to the space for relocation of contents after casualty loss or for inspection, repair, or improvement, and Tenant has failed to provide such access at the time and date requested, which may be no sooner than 7 days from the sending of such request; or
    5. Lessor is exercising Lessor’s lien under paragraph 24. Otherwise, Lessor may not enter the space.

    Am I liable if my security camera or gate isn’t functioning for a period of time? What temperature is considered “climate controlled”?


    Paragraph 15, No Warranties, states: No express or implied warranties are given by Lessor. Lessor disclaims and Tenant waives any implied warranties of suitability, merchantability, security, safety, or fitness for a particular purpose.

    Lessor does not promise safety or security of persons or property on the premises, and Lessor has no duty of safety or security of same under any circumstances. Video cameras may be non-operational or unmonitored. Access control devices may be unmonitored and may occasionally malfunction.

    If your unit is climate controlled, climate controlled for the purposes of this lease means that Lessor will use reasonable efforts to avoid temperature extremes in a unit by keeping the unit warmer than the outside temperature in cold weather, and cooler than the outside temperature in hot weather, through HVAC or other system. As with any mechanical system, it is subject to failure or malfunction. The facility makes no representations regarding humidity control or safety of contents stored in the unit.

    If I want to terminate a tenant’s contract and ask them to vacate, how much notice am I required to give?


    Paragraph 9, Termination and Move-Out Notice, states: Lessor may terminate this Agreement by providing written notice to Tenant 15 days in advance of termination. If the space is substantially damaged due to fire, windstorm, or other casualty in Lessor’s sole judgment, Lessor may terminate this Agreement by emailing, mailing or hand delivering 5 days advance written notice of termination to Tenant. Lessor may terminate this Agreement sooner under paragraphs 24(4) and/or 25. Tenant may not holdover after termination of possession or termination of the lease by Lessor.

    The police are requesting access to a tenant’s unit. Can I let them inside a unit?


    Paragraph 19, Law Enforcement Directives, states: Upon presentation of a search warrant by a health or law officer, Lessor may open the space or allow such officer to open the space for inspection by such officer; and such officer may lock the space (if the space is lockable) but is not required to do so.

    When can I safely consider a unit abandoned?


    Paragraph 26, Abandonment, states: Tenant has “abandoned” the storage space if ALL of the following occur: (a) Tenant has given Lessor written or oral move-out notice; (b) Tenant’s lock has been removed from the space (if the space is lockable) by someone other than Lessor; and (c) the move-out date or termination date has expired.

    Tenant also has “abandoned” the storage space if ALL of the following occur: (a) Tenant has not paid rent or other sums due; (b) Tenant’s lock has been removed (if the space is lockable) by someone other than Lessor OR has been removed by Lessor when exercising a statutory seizure; (c) Tenant’s space contains nothing of value to the ordinary person.

    My tenant moved out in the middle of the month and wants a refund. Do I have to provide a refund?


    Paragraph 28, Refunds, states: Tenant must satisfy paragraph 38 for refunds. Unless a longer period of time is stated in an addendum or in supplemental rules at the time of signing, Tenant is liable for rent for the remainder of the month of move-out or for 10 days after move-out, whichever is longer.

    Paragraph 38, Refunds and Moveouts, states: Unless an addendum to the Rental Agreement provides otherwise, conditions for refunding prepaid rent and deposit are as follows:

    1. Tenant must give Lessor 10 days written move-out notice;
    2. Tenant must give Lessor written notice of actual move-out within 24 hours after moving out;
    3. Tenant’s lock (if any) must be removed on or before move-out date; or if the lock belongs to Lessor, the lock must be returned to Lessor;
    4. Tenant must not leave trash in the space, halls, or driveways;
    5. Tenant much stay minimum term length in paragraph 3; and
    6. Tenant must be current in all obligations at time of move-out.

    Do I have to give my tenants notice when I want to increase their rent? If so, how much notice should I give?


    Paragraph 30, Rules and Agreements, states: Lessor may change any part of this Agreement, including rental rate, due date, late charge dates, and charges listed in paragraph 4 by hand delivering to Tenant, or providing written notice to Tenant via any method of written contact provided by Tenant at least 30 days prior to the effective date of the changes.

    summary


    Sometimes, when searching for an answer to your question, your best bet is to go directly to the source—in this case, the TSSA lease. It contains many of the answers to the most frequently asked questions. Strange scenarios will pop up from time to time, and those may warrant a bigger conversation. Please feel free to reach out to TSSA at 888-259-4902 or info@txssa.org if you have questions that are out of the ordinary…or if you just need validation that you are on the right track.

     

    Read More Blog Posts » 

    Answers to Your Legal Questions Are Hiding in Plain Sight in the TSSA Lease

    What If the Contents Are Owned by Others? Mortgaged to Others? Or Stolen?
    by TSSA Legal Counsel

    Can a Chapter 59 foreclosure sale by a self-service storage facility cut off ownership rights of the tenant whose contents are in the storage unit? Can ownership rights be cut off if the items being sold are owned by persons other than the tenant and the tenant had lawful possession of the property at the time of storage? Can community property ownership rights of a spouse who didn’t sign the rental agreement be cut off by a Chapter 59 foreclosure sale? Can ownership rights be cut off if the items being sold are stolen? Can lien rights of a seller or lender be cut off if their lien was recorded with the Texas Secretary of State or the Texas Department of Motor Vehicles (TDMV) or the Texas Parks and Wildlife Department (TPWD) before the property was stored under a self-service storage facility rental agreement containing a Chapter 59 lien? These are tough questions, and the answers are not always clear, so let's look at some scenarios.

    On the basis of the foregoing, legal counsel for TSSA has reached the following conclusions and makes the following recommendations to TSSA members:

    1. If a foreclosure sale is held by a self-service storage facility under Chapter 59 and if the purchaser had no reason to believe that the property being sold is mortgaged or owned by others, such purchaser acquires title free and clear of all third-party ownership and lien claims—even if:

    • the property is community or separate property of a spouse who did not sign the rental agreement;
    • the property is owned by a third party (friend, relative, business customer, etc.);
    • the property is being stored by the tenant as a bailee for the true owner;
    • the property is stored in the self-service storage facility by a non-tenant, without the tenant’s knowledge;
    • the property is a motor vehicle, provided the procedures of Section 59.0445 have been followed;
    • the property is a motorboat, provided the procedures of Section 59.0445 have been followed;
    • the property is a vessel, provided the procedures of Section 59.0445 have been followed; or
    • the property is an outboard motor, provided the procedures of Section 59.0445 have been followed.

    The facility owner has no duty to investigate or determine whether property is stolen. For example, the owner might discover it was stolen when the owner obtains from TDMV or TPWD the names and addresses of the registered owner and lienholders of a motor vehicle, motorboat, vessel or outboard motor. Or the owner might simply be told by a law enforcement officer that it was stolen.

