Self Storage and The SCRA

My name is Randy Smith your host, and we are talking with Roy Kaufmann of the Servicemembers Civil Relief Act Centralized Verification Service out of Washington D.C. The topic of day’s broadcast is the Servicemembers Civil Relief Act. Great information for self storage owners and managers talking about the act and all of the compliance needed to make sure that you’re within the bounds of the law as it relates to the military tenants at your facility. Roy Kaufman is an attorney with over 30 years of experience in civil and criminal law, conversant in legislative, regulatory, and litigation matters and having published many articles and appeared in telecasts. He’s an expert on the SCRA and currently serves as the director of the Servicemembers Civil Relief Act Centralized Verification Service, based in Washington D.C.

All right, thanks for taking some time of your busy day and speaking with us today. I want you to tell folks just a little bit about yourself and how you’ve been involved with your service in the self storage industry.

RLK: Thank you very much. It’s a pleasure to be here. My name again is Roy Kaufmann and I serve as the director of the SCRACVS, which is a shortened version of a much longer name and we’re a contractor in D.C. What we basically do is a a single function that is to determine or to respond to requests to determine whether a person is or is not in active military service. We will talk later about how “military service” is defined. We are a computer based operation. It is an operation that supplies a very quick verification for people to use. We have been in business for probably I think around eight or nine years and we are located in the District of Columbia.

Q. Well tell me what interest should the self- storage industry have in complying with the SCRA? And maybe, to start, could you give maybe a brief background of the SCRA? What it is and why it was implemented?

self storage unitsRLK: I’ll be happy to address that. The SCRA replaced an old law called the Soldiers Sailors Act. The purpose of both of statues is basically to protect the servicemember while in active military service so that the servicemember can focus entirely on his or her duties and have less of the problems at home than might be otherwise the case.

The SCRA is a federal statute that means it applies to all states and districts. There exist also, as we will discuss later, state versions of the SCRA enacted by some states. Those versions don’t substitute for the federal statute but add to the protections.

Q. So the state versions cannot dilute the federal version they can only add to it that is exactly right. Do do you find many do that?

RLK: Just a handful, a couple. My recollection is that there may be fourteen states that have some version of their own SCRA. But many state statutes mention servicemembers. So it would be important to look at your own state statutes to see whether any of those references involve the enforcement of storage liens which is the topic of our discussion, today.

There are many other protections under the SCRA that go well beyond the enforcement of a storage lien. For example, there are other provisions that have to do with mandatory reduction of interest rates on certain kinds of loans. There are many protections relating to foreclosures: health insurance, life insurance, domestic relations, child custody proceedings. So the SCRA areas are fairly far-reaching.

Q. I didn’t know that the SCRA extended beyond the industry. We hear the term SCRA and we just think of how it relates to the lien and auction process with servicemembers. But I wasn’t aware that it had more implications beyond that. Well, why is it important that storage facilities comply with the SCRA?

RLK: There are specific provisions that relate to storage, and operators need to be in compliance with that. You pose two questions and both of them are important. Let’s deal with second one first, and that is what would be the interest in complying? Well the interest is basically because there is a law. And in order to operate a self storage business, you have to make sure that you are in full compliance with laws. And we already discussed that these laws can have two different categories: the state and the federal category. The second thing is that compliance is very easy. Compliance is but a quick five-minute task or less on the internet especially with our service, the SCRACVS which we’ll get into again later. It is very easy.

Let’s talk about the alternatives to taking the time to comply with the law.

If you don’t comply with the law and you take matters into your own hands, then you’re going to have a very expensive lawsuit that can result in fines. That lawsuit can result in court costs, and as we’ll talk about later, there are criminal implications. This could be a misdemeanor under the federal statute that can be quite serious. And the most the most important thing to the industry is just terrible public relations implications.

The quick circulation of stories about people who ignore the rights of servicemembers — I mean it tugs at the people’s heartstrings and could pretty well spell the end of any kind of business that is located near a military base, for example, if the facility has, as its main customer base, servicemembers. Imagine the reaction of that customer base when it finds out that the facility operator is not respecting the laws that protect the majority of its customers. I think it’s pretty likely that those customers are going to leave the facility and go to a facility that doesn’t have that negative publicity.

Q. So who generally is covered by the SCRA?

RLK: Well let me point out that there are very technical answers here. And if anybody wanted to really investigate it, a good resource happens to be our blog and our F.A.Q. section. In the time we have in this particular broadcast, it would be impossible to really go into all the nuances of whom is protected. But if you are really interested in getting into it, those are wonderful resources. Having said that, let’s talk generally about whom is protected.

First of all, generally, the law applies to people in active duty. Now there are there are differences between active duty and active service. But for the purposes of this discussion, let’s combine them. Covered are those people in the branches of the regular branches of the military that we all know: Army, Navy, Marines, Air Force, Coast Guard. But the term also includes commissioned officers in the National Oceanic and Atmospheric Administration known as NOAA and commissioned officers in the Public Health Service. Protections are also enjoyed by people who may be in full-time training duty involved with their service. For example, there are certain universities and service-related institutions where if you enroll, you are able to enjoy the benefits or the protections of the SCRA.

