The Shifting Laws of Advertising
Self Storage Lien Sales
By Scott I. Zucker, Esq.
As self-storage operators know, under most state lien laws, in order to conduct a lien sale of their tenant’s stored goods, one of the essential requirements is to post an advertisement (or multiple advertisements) in a newspaper of general circulation in the area where the facility is located. This statutory requirement evolved based on the generational expectation that people read their local newspaper and followed the “public notices” that were regularly published. However, the reality is that, over the last decade, many local newspapers have disappeared. Therefore the statutory laws needed to be modernized to address this situation.
The national Self Storage Association, along with numerous state self storage associations, has worked over the past decade to update a number of the state laws, either removing the publication requirement altogether or replacing it with alternative publication requirements, thereby still providing proof that the lien sale is being conducted in a “commercially reasonable manner”. In excess of twenty states have modified their state lien law to amend this publication requirement step in the lien foreclosure process. But, as is true for the individual state lien laws themselves, it is important to recognize that the changes are not consistent and the requirements in one state for lien sale publication may not be the same, even in an adjacent state. In the last year, the states of Arkansas, Alabama, North Dakota, Kansas, Kentucky and Utah have all joined the list of other states that have shifted to address lien sale publication requirements.[1] Each has unique elements, which are highlighted below.
Arkansas:
At least seven (7) days before the sale or removal of personal property: (i) Publish one (1) advertisement announcing the sale or removal of personal property in a newspaper of general circulation in the county in which the storage facility is located at least seven (7) days before the sale or removal of personal property; or (ii) Advertise the sale or removal of personal property in a commercially reasonable manner.
The advertisement of a sale of personal property is conducted in a commercially reasonable manner if at least three (3) independent bidders participate in the sale of the personal property.
Alabama:
At least seven days before the sale, an advertisement containing the time, place, and terms of the sale shall be published once in a newspaper of general circulation in the county where the self-service storage facility is located. A single advertisement listing multiple sales in a newspaper of general circulation in the county shall suffice.
If no newspaper of general circulation is located in the county, or if the operator determines, based on the previous experience of the operator, that the contents of the leased space have a value of five hundred dollars ($500) or less, then an advertisement in any commercially reasonable manner shall suffice.
The manner of advertisement is deemed commercially reasonable if it is likely to attract at least three independent bidders to attend or view the sale in person or online at the time and place advertised.
North Dakota:
At least seven days before the sale, advertise the time, place, and terms of the sale in a commercially reasonable manner. An advertisement satisfies the requirements of this subsection if at least three independent bidders attend the sale in person or online at the time and place advertised.
Kansas:
At least seven days before the sale, advertise the time, place and terms of the sale in a newspaper of general circulation in the jurisdiction where the sale is to be held or in any other commercially reasonable manner. Such advertisement shall be in the classified section of the newspaper, if notice is placed in the newspaper.
If less than three independent bidders attend the sale in person or view the sale online at the time and place advertised, the manner of advertising the sale shall not be considered to have been commercially reasonable and the sale shall be canceled, rescheduled and re-advertised.
Kentucky:
At least three (3) days before the sale, advertise the time, place, and terms of the sale in: 1. A newspaper of general circulation in the jurisdiction where the sale is to be held; or 2. In any other commercially reasonable manner.
The manner of advertisement shall be deemed commercially reasonable if at least three (3) independent bidders participate in or attend the sale at the time and place advertised.
Utah:
After the expiration of the time given in the notice, the owner shall publish an advertisement of the sale of the personal property subject to the lien once in a newspaper of general circulation in the county where the self-service storage facility is located.
An advertisement described in Subsection (6)(a)(i) shall include:
(A) the address of the self-service storage facility and the number, if any, of the space where the personal property is located;
(B) the name of the occupant; and
(C) the time, place, and manner of the sale, which shall take place not sooner than 15 days after the day on which the sale is advertised under Subsection (6)(a)(i).
Subsection (6)(a) does not apply if: (i) the owner: (A) provided the notice described in Subsection (1)(b) by email; and (B) received a response or return receipt from the email address to which the notice was sent; or (ii) the owner: (A) provided the notice described in Subsection (1)(b) by certified mail; and (B) has evidence of providing the notice by certified mail.
These statutory changes will undoubtedly create solutions for operators that are in jurisdictions where local papers no longer exist or where the cost of publication is now prohibitively expensive. At the same time, these changes support the goal of conducting a commercially reasonable sale by requiring the attendance of potential bidders at the public sale itself.
[1] States that have revised their publication requirements include North Carolina, Tennessee, Mississippi, Ohio, Michigan, Indiana, Maryland, Montana, Colorado, Nebraska, Iowa, West Virginia, Delaware and Massachusetts.
Stay Safe and Happy Storing!
Scott