    The law is not clear on whether a self-service facility foreclosure sale would convey title to stolen property that was: (1) found in the unit; (2) not known by the facility to be stolen at the time of foreclosure; and (3) bought by a good faith purchaser for value. Nonetheless, TSSA legal counsel believes that such a sale conveys good title to stolen property if: 1) the property was a motor vehicle, motorboat, vessel or outboard motor registered with TDMV or TPWD; 2) the owner or lienholder of the property received verified mail notice that his property was in the possession of a self-service storage facility; 3) the notice stated that the property was being sold for non-payment of charges by the tenant in whose space it was stored; and 4) the notice stated the time, date and place of sale.

    TSSA legal counsel also believes that a self-service storage facility foreclosure sale of stolen property not registered with TDMV or TPWD probably conveys title to a good faith purchaser for value; but no case authorities have decided the issue.

    2. At all times prior to a foreclosure sale by a self-service storage facility under Chapter 59, the facility’s lien for unpaid charges is superior to the lien of any prior lienholder and superior to the ownership rights of any third-party owner of the property. Therefore, when law enforcement authorities demand that the self-service storage facility turn over stolen property to the rightful owner or to law enforcement authorities, it is TSSA legal counsel’s opinion that:

    • the self-service storage facility can legally refuse to allow the law enforcement officer to open or inspect the property unless he has a search warrant;
    • self-service storage facility personnel should not try to forcibly interfere with a law enforcement officer who decides to break the lock and enter and/or remove the property without a search warrant; and
    • the self-service storage facility may lawfully foreclose on the contents of the unit for any unpaid charges—even if the facility has been informed by a law enforcement officer, a lienholder or the true owner of stolen property that the property is not owned by the self-service storage tenant or that the property is subject to a prior lien. Of course, pre-sale notice to owners and lienholders as required under Section 59.0445 applies to motor vehicles, motorboats, vessels and outboard motors.

    3. The remedy for lienholders and true owners of property who discover that their property or collateral is stored in the self-service storage facility is to:

    • convince the facility that they are the true owner or lienholder of the property being stored; that they did not transfer their title or lien to the tenant; that they will sign an affidavit of their ownership or lien (see sample TSSA form “Affidavit and Indemnification Agreement of Non-Tenant Who Claims Ownership or Lien of Vehicle, Trailer, Boat or Outboard Motor” on TSSA form L-5); that they will indemnify the facility for any lawsuit or damages arising from turning over the property to them; and that the facility should therefore turn the property over to them; OR
    • obtain a court order to recover the property, subject to their obligation to pay the self-service storage facility for any unpaid charges due on the unit; OR
    • pay the accrued unpaid storage charges and redeem the property prior to foreclosure under Section 59.0445 if the property is a motor vehicle, motorboat, vessel or outboard motor; OR
    • show up and be the highest bidder on the property when the self-service storage facility forecloses on the contents. The rightful owner or lienholder of the property can then get a judge to impound any excess proceeds and return them to the rightful owner or lienholder, who may have ended up having to bid more than what was owed by the tenant to the facility owner or lienholder (which very seldom happens).

    The latter three procedures eliminate proof-of-ownership problems and the risk that the facility owner would be sued if they turned the property over to persons wrongfully claiming to be the owner or lienholder.

    Additional Advice from TSSA Legal Counsel

    1. Don’t let law enforcement authorities bully you into opening a storage unit without showing you a search warrant. They will sometimes try to threaten you, but they legally cannot force you to open a unit without a search warrant and they cannot charge you with any crime or put you in jail for refusing to open a unit without a search warrant.

    2. If law enforcement authorities have a search warrant and if they try to remove property they deem to be stolen or property on which a lender or seller has a lien, you could consider objecting orally to such removal and following up with a letter to the law enforcement agency insisting that none of the contents should have been seized without your being paid.

    3. What if the property is stolen? Occasionally, motor vehicles, motorboats or outboard motors discovered in a storage unit are indeed stolen. In that event, you absolutely need to report it to the local law enforcement agency as directed by TDMV or TPWD. Chapter 59 does not preclude a self-service storage facility lien from attaching to property owned by third parties who are not tenants on the rental agreement—unlike Section 54.042 of the Property Code, which specifically exempts any third-party-owned property and lienholders from the residential landlord’s lien. TSSA legal counsel has been unable to find any case law that definitively states whether or not the Chapter 59 lien is valid against stolen property. (However, a 2020 Amarillo Court of Appeals decision involved a claim of conversion against an owner/lessor of a storage facility by the owner of a Jeep, who alleged it had been stolen by a self-storage tenant and then subsequently sold at a public auction by the owner/lessor due to the tenant’s failure to pay rent on the storage unit. Fortenberry v. Birkenfeld, 2020 WL 1146710 (Tex. App.—Amarillo 2020). The trial court entered a directed verdict in favor of the owner/lessor. The Court of Appeals affirmed the trial court’s decision based on the Jeep owner’s failure to present the necessary evidence on appeal. The issue of the validity of the lien itself was not addressed by the Court of Appeals.). As such, that issue does not seem to have been decided yet by the courts.

    Of course, if the property is stolen and no charges are due to the facility by the tenant, there is no problem in allowing an officer with a search warrant to remove or allow the true owner or lienholder to remove the stolen property. See TSSA legal counsel’s article on “What if Police or Other Governmental Officials Want Information or Access?” behind the “Legal Articles” tab in this Goldbook©. It is suggested that you photograph any removed property, keep a photocopy of the search warrant, and make a record of the date of the removal, along with the name and badge number of the law enforcement officer.

     

    Read More Blog Posts »

    Contents Owned by Others

    Lease Essentials

    The Great Benefits Provided by the TSSA Rental Agreement

    by Connie N. Heyer, TSSA Legal Counsel

    The lease contract. The single most important transaction between a landlord and tenant.

    For the protection of both the landlord and the tenant, a written lease needs to be in place to outline exactly “the deal.” For this “Back to Basics” look, let’s focus on this single most important landlord/tenant transaction.

    Tip #1: Use it!

    Use the TSSA lease. The TSSA lease is tailored for Texas law, which is unlike self-storage law in any other state. The TSSA lease is updated to keep up with legal requirements as well as best practices and important protections.

    Tip #2: Read it.

    (Early and often!) Have your managers read through the lease in its entirety, ideally multiple times. It is very helpful to be able to answer tenant questions by referring directly to language in the lease. You can’t and should not answer legal questions and interpret a legal contract, but most questions can be answered by saying something like, “As to your question on late fees and when they are incurred, refer to paragraph 4…”

    Tip #3: Understand it.

    Come to TSSA seminars! Take advantage of the FAQs available in the TSSA Goldbook© and in the Ask the Experts online database. Managers should have a good understanding of the lease terms they work with every day. Among other things, the TSSA lease outlines insurance responsibility, caps the total dollar amount value of items tenants can store in a unit, prohibits storage of sentimental items, prohibits storage of certain items like flammable materials, prohibits sleeping/living in units, and much, much more.

