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Thank You to Our Sponsors
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Announcements
• Housekeeping & introductions
• Real estate MCE credit
• Certificate requests
• Forms for sale (save shipping cost)
• Please complete seminar evaluations
• Today’s agenda and Q&A process
• Special meal requests
• Donate to the Shriners Hospital for Children
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3/21/2017
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Announcements
• Goldbook © pages referenced on slides
Follow the Conversation
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OVERVIEW:2016 – 2017 Goldbook©
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2016-2017 Goldbook© Changes
• New summarized steps for timeline
• New appendix forms
o MISC-7: Amendment for Change in Units
o BUS-20: Notice of Change in Permitted Payment Type
o BUS-21: Notice of Property Damage and Demand for Payment
• Sections removed from CD and are available online
o Business Property & Tax
o Criminal
o Federal
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Legal Resources
• Goldbook©
• Electronic Goldbook© in Members Only section
• Resource Library (free webinars & podcasts)
• Free Auction Posting (auction.txssa.org)
• Ask The Experts Legal Questions
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Pop Quiz
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3/21/2017
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Connie Heyer
Attorney-at-Law
Niemann and Heyer, LLP (Austin)
The legal opinions expressed today are those of TSSA legal counsel.
Other attorneys may have different opinions. #TSSALegal
Texas Legislative Session
LEGISLATIVE UPDATE:What to expect for the 2017 Session • Ad valorem tax• Online auctions• Other bills affecting self storage
OVERVIEW:Self-Storage Lien Law & Foreclosure Process
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Understanding the Basic
Legal Issues in Self Storage
Understanding the Basic
Legal Issues in Self Storage
• Self Storage vs. Warehouse
• Automatic Lien & Priority of Lien
• Seizure
• Care/Custody/Control of Units
#TSSALegal
Regular Foreclosure Process
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Regular Foreclosure Process
• STEP 1: CHECK LEASE FOR PARTICULARS
• STEP 2: SEIZE THE CONTENTS OF THE UNIT
Option #1: Cut the lock + Notice of Claim (N.O.C.)
OR
Option #2: Overlock
• STEP 3: WAIT ANY AMOUNT OF TIME (OR NONE)
pg 34-42
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Regular Foreclosure Process
pg 34-42
• STEP 4: MAIL OR EMAIL NOTICE OF CLAIM
• STEP 5: WAIT AT LEAST 15 DAYS
• STEP 6: PUBLISH NEWSPAPER ADS
(Two ads, at least 7 days apart, but still in two consecutive weeks)
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Regular Foreclosure Process
pg 34-42
• STEP 7: PUBLISH NEWSPAPER ADS NO SOONER THAN 15 DAYS AFTER N.O.C. SENT (OPTIONAL) MAIL NOTICE OF PUBLIC SALE VIA REGULAR MAIL OR EMAIL
• STEP 8: WAIT AT LEAST 15 DAYS AFTER FIRST AD RUNS
• STEP 9: CONDUCT THE PUBLIC AUCTION
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Regular Foreclosure Process
pg 34-42
• STEP 10: ALLOW TENANT TO REDEEM ANYTIME BEFORE “GAVEL FALLS”
• STEP 11: GIVE BUYER BILL OF SALE
• STEP 12: COLLECT SALES TAX (IF APPLICABLE)
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Regular Foreclosure Process
pg 34-42
• STEP 13: IF EXCESS PROCEEDS, SEND NOTICE TO TENANT VIA REGULAR OR CERTIFIED MAIL (If requested by tenant, send excess proceeds. If not requested by
tenant, hold excess proceeds for two years.)
• STEP 14: KEEP ALL RECORDS ON FORECLOSURE SALES FOR
FOUR YEARS
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Special Foreclosure Process
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Special Foreclosure Process
How is the Process Different?
• You must determine registered ownership (TDMV or TPWD)
• Lienholder may be involved
• If there is a lienholder, then a separate notice must be given
• Two notices are required
• Provide buyer with original documents at auction to register vehicle/boat
• Do not charge sales tax to buyer; buyer pays when registering
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Special Foreclosure Process
What is a Vehicle?
