Most people involved with the storage
business would agree the most challenging part of the business is how to handle
the 7 to 10 percent of tenants who don’t pay rent as agreed.
Like all areas in life, there is
no one right answer for every situation.
In the storage business, they have a process designed to answer from a
legal point on how to proceed. These
answers can be obtained by looking at the California Statues 21700 or you can
talk to a lawyer (preferably one who belongs to the CSSA) to know the correct
way to do the lien.
Assuming all the legal paperwork
is accurate, now decisions must be made on how to get these non-paying units
empty so they can be replaced by tenants who will pay for their unit.
Some Mangers are worried if they
auction a tenant’s goods off, they will end up in court with huge
lawsuits. If the paperwork trail is
followed to the letter of the law, this won’t happen. Most people are aware that Paris Hilton had
her items auctioned in November of 2005.
For whatever reason, payment between Paris and the storage site did not
happen. After the auction, she hired the
best lawyer money could buy to try and get her items back. Since all the paperwork was correct and the
person conducting the auction was bonded, she was not able to get any of her
property back.
Another common misconception
about auctions is they don’t bring enough money and it would be better to
settle with 20 percent and get the tenant out.
Occasionally this is the best method, especially after doing inventory
and the contents have value only to the tenant.
However, usually it is better to your bottom line to stand firm and get
100 percent on what is owed to you. Why
would this action be better? Let’s look
at some basic math. For example, from
the thousands of units we sold over the years, three out of five units the
people will pay in full. Should these
five units be $1,000.00 each, and you settle all five you would receive
$1000.00. Should the average pay, you
would collect $3,000.00 from the full pay, and have two units to auction.
Using a Professional Storage
Auctioneer, even after paying his commissions, you will net more than a storage
manger doing their own auction. A
Professional Storage Auction Company will have more buyers and handle those
unique situations that auctions can bring. Should an Attorney get involved for
any reason, having a Professional Storage Auction Company on your side can be
priceless. It also sends a message to your delinquent tenants you are serious
about getting paid which brings in more “past due” money because of your
auction date.
As a businessperson, it sometimes
is confusing why a company that hires an attorney for their legal work, an
accountant for their financial work, a groundskeeper for their yard work, a
computer tech for their computer work and then try to do their own auction
because they think it saves them money. (It doesn’t) The bottom line is what is most important in
business is to make a profit (and not get sued) and not settling just for settling
sake is something everyone should reconsider.
John Cardoza, CAI, BAS, CES
Storage Auction Experts