    Following are some of the more important provisions of the lease. I am hopeful this article can be a starting point for enhancing all owners and managers’ knowledge of important parts of the lease.

    PARAGRAPH 1: TENANT INFORMATION

    This paragraph literally lists who the legal tenant is. The tenant is the person or business named on the first line of TSSA lease paragraph 1 (tenant’s first and last name or business name). The tenant signs the lease. The tenant is the only person legally responsible for rent and other lease obligations. The tenant is the one to whom the facility must send any legal notice.

    If the tenant is an individual rather than a business, do not allow anyone other than the person listed as the tenant to sign the lease. For example, the answer to “Can I rent this unit for my mom, who will come in and sign later?” is “No, but if she can’t sign now, you can be listed as the tenant and sign the lease. With your consent, when your mother comes in to sign a lease, we can void the existing lease.”

    When leasing to a business, the legal name of the business should be listed in the first line in paragraph 1, and the business name should be listed at the signature line with the employee’s printed name and signature under it, as in “Main Street Widget Company, by Jane Doe, authorized agent (signed by Jane Doe).” A best practice in this scenario is to require authorization for this person from the company on letterhead. It can be short and sweet, but if you aren’t sure the individual is the company owner or authorized to store goods, a letter stating that this person is authorized to transact business and sign a rental agreement on behalf of the business is ideal.

    Paragraph 1 also contains a blank for a Social Security number. It is difficult to perform a check on military status without one should you need to. That being said, there is no legal duty to collect a SSN from tenants and many facilities do not. If renting to a military tenant, you could obtain this information on a separate Tenant Information form that is kept safe.

    Paragraph 1 also contains a blank space in which the tenant may list names of people to whom you may provide access. This access may be provided at your option; it is not mandatory.

    Finally, paragraph 1 lists emergency contacts for the tenant. There are “default” emergency contacts (like spouses, siblings and adult children) to whom you may, at your option, provide access if the tenant dies, is jailed, is missing or incapacitated (the individual would sign an affidavit swearing one of these events has happened). The tenant may also list specific names and contact information for additional emergency contacts.

    PARAGRAPH 4: “DOLLARS AND DATES”

    This paragraph lists all the dollar amounts involved in the transaction, both on the day of renting and anything that could apply in the future. Monthly rent (paragraph 4a), due date (par graph 4b), late charges, NSF charges, and all other fees you intend to charge the tenant should be listed in this para- graph. Something to remember is that you aren’t obligated to charge the fee just because it is listed (it can always be waived), but you should not try to charge the tenant any fee which both of you have not agreed to in advance.

    “NOTICE TO TENANT AND RELEASE”

    This is the language at the bottom of the first page of the TSSA lease that really stands out—we have used bold, italicized and in some sections all-caps fonts, and that is intentional. This statement is comprehensive and packed with important liability language and it should be initialed by the tenant!

    This is important information for both you and the tenant. This paragraph references late charges. It also makes clear that there are no representations of safety or security. It contains a negligence waiver and non-liability language related to bodily injury and property damage. It contains non- liability language for fire, smoke, dust, water, weather, insects, vermin, explosion, utility interruption and theft. Finally, it notes the tenant’s insurance and self-insurance duties. As mentioned, it is quite comprehensive and offers the facility owner a great deal of protection.

    PARAGRAPH 9: “TERMINATION AND MOVE-OUT NOTICE”

    This paragraph outlines how both you and the tenant may part ways amicably. First, the tenant must comply with any minimum lease term per paragraph 3. If a tenant wants to move out, he must provide you with at least a 10-day written notice of lease termination/non- renewal via mail, hand delivery or email. If you want the tenant to move out, you must provide him with at least a 15-day written notice of lease termination/non- renewal via mail, email or hand delivery.

    Regarding rent due at move-out, Paragraphs 28 and 38 outline how amounts due at termination and other termination-related provisions are calculated. For example, the tenant is liable for rent for the remainder of the month of move out, or for 10 days after move-out, whichever is longer. So, for example, if the tenant moves out July 10, the tenant owes full July rent. If the tenant moves out July 25, the tenant owes through August 4 (four days prorated for August). Of course, you can waive any part of that amount if you desire. But this language encourages tenants not to expect refunds of rent already paid if they did not give enough notice to allow you to rent the unit to another tenant.

    PARAGRAPH 20: “NONLIABILITY AND RELEASE FOR LOSS OR INJURY; AND INSURANCE”

    This paragraph makes clear that your facility is not a warehouse and has no possessory duty of safekeeping (no bailor/bailee relationship). So, you are generally not liable for damages from vermin, leaks, etc.

    This paragraph also binds the tenant to a $5,000 cap on the value of stored items. If the tenant stores items worth more than that in the unit without your permission, he is in breach of the lease. It also makes clear that tenants cannot store items of sentimental value. All of this is for both the tenant’s and your protection. Finally, the paragraph outlines the tenant’s duty to purchase insurance if he stores more than $1,000 in goods in the unit and notes that the tenant is considered to self-insure for all items not covered by his insurance.

    PARAGRAPH 24: “LESSOR’S REMEDIES”

    This paragraph outlines your remedies in the event of a tenant default, such as failing to pay rent. You have many remedies, all outlined by this paragraph. You may lock an unlocked space. You may overlock, code out and wheel boot (if a vehicle or trailer) for any breaches of the lease. You may give notice to vacate and file with your local justice court for eviction. You may assess any charges due under paragraph 4. You may seize the unit (the steps that constitute seizure are defined in this paragraph so be sure you are following them). Finally, you may exercise your Chapter 59 right to foreclosure and auction.

    PARAGRAPH 30: “CHANGES IN RULES OR AGREEMENT”

    This paragraph allows landlords to change provisions of the lease after providing appropriate notice to the tenants. Notice of a minimum of 30 days is required for increases in dollar amounts (like rent increases). Some provisions that do not involve increases to dollar amounts can be changed immediately after written notice is provided. This is a good way to handle gate hour changes and any other change desired.

    PARAGRAPH 31: MISCELLANEOUS

    As the name implies, this is something of a "catch-all" paragraph to address issues not addressed elsewhere.

    Boilerplate but essential legal language, such as "time is of the essence" and "Texas law applies" are included for a reason. Additionally, the fact that managers can't make oral promises which override the executed lease is also clearly spelled out. This paragraph is also where you'll find the important stipulation that mediation is required when a lawsuit is filed, except for legal actions taken by a lessor (facility owner) for rent, foreclosure, eviction or charges spelled out in Paragraph 4.

    SUMMARY

    Without a lease tailored to the self-storage industry, you are exposing yourself to liability, as self storage is different from other commercial real estate rentals and different laws apply. Use the TSSA lease. It’s one of the best benefits of your TSSA membership.


