New Law Discourages Tenant Delinquency | Mini-Storage Messenger

Posted by Admin on May 2, 2023 12:00:00 AM

Dealing with a tenant delinquency tenant is something most self-storage operators have experienced. Aside from the unpaid rental fee, these delinquencies have other implications on the bottom line. With many state laws declaring that storage facilities cannot lock-out tenants until rent has gone unpaid for 30 days, and that the facility can only auction the contents of the unit after 90 days, there is also lost revenue since the unit cannot be rented. This is changing in at least one state.

Designed To Discourage Tenant Delinquency

A new law in Indiana, House Enrolled Act 1621, will now permit storage facilities to seize a storage unit after just five days of delinquency. It also authorizes a storage auction to be held within 60 days. Hoosier State Governor Eric Holcomb signed the bill this week, which goes into effect July 1, 2023.

The new law was prompted by requests from self-storage owners and the Indiana Self Storage Association. The requests claimed the state’s timelines for seizing units and disposing of unpaid storage unit belongings are too long and among the most generous in the country. In their requests, the parties noted that while a tenant will still have the ability to pay up and retrieve their items during the default process, those who are more than 60 days late on rent rarely get caught up after 90 days.

The sponsors of the law, Rep. Zach Payne (R-Charlestown) and Sen. Gary Byrne (R-Byrneville), stated that the law not only protects storage facility owners but also helps consumers by allowing storage unit renters to designate a back-up contact to receive notices of unpaid bills.

With Indiana taking the lead, it’s expected that other states with long delinquency grace periods may introduce similar bills in the future.

Preventing Tenant Delinquency From The Beginning

What can self-storage owners do to stave off delinquencies early on? “The bottom line is being vigilant from day one,” Todd Amsdell, president and CEO of Amsdell Companies, told Mini-Storage Messenger in 2021. “Don’t start off on a negative note, but make sure everybody knows what their obligations are.”

Amsdell added the best way to avoid delinquency is to use autopay when a tenant signs a new rental agreement. “The No. 1 thing with getting all this to happen is getting tenants signed up on autopay,” Amsdell said. “Most of the problems then vanish. It’s rare that you have to collect because accounts on file are in the red.”

Read more about preventing delinquency in our blog Improving Collection Rates: Valuable Tips from Industry Experts.