By David Wilhite

Sale-and-disposal legal-liability is an important coverage specific to the self-storage industry. It provides protection against conversion: the act of wrongfully taking, selling, using or destroying the goods of another party. Nearly every state has specific statutes governing the sale-and-disposal process, as provided for in the States Self Service Storage Facility Act. However, if the procedures are not followed to the letter, or if there is an error in any step of the sale-and-disposal process, self-storage operators are left vulnerable to lawsuits claiming loss or damage of stored goods. Due to the incredible diversity of goods commonly stored and the wide range of values of the property, the penalty for conversion can be extremely high.

Sooner or later, every self-storage owner will be faced with the unenviable task of evicting a tenant for failing to pay his rent, reclaiming the storage space and removing or disposing of the tenant's property. Fortunately, most states give self-storage operators extraordinary leverage against delinquent tenants. Nearly every state has specific statutes to govern this process. If the procedure is not followed correctly, an operator leaves himself vulnerable to lawsuits claiming loss or damage of stored goods. Even when the process is handled correctly, it is not uncommon for a disgruntled tenant to file a claim against the operator charging negligence in the removal or disposition of stored property.

For example, a self-storage operator was recently held liable for $250,000 in damages by a California court for the wrongful sale of a customer's property. The court judged that the storage owner's notice of intention of sale was defective, since the operator's newspaper ad did not include the delinquent tenant's name, which was required by state law. The court ruled that the operator was in violation of negligence and conversion as a result of this error.

It is important to remember that many sale-and-disposal lawsuits are the result of trivial errors, such as reversing the numbers on an address. The chance of an error occurring is compounded by the fact that most state statutes generally require that several letters of notification be mailed to tenants with delinquent accounts, and that the self-storage operator publish a legal notice in a general circulation newspaper in the judicial district where the sale will be held. There are, of course, many variations by state on these procedures, and each must be followed to the letter to minimize the likelihood of a lawsuit. It pays to be careful! Judging by several recent jury awards, a trend appears to be developing in which storage operators who make minor violations of state statutes can be held liable for large punitive and emotional damages far in excess of the actual value of a tenant's stored items.

The good news is that there are several effective steps you can take to minimize the risk of sale-and-disposal lawsuits. If you or your staff are involved in the sale-and-disposal process, you must be aware of lien law. Consult with an attorney about preparing a written procedure that outlines the exact steps for disposing of a delinquent tenant's property. Read and follow all state statutes. Always double-check names and addresses, and don't make any changes to information on the rental agreement, such as correcting an obvious misspelling, unless accompanied by a signed change-of-address card. Document, in photographs and writing, every step of the inventory and auction process. In a lawsuit, you will have to show proof that the disposal of the delinquent tenant's goods conformed to state statues. And if there is any reason to question the sale and disposal of a tenant's goods--don't. Many owners prefer to let tenants retrieve their property at no charge, rather than go through the potential liability of an auction (it is certainly preferable to defending yourself in a lawsuit). Last but not least, be absolutely certain you have adequate insurance coverage.

When shopping for sale-and-disposal legal-liability insurance, be aware that this industry-specific coverage is not normally available through regular business insurance carriers and generally cannot be added to a standard business owner's policy. However, the coverage can be secured through insurers specializing in the self-storage industry. No matter how large or small your self-storage facility may be, securing adequate coverage is essential for protecting your business and your peace of mind.

To better help you protect your business, Universal Insurance Facilities Ltd. offers sale-and-disposal legal-liability coverage as part of its extensive self-storage insurance program. Universal's coverage helps protect you against claims arising from the negligent sale, removal, disposal or disposition of customers' property when reclaiming space for which rental or other charges are delinquent or unpaid. The coverage further provides for defense and legal costs, even if a customer's suit is groundless or fraudulent. In addition to loss-of-income and extra-expense coverages,

Universal offers a comprehensive package of coverages specifically designed to meet the unique needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ 85067-0079; phone (800) 844-2101; fax (480) 970-6240; e-mail uif@vpico.com; www.vpico.com/universal.

Don't Take Chances Secure a copy of your state's lien laws As witnessed in the accompanying article, many wrongful sale lawsuits occur when a self-storage facility operator inadvertently violates state lien laws. That is why it is vitally important for you and your employees to be aware of the sale and disposal requirements for your state. By following the sale-and-disposal process to the letter, you can greatly minimize the risk of a wrongful sale judgement being held against you. For a free copy of the lien laws for your state, call Universal at (800) 844-2101.

By Tom Berlin

Americans are becoming more sophisticated. Starbucks and other coffee shops have educated us on the sundry ways to enjoy coffee. The Internet has connected us to an entire universe of information. Cable and satellite television has allowed us to peek into the lives of different cultures. And the American economy continues to provide most people with an unprecedented standard of living.