    Read More Blog Posts » 

    Lease-Essentials

    Bankruptcy of a Tenant: What You Need to Know

    by TSSA Legal Counsel

    Bankruptcy is a no-win situation for a landlord. In general, when a tenant files bankruptcy, a landlord’s hands are tied for at least a few months when it comes to collecting overdue amounts. Once a bankruptcy is filed, unless you have received permission from the bankruptcy court, or unless a certain time period has passed, you cannot file for eviction, begin foreclosure or exercise any collection remedies. If you have started either of these procedures, you must “freeze” your effort until the law allows you to continue. Bankruptcy results in an “automatic stay”—this means that until this “stay” is lifted, you cannot take any actions against a bankrupt tenant such as eviction or foreclosure.

    What if you have received no paperwork, but the tenant comes to your office, or calls you, to tell you that he has filed for bankruptcy? If you knowingly violate the automatic "stay," you are subject to sanctions and potentially punitive damages if you move forward with your action (e.g., foreclosure) and a bankruptcy has indeed been filed. It is therefore likely not a good idea to ignore someone's statement that they have filed. However, while you should not disregard your tenant's claim of filing, you should, in TSSA legal counsel's opinion, do your best to confirm (or refute) the tenant's claim. If the tenant is not being truthful, and has not filed, you may move forward with your action. You can ask the tenant for a case number and/or the name and phone number of his bankruptcy attorney. It is easy to verify bankruptcy filings with the bankruptcy court, especially with a case number.

    You can verify/lookup the status of a bankruptcy at https://www.pacer.gov/ and you can also check the Texas District Court website at https://www.txs.uscourts.gov/. If you act reasonably in attempting to verify the filing, you may avoid punitive sanctions if you elect to go forward in absence of verifiable information as to the filing. But clearly, the most cautious approach, and the recommended one, is that if someone tells you that they have filed for bankruptcy, stop ("freeze") any ongoing collection activity (for example, if you have already overlocked, you can leave the overlock on, but do not proceed to foreclosure), until you can verify the bankruptcy filing.

    There are a lot of steps and possible decisions and solutions to a bankruptcy situation. This article outlines, in sequential order, some of the most important steps that you may take in TSSA legal counsel’s judgment. You may also want to consult your own attorney with regard to bankruptcy matters. But first and foremost: act quickly. The quicker you start to act, the quicker you can get a paying lessee.

    1. Stop all collection activity. Your first step should be to immediately stop all collection activities against the tenant once you receive notice of a legitimately-filed bankruptcy. Failing to stop collection efforts upon notice may lead to severe monetary penalties.

    2. Note the date of notice. Make a note in your files of the date upon which the bankruptcy was filed: any late fees not already assessed on amounts owed as of that date cannot be assessed. If you do not have a written notice (i.e., the notice was oral), then insist on a copy of the notice and/or a case number.

    3. Strike a deal. Try to negotiate a deal with the tenant if the tenant has filed under Chapter 11 or 13. If a tenant of yours has filed for Chapter 11 or Chapter 13 bankruptcy, you might want to consider forgiving his debt or even paying him a token amount to come and take his things away. In a Chapter 11 or 13 bankruptcy, you may lawfully agree to forgive all of the tenant’s debt in exchange for voluntarily vacating the unit. The tenant will probably need this agreement in writing to show to his lawyer so his bankruptcy plan can be amended. You cannot legally make a deal to forgive only part of the debt in exchange for immediate payment—even if it is partial payment. A debtor (tenant) does not have the authority to pay you anything except what a court approves under a bankruptcy plan. It may also be worth the effort to call the trustee’s number (listed on the notice of a Chapter 7 bankruptcy) and make the same move-out offer deal.

    Forgiving a debt entirely or even paying a tenant to move out is difficult to do when you know a tenant owes you money, but on the other hand, you are otherwise looking at going for months without payment, spending attorneys’ fees, and possibly getting 50 cents on the dollar or less as repayment under the tenant’s bankruptcy plan.

    If a tenant has filed for Chapter 7 bankruptcy, the law prohibits you from making any type of agreement directly with the tenant. In a Chapter 7 bankruptcy, the items in the unit now legally belong to the tenant’s bankruptcy trustee and not the tenant. Any “deal” would have to be approved by the Chapter 7 bankruptcy trustee. The bankruptcy notice you receive will tell you what chapter the tenant filed under.

    4. File a Proof of Claim with the bankruptcy court. When you receive notice of the bankruptcy in the mail, you should file a document called a Proof of Claim with the bankruptcy court (however, if it is a Chapter 7 bankruptcy, normally no Proofs of Claim are allowed to be filed absent court request). In a Proof of Claim, you list all debts the tenant owes you that were due before the bankruptcy was filed. Normally, the court will send you a Proof of Claim form that you can fill out. Otherwise, your lawyer can submit a Proof of Claim on your behalf. There is a deadline for filing the Proof of Claim, so make sure you read the court’s documents and comply with that deadline.

    When you file your Proof of Claim, make sure you file it as a “secured” claim rather than an “unsecured” claim (there will be a check box on the form where you can indicate that it is a secured claim). Your claim is secured by a lien on the contents of the unit. The lien is described in paragraph 22 of your lease and in Chapter 59 of the Texas Property Code. You will need to attach a copy of your lease to the Proof of Claim that you submit.

    If a debtor has listed you as a creditor, you should receive a Proof of Claim form from the court in which the debtor filed bankruptcy. If not, and the debtor did not file for bankruptcy in the Western District, you may get a copy of the proper Proof of Claim form by calling the clerk for the appropriate court (most courts have a website, and the clerk can tell you how to download the appropriate form or how to get a hard copy if you don’t have internet access). The clerk’s contact information should be on the notice of bankruptcy you receive.

    5. Hire an attorney to “lift” the bankruptcy stay. When the court “lifts” the bankruptcy stay, it means the court is allowing you to go forward with your self-help on judicial remedies. Paying attorneys’ fees may only be worth your while if a tenant owes you a considerable amount of money. It is most likely going to cost you several hundred dollars to hire an attorney to petition the bankruptcy court to allow you to foreclose or file for eviction. However, if the tenant owes you a considerable amount of money and shows no sign of paying any rent that has become due after he filed for bankruptcy (post-petition debt), it may be worth your while to hire an attorney and act quickly.

    6. Take action yourself 60 days after the bankruptcy is filed. The tenant’s bankruptcy trustee (in a Chapter 7bankruptcy) or the tenant (in Chapter 11 or 13 bankruptcies) must assume or reject the tenant’s lease within 60 days after the bankruptcy is filed under Section 365(d)(4) of the Bankruptcy Code. If the trustee or tenant decides to “assume” a lease, he must cure any default and show adequate proof to the court that future rent will be paid.