• Trailer, Car, Truck, RV
• Essentially, “anything required to be registered”
• ATV
• Motorcycle
• Includes boat trailers
• Golf carts are NOT “vehicles”
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Special Foreclosure Process
• STEP 1: CHECK LEASE FOR PARTICULARS
(Note: Some like to determine ownership information now)
• STEP 2: “SEIZE” UNIT OR VEHICLE BY OVERLOCKING + N.O.C., CUTTING LOCK, OR WHEELBOOTING/CHAINING IF OUTSIDE
(Or coding out + N.O.C.)
• STEP 3: WAIT ANY AMOUNT OF TIME (OR NONE)
pg 46-59 pg 63-77
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Special Foreclosure Process
pg 46-59 pg 63-77
• STEP 4: MAIL OR EMAIL NOTICE OF CLAIM TO TENANT
• STEP 5: GET OWNER & LIENHOLDER INFO:• FOR BOATS: Use TPWD form 763 • FOR VEHICLES: Use TDMV official form VTR-275
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Special Foreclosure Process
pg 46-59 pg 63-77
• STEP 6: NOT MORE THAN 30 DAYS AFTER SEIZURE, MAIL “NOTICE OF INTENT TO SELL” VIA VERIFIED MAIL TO REGISTERED OWNER & LIENHOLDER(Can be sent when N.O.C. is sent)
• STEP 7: PUBLISH NEWSPAPER ADS (Same rules for ads as REGULAR foreclosure)
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Special Foreclosure Process
pg 46-59 pg 63-77
• STEP 8: (OPTIONAL) MAIL NOTICE OF PUBLIC SALE TO TENANT
• STEP 9: WAIT AT LEAST 31 DAYS AFTER SENDING NOTICE OF INTENT TO SELL AND UNTIL THE NEWSPAPER ADS HAVE BEEN PUBLISHED BEFORE HAVING AUCTION
#TSSALegal
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Special Foreclosure Process
pg 46-59 pg 63-77
• STEP 10: CONDUCT THE PUBLIC AUCTION
• STEP 11: TENANT CAN REDEEM ANYTIME BEFORE GAVEL FALLS
• STEP 12: LIENHOLDER CAN REDEEM WITHIN SPECIFIC PERIOD OF TIME (W/IN 31 DAYS AFTER NOTICE)
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Special Foreclosure Process
pg 46-59 pg 63-77
• STEP 13: GIVE BUYER BILL OF SALE
• STEP 14: GIVE BUYER ALL NECESSARY DOCUMENTS TO TRANSFER OWNERSHIP, INCLUDING:• FOR BOATS: TPWD Affidavit Form PWD 308 • FOR VEHICLES: TDMV official form VTR-265-SSF
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Special Foreclosure Process
pg 46-59 pg 63-77
• STEP 15: DO NOT COLLECT SALES TAX
• STEP 16: IF EXCESS PROCEEDS, SEND NOTICE TO TENANT (Hold excess proceeds for 2 years; send if requested)
• STEP 17: KEEP RECORDS• FOR BOATS: 4 years• FOR VEHICLES: 5 years
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3/21/2017
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Question
What if lienholders want to redeem their property (boats or vehicles)?
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Alternatives to Foreclosure
Alternatives to Foreclosure
Eviction• When to evict vs. foreclose (GB page 238)
• Affidavit of military status (see Appendix CD form E-7)
• Step-by-Step Procedures for Evicting (GB page 239-242)
pg 239-242
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Alternatives to Foreclosure
Abandonment Defined (lease paragraph 26)
Notice of Abandonment (see Appendix CD form MISC-3)
Authorization and/or Release form (official form, GB page 281)
Is it OK to have an abandonment pre-agreement?
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Alternatives to Foreclosure
Using Collection Agencies • Final Notice Before Collection Agency Fees Charged
(see Appendix CD form BUS-10)
pg 210
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Alternatives to Foreclosure
Make a Deal
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Common Questions
About Foreclosure
• What about tenants who don’t want to provide email?
• We don’t trust email. Is it okay to still send notice of claim via certified mail?
• Can I text a tenant about his account?
Common Questions
About Foreclosure
#TSSALegal
• Is an inventory of the contents for delinquent units required?
