After A Lien Sale

Posted by msmessenger on Mar 1, 2017 12:00:00 AM

Dealing With The Return Of Personal Property

The situation is not that uncommon. At the conclusion of a lien sale, the high bidder will walk into the manager’s office with a box loaded with photos, photo albums, and miscellaneous personal papers, saying to the manager: “These look to be personal items of the Tenant. I can’t sell these.” The question of how personal items can or should be handled after a lien sale is sometimes addressed in the individual state lien laws (for example in Washington State or Nevada), but otherwise, when the state statutes are silent on these issues, the decision to take or not take the personal items is left to the individual policy of the self-storage operator or facility.

So, for example, in Washington, the law provides:

    (1) After the expiration of the time given in the notice of lien sale pursuant to RCW 19.150.060, the property, other than personal papers and personal photographs, may be sold or disposed of in a reasonable manner.

  (3) Personal papers and personal photographs that are not reclaimed by the occupant within six months of a sale under subsection (2)(a) of this section or other disposition under subsection (2)(b) of this section may be disposed of in a reasonable manner.

However, “personal papers and personal photographs” is not specifically defined under the law. The interpretation suggests a “reasonable meaning” be given to define personal items as those that would not have a resale value to third persons. But certainly, the intent of the law is that these personal items not be sold, which means they must be removed prior to the sale by the operator or must be returned after the sale by the high bidder as being excluded from the contents allowed to be sold in the unit space. Either way, that law gives credence to the fact that these personal items are the type that should not be sold but instead held by the facility for a period of time to be claimed by the tenant after the sale (in Washington a period of up to six months).

In Nevada, the law provides that these personal items are defined as “protected property”. The law states: 

“Protected property” includes, without limitation: “Documents, film, or electronic data that contain personal information, such as social security numbers, credit or debit card information, bank account information, passport information, and medical or legal records relating to clients, customers, patients, or others in connection with an occupant’s business.”

The state law then prescribes a specific process for the disposal of such items if not retrieved by the tenant, including “Destroying the protected property in an appropriate manner which is authorized by law and which ensures that any confidential information contained in the protected property is completely obliterated and may not be examined or accessed by the public.

But absent state laws like these, an operator must decide its own policy as to whether it will accept the return of personal/protected items and, if so, how long it will keep the items before disposal. Certainly, so long as state law does not provide otherwise, the operator could decide not to accept the return of any items from the foreclosed unit, leaving the purchaser of the storage unit to handle the disposal of these items on its own.

Where the state law does not specifically provide requirements relating to the handling of personal/protected property, the operator can make its decision without concern for statutory liability. The operator then must determine for itself whether it will hold onto these personal items of the tenant after the sale or if it is better to separate itself entirely from the process. Given that there are only a few states which require such retention of the property, such retention is not overwhelmingly expected of operators and to do so remains more of a courtesy to the facility’s tenants than anything else.

Scott Zucker is a partner in the law firm of Weissmann Zucker Euster Morochnik & Garber, P.C. in Atlanta, Georgia.