    The tenant’s bankruptcy plan (which you should receive a copy of) should tell you whether the trustee is accepting or rejecting your lease. If you have a question and the 60-day time period is nearing, you should call the trustee or the tenant’s bankruptcy attorney and find out if the trustee is going to accept or reject the lease. The trustee’s name and contact information should be on all court documents. If the trustee does not accept the lease within the 60-day period after the tenant files for bankruptcy, then the lease is deemed to be rejected, and the trustee must immediately surrender the property.

    Rejection of a lease does not mean that the lease is terminated, but simply means that the trustee or tenant has decided that the lease will not be part of the bankruptcy estate. If the lease is rejected, the obligations of the lease simply become obligations of the tenant again—without being subject to the bankruptcy. The ball is in the landlord’s court at this point to terminate the lease, give an eviction notice or begin the foreclosure process. Once you have confirmed that a lease has been rejected, you can exercise your remedies just as if the bankruptcy did not exist.

    If the tenant owes you a considerable amount of money, you may file a petition with the bankruptcy court requesting that the court shorten the 60-day time frame in which the lease must be assumed or rejected. Your bankruptcy attorney can do this for you if this action is appropriate.

    7. What about rents that become due after the tenant declares bankruptcy? What if the tenant was current in rent before bankruptcy was declared, but since the time he declared bankruptcy, he has not paid any rent or has missed certain payments? Under bankruptcy law, the tenant is required to keep “post-petition debt” (debt that has become due after the bankruptcy was filed) current. If the tenant doesn’t do this, the first thing you should do is call the tenant’s bankruptcy attorney. Tell the attorney that his client is not keeping post-petition debt current and that you will turn the matter over to a lawyer if payments are not made immediately. The tenant’s bankruptcy attorney should then instruct the tenant to get the debt current. If the tenant does not bring post-petition debt current, then in order to enforce your claim for rents, you (your lawyer) must file a motion with the bankruptcy court asking the debt to be classified as an “administrative claim,” which is given a high priority for payback.

    8. Tips to keep from getting “burned” by a tenant’s bankruptcy. There are several things you can do to prevent yourself from being hurt by a tenant’s bankruptcy. Probably the most important thing is to make sure you don’t let a tenant get too far behind in rent payments. Exercise your foreclosure rights quickly or evict the tenant quickly before the tenant has the time to declare bankruptcy. Bankruptcy is a very specialized area of the law, and if you find yourself on the other side of an increasing number of tenant bankruptcies, in TSSA legal counsel’s opinion, you would be well-advised to retain an attorney specializing in bankruptcy to assist you.

     

    Read More Blog Posts »

    Tenant Bankruptcy

    Access Rights Q&A

    by TSSA Legal Counsel

    It is important to remember that your signed Rental Agreement is the primary source for determining access rights. The tenant who signed the lease is the only person with access rights. Other individuals might be listed on the lease for possible access rights (at your option and sole discretion), but these individuals have no legal rights for access.


    The Repo Man Wants Access 

    Question: We have a tenant who is current on rent, but there is a person wanting to repossess the vehicle he’s storing with us. The “repo” man is pretty demanding, and we are not sure how to handle this situation. The police have not been helpful. The repossession representative has paperwork from the lienholder but not a court order. What can we do?

    Answer:     You are not authorized under the lease to provide the “repo” man access. You would be violating the lease in doing so, unless you were authorized to enter under paragraph 18 (in other words, unless you had written or oral permission from the tenant to provide entry to the repo man). Any repo rep should have paperwork from the lienholder evidencing the lien, and he might even have a court order ordering the tenant to hand over the car. However, any such court order would not be binding on the facility. The best course of action is likely to inform the repo man that 1) this is not a warehouse; 2) you do not have access to the unit; 3) you would be violating the tenant’s lease by providing access to the unit to anyone not authorized by the tenant; and 4) you’re sorry, but you cannot assist with access. The repossession company will need to go to court and get an order commanding the tenant to turn over the property, with a statement that if the tenant fails to do so, the tenant will be held in contempt and will be subject to fines or even jail time. 

     

    Husband vs. Wife—Access Rights During Divorce

    Question: I have a tenant who listed his wife as someone with whom we are authorized (at our discretion) to discuss the unit’s account and to cut locks. They have now decided to divorce, and the wife had the key to the unit. The husband came out today and requested we cut the lock and replace with a new one. Then the wife called and asked if she could have the locks cut and replaced with new ones.

    Answer: Your best move is to stay out of this. Assist no one. You don’t have a duty under any version of the TSSA lease to assist anyone (including tenants and “additional access” people) with lock cutting. Let the husband and wife duke it out and you stay out of the fray!


    Access Rights for Girlfriend/Boyfriend

    Question: A man signed a lease and listed his girlfriend as a person the facility may grant access to in the facility’s discretion. Now they’ve had a fight and she wants to remove the contents of the unit and put them in a different unit under a new lease with her name only. He refuses to cooperate. What should we do? Can she remove the contents of the unit?

    Answer: If she is listed on the lease as a person you are authorized to allow access to, if you elect to allow her entry, she may enter the unit and remove anything from the unit just as if she were a tenant. As a practical matter, anyone with a key and a gate code can enter the unit—the tenant has made a decision to provide a code and key to someone, and that is the tenant’s business. If she doesn’t have a key or code, per the terms of the TSSA lease, since she is listed as an “additional access” person, you may assist her with entry and lock cutting (but you have no obligation to assist, and it is recommended that you don’t assist in this capacity). Although it is not technically unlawful, I would recommend that you not rent the girlfriend a new unit. It would probably be advisable to have her rent a unit from another facility so that you are not dragged into the middle of a fight.


    DEA or Law Enforcement Agency Seizure

    Question: The DEA came to my facility with a federal search warrant and demanded search and seizure of three units. I allowed them entry, and they cleaned out three units, including a stolen car. At the time, we had not yet started a foreclosure procedure as the tenant was only one month behind in rent. Should I have done anything differently in this situation?  

    Answer: In a word, no. Your Chapter 59 lien on property in a unit includes stolen property. So, you had a lien on all property in the unit and the DEA has taken away property upon which you have a lien. The DEA had a right to enter the property under its search warrant, and in that situation, there is very little you could do to prevent the DEA or other governmental officer from taking away property found in the unit. You may try to contact the DEA officer who came to your property and inform him that you had a lien for the property seized from your storage facility. You may send a copy of the legal article titled “Memorandum Brief on Police Seizure of Stolen Vehicle in Self-Storage Facility” which can be found in the TSSA Goldbook©. You may have to press the DEA to get them to respond, but you may be able to work a deal that your lien amount (the one month's rent) would be satisfied out of any sale of the seized property that the DEA conducts. Since this incident only involves one month of unpaid rent, it is up to you to determine whether it is worth it to press this matter with the DEA.