• Must I use an auctioneer for the sale?
• Do I need auction rules?
• Can the tenant bid at the auction?
• Who can bid at the auction? What if no one bids on a unit?
Common Questions
About Foreclosure
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What items CANNOT be sold at auction?
• Beer, liquor, wine
• Food, drugs, cosmetics, medical devices
pg 23-24
Common Questions
About Foreclosure
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What items CANNOT be sold at auction?
• Firearms, such as semi-automatic assault weapons, machine
guns, sawed-off shotguns, guns with a silencer
• Illegal weapons (brass knuckles or spike strips)
pg 30
Common Questions
About Foreclosure
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Q&A: Foreclosure Process
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Upcoming Events
Houston LuncheonMay 11
August 10
Big Ideas in Storage Annual Conference October 18-20, 2017
San Antonio Convention Center
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Part 2#TSSALegal
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TECHNOLOGYand Its Impact on Self Storage
• Is it okay to do online-only auctions?
• Online leasing (if opt-out, then are paper leases available?)
• E-signatures: Are they valid?
Technology and Its Impact on
Self Storage
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• Paperless record keeping
• How can I prove that email notices are sent/received?
• Management software considerations
• Data security duties
Technology and Its Impact on
Self Storage
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3/21/2017
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Question
Is texting allowed for giving notice?
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BEST PRACTICESand Operational Tips for Common Issues
The TSSA Lease
• Notifying your tenants of change in lease
• Does tenant have to sign?
• Caution about policies in conflict with the lease
Best Practices and
Operational Tips
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Most Important Provisions of the Lease
• Who should sign a lease?
• Tenants’ and others’ access rights (TSSA Lease ¶1)
• Change in language for access rights person & lessor’sonline form option for change of address
Best Practices and
Operational Tips
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Accessing the Unit
• Keeping vacant units locked
• Tenant adding or changing units
• Tenant wanting to “turn over” unit to another party
Best Practices and
Operational Tips
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Accessing the Unit
• Powers of attorney
• Court orders
Best Practices and
Operational Tips
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Lessor’s Right of Entry TSSA Lease ¶18
• Emergency, Health Hazard, Imminent Danger
• Suspicion of Criminal Activity
• Inspection, Repair, Improvement, Casualty Loss (after written request)
• Tenant in default
Best Practices and
Operational Tips
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Relocation of ContentsTSSA Lease ¶18
• Seizure because of foreclosure
• Protect from loss or damage
• Tenant liable for reasonable storage charges
• Tenant has access, except when in default
Best Practices and
Operational Tips
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Tenant Bankruptcy
• Hire an attorney
• Strike a deal (Ch. 11 or 13 vs. Ch. 7)
• Proof of claim
• Post-bankruptcy rents
• Tenant “claims” bankruptcy filed
Best Practices and
Operational Tipspg 115-116
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Question
A tenant filed bankruptcy. I contacted the trustee and he said that the case was dismissed. Now, I can’t get in touch with the tenant.
Am I at risk if I foreclose on the unit? The unit has mostly junk, but there is a camper.
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Deceased Tenants
• Certainties: (1) death, (2) taxes, (3) storage rent
• Estate liable
• Emergency contact
• Affidavit for Removal of Property… (see Appendix CD form MISC-2)
• Practical business decision
Best Practices and
Operational Tipspg 200
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Question
The son & daughter of a deceased tenant do not want the contents of his unit, including a boat and trailer.
What should I do?
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3/21/2017
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Question
Who has more rights to the unit of a deceased tenant?
ANSWER:
(A) The executor
(B) The access rights person
(C) The emergency contact person
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Incarcerated or Incapacitated Tenants
• Emergency contact
• Affidavit for Removal of Property… (see Appendix CD form MISC-2)
Best Practices and
Operational Tips
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Military Tenants
Best Practices and
Operational Tips
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Dealing with Military Tenants
• Importance of gathering information at time of rental
• Photocopying military IDs is PROHIBITED
• Foreclosures and evictions on military tenants and their spouses
Best Practices and
Operational Tipspg 185-189
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Dealing with Military Tenants
• Military Waiver (see Appendix CD form ADD-4)
• You may require proof of active duty status
• Consider DOD check prior to any foreclosure (need SSN & DOB)
Best Practices and
Operational Tipspg 185-189
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Law EnforcementTSSA Lease ¶19
• Officer MUST present a search warrant
• No warrant, no unit entry
• Open unit or allow law enforcement to open
Best Practices and
Operational Tips
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Criminal Searches & Police Seizure of Stolen Property
• No warrant, no unit entry
• Superior lien rights
• Sharing information with law enforcement?