As a result, our expectations of what is acceptable to us, as consumers, have risen. This is a trend impacting all retailers. For example, one long-time discount department store chain is in the midst of renovating hundreds of its stores in order to staunch the flow of its customers into more contemporary discounters that feature newer stores with wider aisles, brighter lighting, nicer displays and an overall cleaner environment.

Self-storage is no exception to this scrutiny. As the population becomes more educated about our product, their expectations and requirements of a facility are reaching higher levels. In the past, a metal building sitting in the middle of an unpaved field was completely acceptable. For some prospective tenants, it still is. But the vast majority of our customers has become accustomed to, and even demands, a higher standard.

As is regularly pointed out in industry trade journals such as this one, many new self-storage facilities are virtually indistinguishable from the most upscale office buildings or residential developments. They feature every new technological bell and whistle available, and provide customer service rivaling that of the fabled Nordstrom's chain of department stores.

Many of us with older facilities try to do whatever we can to compete by upgrading our properties with new storage doors, computer-controlled gates, surveillance cameras, door alarms, etc. But these are high-cost, capital- intensive improvements. Don't get me wrong--these are very worthwhile expenditures. We all need to consider installing what is increasingly becoming the norm at self-storage operations. But there is one area that is often overlooked by managers and operators that can keep a facility competitive even as new facilities nip at your marketshare: daily maintenance.

The Importance of Maintenance

Managers and operators are always extremely busy with the day-to-day activities of running their facilities. It's easy to forget the important role a facility's appearance and cleanliness plays in the decision-making process of the prospective tenant. Often, the customer doesn't even realize the influence of these factors. He just knows he "didn't feel comfortable" at a particular store and moves on to a competitor. Small d ifferences between competitors can decisively impact a potential customer's storage decision.

Certainly, every owner needs to ensure that his roofs don't leak, lighting on the property is adequate and working properly, paving is in good condition and doors operate smoothly. However, the daily "housekeeping" at a self-storage facility can be a critical factor in the facility's success. A new store that looks dirty will give customers a worse impression than an older location that is immaculate.

Our managers complete a daily checklist of housekeeping items. This helps ensure that easily overlooked items are still completed. Since each facility is different, every manager should develop his own list of duties that need to be handled every day. Here is a sample of the items on our list:

Office

• Straighten all work surfaces, the customer counter and the area behind it to eliminate clutter and keep areas neat and organized.
• Dust all counters, window sills, sundries displays and window blinds, and any other horizontal surfaces.
• Sweep and/or mop all hard flooring.
• Vacuum all carpeting and walk-off mats.
• Wash windows in the office entry door and elsewhere if they are fingerprinted or otherwise dirty.
• Empty wastebaskets.
• Straighten and fill all sundries item displays (not part of housekeeping perse, but something that should be done daily anyway).
• Clean the customer restrooms including the sink, commode, floor and mirror. Fill the soap, toilet tissue and handtowel dispensers.
• Empty the wastebasket.
• Replace all burnt-out lightbulbs.

Exterior

• Remove all litter from the grounds, including both natural refuse (leaves, stones, twigs, dirt runoff, etc.) and man-made rubbish such as paper, bottles, cans and, especially, cigarette butts. (Cigarette butts scattered about a property always make it look dirty, no matter how clean it is otherwise.) It is important that any trash found against your fence is also removed whether it is on your side or not. Remember that the sight lines of potential customers don't end at your property line.
• Move any "presents" from tenants, such as mattresses, sofas, boxes, etc., to the dumpster area. Don't forget to look up at the building roofs to see if anything is visible that has been thrown up onto them.
• Pull or spray with weed-killer any weeds that have sprung up from cracks in the paving, planting beds or other areas--around the dumpster, for example.
• Check the site for any damage to the gate, buildings, signage, doors, fencing, lights, bollards, etc., that may have occurred overnight.
• Make sure all exterior lights are working properly. (Obviously, none of them should be on during daylight hours, for example.)

Our managers do both the interior and exterior housekeeping at the beginning of the day. The manager, in some cases, is scheduled to start work before the office opens in order to get everything accomplished before our first customers arrive. When a manager is doing the morning site inspection, he can also overlock past-due spaces and remove overlocks from paid spaces.

Some of the activities listed above may need to be done several times a day if an office or property is especially busy or the weather is bad. It is important to keep in mind tht the acceptable standard for cleanliness should be immaculate.

Maintenance of Vacated Units

Whenever a tenant vacates, the site manager should perform a thorough inspection of the space before it is rented again. Our managers use the checklist on the following page for this purpose.

The completed checklist is placed in the vacant-space file. When a store is audited, the checklists for all vacant spaces are reviewed and the spaces inspected to ensure they are ready for the new tenant.

Keeping a property clean at all times is one of the most important aspects of a manager or operator's job. It is neverending, but it can mean the difference between a potential customer choosing to store at your facility or moving on to your competitor.

Tom Berlin is vice president of operations for Farmington Hills, Mich.-based Pogoda Management Co., one of the largest owners and operators of self-storage facilities in the Midwest. For more information, call (800) 326-3199.