    Deceased Tenant, Access by Others

    Question: A tenant is deceased, and no one is listed as someone I can grant access to, and there is obviously a family conflict regarding the contents of the unit. Is the best course of action to wait for a court order, or take a “first-come, first-served” approach as far as relatives wanting access?

    Answer: This topic is addressed in further detail in the article “When a Tenant Dies,” which can also be found in the Goldbook©. If no emergency contacts are listed and there are no other persons listed who you are authorized to grant access to, then under TSSA lease paragraph 1 (the “emergency contact” section), you have the right, but not the obligation, to allow the tenant’s brother, sister, spouse, parent or child over 18 (and in more recent versions of the lease, the estate executor) to have access to the tenant’s space if that person signs an affidavit that the tenant is deceased, incarcerated, permanently missing or permanently incapacitated (TSSA form MISC-2). You also have the right to discuss the tenant’s account with this person.

    What this language of the TSSA lease means is that you have the ability to work with the tenant’s immediate family (or on newer lease versions, the estate executor) in the event of death, should you elect to allow one of these people to have access. If you allow this person to have access after signing an affidavit, you have done nothing legally wrong and should have no legal liability—the tenant has contractually agreed that in the event of his death, the people listed above may be granted access to his space if they sign an affidavit.

    However, you have no duty to assist anyone with access. If, at your discretion, you elect to wait for a court order or wait for the unit to become delinquent and proceed to foreclosure, that is fine, too. This is probably the most conservative stance to take if you have reason to believe that there is a family conflict. If you are on a newer version of the lease (check paragraph 1) and you have the right to allow access to the estate’s executor, that is likely “safe” as well in terms of not getting in the middle of feuding heirs. Any executor should be able to show you court documents appointing him or her as the legal executor of the estate.

    Access for Repairs

    Question: I need to access some units to make repairs. How do I notify the tenants? What if they turn out to be the hard-to-reach kind, and I cannot contact them, can I still perform the repairs?

    Answer: If you are using the TSSA lease, you should not have any trouble performing the repairs. Paragraph 18 of the TSSA lease outlines your right of entry. Paragraph 18(4) gives you the right to send the tenant a letter requesting access to the space for a number of reasons, including repair. Your request needs to outline the time and the date of your requested entry, which may be no sooner than seven days from the mailing of the request. If the tenant fails to provide you access at the time and date requested, you may then enter the unit. Paragraph 18 also provides that if you enter the unit after you have provided the requisite notice and the tenant has not responded, the tenant must pay for lock removal charges. TSSA legal counsel has prepared a form to use when requesting access to the tenant’s space pursuant to paragraph 18 of the TSSA lease (TSSA form SP-1).


    Read More Blog Posts »

    Access Rights Q&A

    Gaining the Authority to Dispose of ‘Valueless,’ ‘Junk’ or ‘Nuisance’ Vehicles

    by TSSA Legal Counsel

     At a recent TSSA legal seminar, a member mentioned the topic of disposing of old, abandoned vehicles and their town’s involvement in that endeavor. Here, attorney Will Farnsworth, part of TSSA’s legal team, addresses the question at hand.

    Member Question: We have a number of old, abandoned vehicles parked outside at a facility we purchased. I’ve heard there is a process for getting my town to consider these vehicles a nuisance so that they take over the burden of getting rid of them. Can you tell me if this is true, and if so, what the process would be for that?

    The Lawyer Answers: Generally speaking, for self-storage facility purposes, there are three potential options for handling “abandoned” or “junked” vehicles on your property or, alternatively, as part of a delinquent tenant’s property that you’ve seized for foreclosure:

    1) A self-storage facility may seek a Certificate of Authority (“COA”) to dispose of a motor vehicle by a demolisher if the motor vehicle is deemed “abandoned” (i.e., it has remained on your private property without your consent for more than 48 hours);

    2) A municipality or a county may apply for a COA and dispose of a junked vehicle by a demolisher if the municipality/county deems such “junked vehicle” (or parts) to be a public nuisance and desires to dispose of the junked vehicle or parts; or

    3)The self-storage facility may seek a COA to dispose of a motor vehicle by a demolisher if the facility has conducted all of the required foreclosure notification requirements under Chapter 59 of the Texas Property Code and the facility determines that either (a) the motor vehicle’s only residual value is as a source of parts or scrap metal, or (b) it is not economical to dispose of the vehicle at public sale.

    Each of these options involve the party applying for a COA with the Texas Department of Motor Vehicles (“TDMV”). Upon issuance of a COA, a motor vehicle demolisher who acquires a motor vehicle for dismantling or demolishing may dismantle or demolish such vehicle upon its receipt of the COA (in lieu of the vehicle’s Certificate of Title). (See Section 683.056 of the Texas Transportation Code.)

    Abandoned Vehicles

    For the first option, a self-storage facility may apply for a COA when a motor vehicle has remained on private property (in this case, the self-storage facility’s property) without the consent of the property owner or person in charge of the property for more than 48 hours (and, therefore, the motor vehicle is considered “abandoned”). Once the TDMV has received the COA application, TDMV is required to send a notice to any owner(s) and lienholder(s) of the abandoned vehicle (and, if no record owners/lienholders are found in the TDMV’s system, TDMV is required to publish a notice on its website). If the motor vehicle’s owner or lienholder has not claimed such vehicle by the 20th day after such notice, the TDMV will issue the COA to the applicant, which will be sufficient for a motor vehicle demolisher to demolish or dismantle the abandoned vehicle.

    All-in-all, it may take up to 30 days for the issuance of a COA by TDMV following application. While a self-storage facility would legally have the right to begin this process 48 hours after a motor vehicle has remained on its property, this option would be most practical in the scenario where a motor vehicle has been left at the property for a lengthy period of time, when multiple attempts have been made to identify and/or contact the owner of such vehicle, and when the vehicle is clearly inoperable/abandoned. The form for this application is known as “VTR-71-2” and can be found on the TDMV’s website at: https://www.txdmv.gov/sites/default/files/form_files/VTR-71-2.pdf.

    Nuisance Vehicles

    With respect to the second option available to a facility (which is similar to the scenario the member asked about), a municipality or a county may notify the TDMV of the abatement of a public nuisance vehicle AND apply for a COA to dispose of a motor vehicle by a demolisher ONLY IF the motor vehicle is considered a junked vehicle and abated and removed from public or private property as a public nuisance pursuant to the provisions of a procedure established by the municipality or county.

    Under Section 683.074 of the Texas Transportation Code, a municipality or county may adopt procedures for the abatement and removal of a junked vehicle or part of a junked vehicle from private or public property or a public right-of-way as a public nuisance if such procedures: (1) prohibit a vehicle from being reconstructed or made operable after removal, (2) require a public hearing on request of a person who receives notice if the request is made not later than the date by which the nuisance must be abated and removed, and (3) require that notice identifying the vehicle or part of the vehicle be given to the TDMV not later than the 5th day after the date of removal.

