Owners and landlords of storage facilities can benefit greatly from being familiar with the Servicemembers Civil Relief Act. Armed with this knowledge, they can ensure their money collection activities comply with federal law.
Self Storage Owners and the SCRA
For those not familiar with this piece of legislation, the SCRA exists to protect active duty members, including commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration who are actively serving the federal government, as well as reservists. The legislation was enacted to safeguard their civil rights during their military service.
The act protects servicemembers in every state, and in certain cases, the U.S. Attorney General can enforce the legislation. Failure to comply with the act could result in various sanctions, including monetary damages, legal expenses, injunctions, liability for civil money penalties and imprisonment. In addition, violating the SCRA could generate reputational damage.
The legislation helps to protect the rights of affected individuals by suspending, at least for a period, judicial and administrative proceedings such as lawsuits and liens that could negatively impact the civil rights of servicemembers. The SCRA affects active duty members and others with the following matters:
- Default judgments
- Residential leases
In addition, the legislation contains provisions that directly impact self-storage facilities. Because of these sections of the act, industry participants would do well to know the facts.
Under ordinary circumstances, owners and operators of self-storage facilities can usually hold lien sales under state law. Such events have risen in popularity in recent years, possibly fueled by lackluster economic conditions that undermined renters’ ability to make timely payments.
“The legislation contains provisions that directly impact self-storage facilities.”
Using this approach can help recoup some of the revenue lost due to renters who default. To comply with existing law, professionals must often sell the property at an auction and notify the renter that such an action is taking place. In these instances, renters will frequently challenge a particular sale.
They might claim they have indeed paid rent but that such transactions were either not recorded or not given the credit they were due. Alternatively, the unit holder might contend the self-storage owner or operator failed to send the sale notification to the most recent address supplied by the renter or otherwise failed to conduct their due diligence in contacting the renter.
The renter might also complain the sale advertisement was faulty, and that the improper or incorrect information generated fewer bidders and less money from a sale.
However, servicemembers have additional rights, which would require any owner or operator of a self-storage facility to receive a court order.
More specifically, the SCRA states that “a person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.”
If the owner or operator of a self-storage facility has a servicemember who is not making timely rent payments and wants to enforce a lien against them, the professional must file a lawsuit and obtain a court order before they can enforce a lien. This requirement covers not only the time the member of the military is on active duty, but also another 90 days following that period.
In addition, the court system has substantial authority to either postpone the lawsuit or address it in a way that benefits the interests of all parties involved.
The legislation specifically says that “the court may on its own motion, and shall if requested by a servicemember whose ability to comply with the obligation resulting in the proceeding is materially affected by military service: (1) stay the proceeding for a period of time as justice and equity require; or (2) adjust the obligation to preserve the interests of all parties.”
Given this broad language, self-storage owners and operators involved in these proceedings lack clarity as to what the outcome will be.
While this situation may seem daunting, professionals may be able to make things a bit more simple if a servicemember is willing to waive their rights under the SCRA. Before a self-storage owner or operator decides to request such a voluntary relinquishment of their protections, they must keep in mind that any such forfeiture of rights involving repossession, foreclosure, sale, retention or taking hold of any property that secures any obligation must adhere to specific requirements:
- The waiver must be in writing.
- It must be in at least 12-point type.
- The forfeiture of rights must be effectuated separate from the obligation or liability it applies to.
- The waiver must specifically name the document to which the waiver applies, and if the servicemember is not a party to that agreement, the military member must also be identified.
- The relinquishment of rights must take place either during or after the servicemember’s period of military service.
If the owner or operator of a self-storage facility is looking to obtain a waiver from a renter, this request should not only meet all SCRA requirements, but also contain language that enables the professionals seeking to enforce the lien in a timely manner. Therefore, individuals looking to make such a request might benefit from seeking legal counsel.
Whether those owning and managing self-storage facilities want to obtain a waiver or not, complying with the Servicemembers Civil Relief Act is very important. The legislation supersedes all state laws, and violating it can trigger serious consequences.
To conduct the proper due diligence, professionals should leverage the Servicemembers Civil Relief Act Centralized Verification Service, the best way to determine whether an individual benefits from the rights contained within this reform.