The National Guard is another technical topic. If a person is called up for duty for the National Guard he may or may not be eligible for SCRA protection. If the person is called up pursuant to a presidential call-up (that means the president of the United States calls up the National Guard) and that service extends for more than 30 days and those services are paid for by the feds, then the person is covered by the SCRA. Otherwise there is no coverage. If a governor calls in the National Guard, it is a different story. There would be no federal SCRA benefits in that situation. However, some states have enacted their own mini-versions of the SCRA which would extend SCRA-type benefits in the event the governor initiates the call-up.

Reservists, on the other hand, are entitled to SCRA coverage from the date the reservist member receives his call-up orders, as opposed to the date he reports for duty.

People have asked if military family members are covered. They are not automatically covered. If family members want coverage, they have to ask a judge for those protections. And the judge has very very broad latitude. Things that the judge can consider, for example, include whether the contract was signed before or after the servicemember went into active duty, whether there are sufficient resources for the family apart from the the income the family receives from the servicemember. No attorney’s fees, by the way, are awarded, I might add. So it is expensive sometimes for the family members to go in for protection. And it is not that common, especially in proceedings for for storage liens.

Q: How long does someone enjoy the protections of the SCRA?

RLK: Generally, the protections extend obviously to the period that the person is in active service. But the protections can also extend for a period after the person leaves active service, either because of retirement or or some other termination. And that usually results in an extension of 90 days after active duty.

Now there are certain provisions of the SCRA which extend further which do not relate to this storage facility subject matter important to our listeners, having to do with foreclosures where extensions can be as long as a full year after termination of duty.

So, therefore, it’s very important when you’re doing your SCRA verification, to look carefully at whether the person has recently retired. When you do a verification through our SCRACVS, you get that information automatically. If you are getting the information through some other resource, and you just take false comfort in knowing that the person is not in active service, that is not enough. That person may still be within that 90-day period after active duty during which he’s entitled to the protections.

OK, so technically if someone has property in storage and falls behind on the rent, the SCRA says you cannot evict the tenant without a court order. Yes, you may have a lien under your local, state laws, but the federal SCRA trumps that rule. You cannot take self-help action. You cannot add a lock or disable the servicemember’s lock or impede his access — you have to go to court you go to court. And you basically get a court order that permits you to enforce your lien. The judge has broad discretion in these cases. The judge can stay (or postpone) the proceedings and will usually do so for 90 days.

There are some pretty significant penalties if a storage operator ignores the SCRA requirements. There are also cases that we see in the newspaper all the time. Some cases, for example, demonstrate that the storage operator did not have good control over what the site manager was doing. In one case, the local manager sold a woman’s belongings while she was stationed in Afghanistan. You can imagine the bad press that generated, not to mention the fine that the court imposed of $150,000.00.

What precautionary steps can you take? One might be to add to your application a question about whether the person or a member of his immediate family is in active military duty, a reservist or in the National Guard. I would caution everybody not to base a decision whether to rent to this person or not upon the answer. But I think, at the very least, it can give you a little bit on notice of what you know what you might face if there is a default.

While an SCRA verification is easiest if you have the renter’s Social Security number, many operators decline to collect and store that information because they are scared of a data breach. I will tell you that there are differences between verifications based on a Social Security number and verifications where you do not supply the Social Security number to the government.

The U.S. Department of Defense still uses Social Security numbers as the only unique identifier. If you give us the SSN, it is fast. But even if you do not retain the Social Security number, we can usually find the Social Security number and submit that information to the Department of Defense. All we need is alternate information on the renter that you should get when the application for rental is filled out. You always want to get as much other information as you can, especially if the person has a common name. That other information includes addresses, phone numbers, date of birth, driver’s license numbers, and tag numbers. Names and addresses of some relatives (people to contact in an emergency) are great information to retain.

The military verification service is offered online, only. The cost is usually $36.40. The Defense Department offers a verification service without charge. But especially if you do not have a Social Security number, the certificate from the DoD may be rejected by the court.

Speaking of the certificate, the SCRACVS does offer notarized affidavits (even by overnight delivery), but the DoD does not. SCRACVS stores your certificate and DoD does not. SCRACVS has a chat and phone line available to make the process very smooth.

The operators must conduct a military verification. Spend $36.40 and a minute or two of time to comply, or face a huge legal and public relations nightmare.

 

Attorney Roy Kaufmann serves as the Director of the Servicemembers Civil Relief Act Centralized Verification Service, located in Washington, D.C. As a recognized authority on the Servicemembers Civil Relief Act, Mr. Kaufmann has published hundreds of articles and hosted many webinars. His teachings help law firms and businesses to remain compliant with the SCRA rules and regulations so as to avoid costly fines.

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