• Your paragraph 18 rights
• Suspicious of criminal activity?
Best Practices and
Operational Tipspg 127-128
#TSSALegal
Handling the Repo Man • We cannot let you in; no legal authority
• We do not, as policy, disclose tenant’s unit #s
• We welcome your $; it will stop the collection process/auction sale
• Talk with your tenant
Best Practices and
Operational Tips
#TSSALegal
Tenant Records and Privacy Issues
• Business records are your property
• Sample privacy policy (pg 172)
• Privacy policy for websites
• Dealing with third parties and sensitive information
Best Practices and
Operational Tipspg 170-171
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Tenant Records and Privacy Issues
• Sensitive documents stored by tenants (medical or legal records)
• Self storage is not equivalent to a document storage company;
hence, HIPAA agreements do not apply
Best Practices and
Operational Tips
#TSSALegal
Credit Card Security
• PCI/SSC compliance requirements
• Merchant services agreement
Best Practices and
Operational Tipspg 204-206
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Partial Payments
• Why partial payment agreements are critical (Appendix CD form PP-1)
• Dealing with pre-paid rent and refunds; special rates tied to pre-paid rent
Best Practices and
Operational Tips
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Renting to Businesses
• Tips for renting to businesses
• Delinquent tenants storing property used in running a business (no special rules)
• But be careful…
Best Practices and
Operational Tipspg 192-194
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Pest Control
• Apply your own pesticide or hire a licensed professional?
• Treating units, both leased and vacant
• Treating workplaces
Best Practices and
Operational Tipspg 208
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Guidelines for Break-ins
• Secure the unit
• Notify the tenant
• Complete an incident report
• Tenant notifies police and their insurance company
Best Practices and
Operational Tipspg 197-199
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LIABILITY and Other Important Issues
Sales Tax • Vehicle & Trailer Parking/Storage
• Sale of goods/merchandise
• Services
• Giveaways
• POD rentals
Liability and
Other Important Issuespg 220-225
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Americans with Disability Act (ADA)
• 1991 standards vs 2010 standards (effective March 15,2012)
• “Readily achievable” test
o Easily accomplished and able to be carried out w/out much difficulty/expense
• Scoping requirements (how many units meet standards)o 200 or < units, 5% accessible
o > 200 units, 10 units, plus 2% of # of units over 200 accessible
• Dispersion requirements (what kind of units meet standards) o Accessible units in each “class” of unit
Liability and
Other Important Issuespg 113-114
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Smoke Alarms in On-Site Residences
• Smoke alarms in every bedroom (effective Jan 1, 2013)
• In good working order
• Duty to inspect & repair
Liability and
Other Important Issuespg 124-126
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Credit or Background Checks
• Permission from tenant?
• Federal Fair Credit Reporting Act (FFCRA)
• “Adverse action” requirements
Liability and
Other Important Issuespg 167-169
#TSSALegal
Credit Card Fraud Liability Law • EMV (chip card) is the new standard
• Businesses that have not upgraded to EMV payment terminals will be liable for
fraud that occurs on an EMV-ready credit card
• Shift in liability in the credit card policies and not a change in the law
Liability and
Other Important Issuespg 211-213
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LEGAL CASES and Trends
• Class action lawsuit regarding insurance Bowe v. Public Storage
• Unpaid overtime lawsuitAlford v. Metro Mini Storage, Inc. et al.
Legal Cases
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Group Activity
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3/21/2017
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Group Activity
Scenario 1: Delinquent tenant left behind old TVs to
cover any remaining rent
Scenario 2: Delinquent tenant with vehicle and a
separate motor in the unit
Scenario 3: Units with no lease being used to store
seized items
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Open Q&A
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Thank You to Our Sponsors
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