    Additionally, the procedures must provide that at least 10 days’ prior notice (personally delivered, sent by certified mail with a 5-day return requested, or delivered by USPS with signature confirmation service) that states that the nuisance must be abated and removed not later than the 10th day after such notice was personally delivered or mailed to (a) the last known registered owner of the nuisance, (b) each lienholder of record of the nuisance, and (c) the owner or occupant of (i) the property on which the nuisance is located, or (ii) if the nuisance is located on a public right-of-way, the property adjacent to the right-of-way. If such procedures are properly followed, the application has been approved by the TDMV, and the agency has issued a COA, the municipality or county must assign the COA to the metal recycler and, after permanently destroying the vehicle, the metal recycler will surrender the COA back to the TDMV and notify that agency to mark the vehicle record as “crushed.” This remedy is only available to the municipality/county where the junked vehicle is located (but nothing prohibits a self-storage facility from contacting the municipality or county in order to move forward with this remedy). The form for this application is known as “VTR-71-4” and can be found on the TDMV’s website at: https://www.txdmv.gov/sites/default/files/form_files/VTR-71-4.pdf

    Demolishing a Foreclosed Vehicle

    Finally, a self-storage facility has the option to apply for a COA in order to dispose of a motor vehicle to a demolisher if (1) the motor vehicle is subject to a self-storage facility lien (as opposed to merely a vehicle being abandoned in the parking lot of a facility), (2) the self-storage facility owner has complied with all notification requirements under Chapter 59 of the Texas Property Code, including sending the “special foreclosure” Notice to Owner(s) and Lienholder(s), and (3) the facility determines either that (a) it is not economical to dispose of the vehicle at a public sale or (b) the motor vehicle’s only residual value is as a source of parts or scrap metal.

    After the notification requirements have been fulfilled and the TDMV’s Self-Service Storage Facility Lien Foreclosure form (Form VTR-265-SSF) has been completed and submitted and after the facility has determined the vehicle’s only value is for parts or scrap metal or it is simply not financially feasible/economical to dispose of the vehicle at public sale, then the facility may apply for a COA with the TDMV to dispose of the motor vehicle in lieu of a public sale. The application for the COA may only be submitted on or after the 31st day after the Notice to Owner(s) and Lienholder(s) has been made. The form for this application is known as “VTR-71-6” and can be found on the TDMV’s website at: https://www.txdmv.gov/sites/default/files/form_files/VTR-71-6.pdf.

    In summary, there three available avenues for a self-storage facility to take for dealing with “abandoned” or “junked” vehicle on its property. In all cases, the facility should follow the guidelines and forms promulgated by the TDMV with respect to properly applying for a COA prior to disposing of the vehicle.

     

    Read More Blog Posts »

    Disposing of Valueless, Junk or Nuisance Vehicles

    An Acquisition Nightmare: How to Clean Up the Books and Get Back on Track

    by Mallory Scott, TSSA

    Picture this—you just purchased an existing facility that was previously owned and operated by someone else. You assumed the facility was a well-oiled machine with pristine documentation and sound business practices, but instead you inherited an operational mess that needs some cleanup. Although you may have walked into an acquisition nightmare, it’s never too late to get your facility back on track. Let’s review some scenarios.

    TENANTS ON A NON-TSSA LEASE—HOW TO MAKE THE SWITCH

    A tenant is delinquent and you discovered that the previous owner used a non-TSSA lease. If your tenants have signed a non-TSSA lease that may or may not have the proper statutory language for foreclosure and Texas-specific laws affecting self storage, you should consider having your tenants sign a TSSA lease. If you do not want to switch your existing tenants to a new lease, you should contact your attorney to review your current rental agreement to ensure that you can (legally) pursue appropriate remedies should a tenant stop paying rent.

    To switch to the TSSA lease, you can use TSSA form BUS-4, “Notice of Switch from Non-TSSA Lease to the TSSA Lease,” which can be found in the Members Only section of txssa.org. You can either: 1) Mail the notice, along with a paper copy of the TSSA lease and a return envelope to your tenants’ last known address on file so that they can sign the new lease and return it; 2) Contact your tenants via phone, email or mailed notice requesting that they come into your office to sign a new lease; or 3) If you are subscribed to the TSSA e-Lease, depending on your management software’s functionality, you may be able to email your tenants new leases to e-sign and return electronically.

    If your tenants refuse to come in and sign or return a signed copy of the TSSA rental agreement, then you can send them a notice with a gentle reminder stating that if they do not sign a new lease by a specified date, that you will be forced to terminate their contract and they will have to move out. If they still do not sign a new lease, you can hand deliver, mail or email TSSA form E-1, “15-day Notice of Termination of Storage Space Rental Agreement.” Please note: If you do not have a lease, you should give your tenant a minimum of 30 days to vacate the space. You can still use form E-1, but you'll need to extend the date of move out to 30 days instead of 15 days. This is obviously a last-ditch effort as you don’t want to have to ask a paying tenant to move, but sometimes that is your only option. You do not want to end up in a situation where your tenant becomes delinquent, but you can’t exercise your lien because you don’t have the required statutory language in your lease.

    NO LEASE, NO NAME, WHAT TO DO?

    After an acquisition, you may find a unit that is locked, but you are not receiving rent and have no record of who is leasing the space.

    The practical solution is to follow a set of steps to find out who the tenant is and to document a case for “abandonment” by the tenant. TSSA legal counsel recommends: 1) Ask previous owners, managers, employees or tenants who rent near the unit if they know who the tenant is. 2) After at least two months of delinquency, overlock the space and leave a notice in an all-weather sleeve attached to the door asking the tenant to come to your office to discuss the matter. 3) If the tenant shows up, ask them to sign a lease and pay any back rent. If the tenant refuses to pay back rent, you can hand-deliver TSSA form E-2, “Notice to Vacate Storage Space for Non-Payment of Rent or Other Sums.” Since the tenant does not have a written lease, you should alter the form to remove any references to a “written” lease, as it is technically an “oral” agreement. Refer to the Eviction tab in the TSSA Goldbook© for step-by-step eviction instructions. 4) If the tenant does not show up to your office after you have left a notice on the door of the unit, you can cut the lock to take an inventory of the contents. You should either have a witness with you or record yourself cutting the lock and entering the space. If you find any clues as to the identity or contact information for the tenant, you should pursue them. 5) If you don’t find any clues (such as documents or mail), overlock the unit and keep it locked for at least three months. As a practical matter, you can move and store the contents in another unit with other property as long as it doesn’t get mixed up. 6) At the end of three months, if no one has come to claim the property, it can be considered “abandoned” property under the common law definition, in TSSA legal counsel’s opinion. 7) You can now donate the contents to a charitable organization. Obtain a receipt. Please note: If the contents appear to have great value, consult an attorney prior to donating to charity.

    SOME TENANTS HAVEN’T PAID IN MONTHS OR YEARS

    You have three options…foreclosure, eviction or abandonment.

    Let’s start with the safest and simplest remedy, which is foreclosure. There is one question you MUST ask yourself before starting the foreclosure process—do I have a signed lease with the required statutory lien language for this tenant? The TSSA lease (all versions) contains the necessary lien language, which consists of 1) a reference to Chapter 59 of the Texas Property Code, 2) a reference to Lessor’s priority lien on the contents of the property to secure unpaid fees by your tenant, and 3) the text in conspicuous bold or underlined font. If you have a non-TSSA lease and are uncertain if your rental agreement fits all the criteria, you should consult with an attorney prior to proceeding with foreclosure. If you use a TSSA lease or are sure that your non-TSSA lease checks all the legal boxes, then you can follow the step-by-step foreclosure procedure, which is detailed in a legal article in the TSSA Goldbook.

    If you find out that your non-TSSA lease does not contain the required statutory lien language, then a viable option is eviction. The eviction process starts with notifying the tenant that you are terminating their contract. You can use TSSA form E-1, “15-day Notice of Termination of Storage Space Rental Agreement.” (See previous note about 30 days notice for a non-TSSA lease.) Hopefully the tenant will move out and you can rent the unit to a new paying tenant. However, it doesn’t always work out that way. So, if the tenant does not move out within the allotted timeframe, you can send one final notice for holding over. You can use TSSA form E-4, “Notice to Vacate Storage Space for Holding Over.” If the tenant does not move out after the three-day notice expires, then the next step is to file for an eviction at your local justice court. To learn more about eviction, read the legal article in the TSSA Goldbook that details the step-by-step eviction process.

    There are several other situations when eviction is the best option including, but not limited to:

    *You don’t have a signed rental agreement for a tenant who stopped paying rent.
    *You have a tenant sleeping in their unit.
    *You have a paying tenant who is engaging in illegal activity or causing trouble at your facility.

    ABANDONMENT

    Abandonment is another option if you have a tenant who is severely delinquent. Using this option hinges on whether the tenant is willing to communicate with you or not. If the tenant is responsive, you can send them TSSA form BUS-23, “Authorization and/or Release by Tenant.” You’ll want to check box number five, which states that by signing the form, the tenant is abandoning all contents to you/your facility. If the tenant is willing to sign this form, you can then dispose of the contents of the unit as you see fit. You can donate the items, sell them in your next auction (without having to pay for the newspaper ad, etc.), sell them at a garage sale or have them hauled off and thrown in the trash.

    There is another type of abandonment, which is detailed in Paragraph 26 of the TSSA lease. The tenant has “abandoned” the storage space if ALL the following occur: a) the tenant has given written or oral move-out notice; b) the lock has been removed by someone other than the Lessor; and c) the move-out date or termination date must have expired. The tenant has also “abandoned” the storage space if ALL the following occur: a) the tenant has not paid rent or other sums due; b) the lock has been removed by the Lessor during the foreclosure process; and c) the space contains nothing of value to the ordinary person. This one can be tricky. Something you might not see as having value may hold great value to the tenant, so proceed with caution in deeming contents as having no value to the ordinary person. A good practice is to ask yourself if you would donate the items to Goodwill or The Salvation Army. If the answer is yes, then there is some value you are assigning the contents, but if the answer is no (i.e., the contents are clearly “junk” and have no value, sentimental or otherwise), there is probably minimal risk involved in considering the items abandoned. The next step is to send the tenant TSSA form MISC-3, “Notice of Abandonment,” and give them a reasonable amount of time to come and retrieve the contents. If the contents are not removed by the allotted timeframe, then you can dispose of them as you see fit.

    RAISING RENT

    It is typical for new owners to raise the rent and other fees after acquiring a previously owned facility. The previous owner may have been charging the same amount for rent since 1982, and in that case, it’s just a good business practice to raise the rent to an amount that is reasonable within your local market. The previous owner may have a minimal late fee that you feel should be increased. They may have also not been assigning fees to all the items listed in paragraph 4 of the TSSA lease. You may not think you need a fee for having to judicially evict or a charge per hour for cleaning or removing contents left behind today, but you may one day. To increase the rent and/or other fees, you can use TSSA form BUS-5, “Notice of Rental Increase and Switch to the Most Recent TSSA Lease.” You MUST give at least 30-days notice to your tenants prior to raising the rent or other fees. If you are using the TSSA lease the tenant does not have to sign or accept a new lease for these changes to take effect.

    PREVIOUS OWNER WASN’T COLLECTING SALES TAX

    You should be collecting sales tax on the rent for applicable spaces, including those that contain vehicles and trailers, whether the space is designated for vehicles or just a regular self-storage unit. The exception to this rule is a trailer with a boat on it—you should NOT collect sales tax on a trailer if it has a boat on it. You should also be charging sales tax on personal property sold at your facility, such as boxes, locks, keys, packing materials, etc. If the previous owner was not collecting sales tax, it’s quite simple to get back on track. Apply for a sales tax permit with the state Comptroller at https://comptroller.texas.gov/taxes/permit. You can call (800) 525-5555 with questions. For more detailed information on sales tax, see the legal articles in the TSSA Goldbook.

    DOCUMENTATION ISSUES

    Maybe the previous owner or manager just didn’t keep good records, or maybe there were even some questionable business practices going on behind the scenes. Cleaning up messy documentation can be a process, but it will be well worth the work because precise records can help you stay out of legal trouble.

    Signed Lease, Wrong Unit Number
    Scenario: You have a signed lease, but then discover that the unit number is incorrect. It’s possible that when the tenant originally signed the lease, they moved into the correct unit, but then moved into a different unit later on and the lease was not updated. You have a few options: 1) Contact the tenant and ask that they come to the office to amend the current lease. You can change the unit number on the lease and have the tenant initial and date next to the changes, and then have a facility representative initial and date next to the changes as well; 2) Complete TSSA form MISC-7, “Rental Agreement for Change in Unit(s)”, and put the signed form in the tenant’s file; or 3) Execute a new lease. Any of these options will work just fine, so choose the one that works best for you. If you are using the TSSA e-Lease, executing a new lease and having the tenant e-sign is probably the safest option.

    Multiple Units on One Lease
    Scenario: You notice that there are multiple units listed on a single lease. This can actually work in your favor. If the tenant stops paying on one of the units, but continues to pay on the others, you can deny access to all the units listed on the lease until the balance on the account is paid in full. Sometimes tenants will stop paying on a unit containing items that aren’t of great value but continue to pay on units that they need to access frequently. Because all units are listed on one lease, any amount left unpaid is considered a balance on the account, and until paid in full, access can be denied, and the foreclosure process can begin.

    There are endless scenarios that you can face when purchasing a facility that has been run by someone else. The main thing to remember is that there are resources available to you through TSSA.

     

    Read More Blog Posts » 

    Acquisition Nightmare