YOUR LATEST NEWS & RESOURCES
We have compiled the latest news and resources related to the self storage industry in your state.
The Dakotas Self Storage Association, together with the national Self Storage Association, has been collaborating on how best to update North and South Dakota’s lien laws. If you are interested in helping with this effort, have a relationship with our policymakers, or would otherwise be interested in writing letters of support or testifying on behalf of the industry, please let us know.
LEGAL UPDATE SUMMER 2022
South Dakota Lien Law Significantly Updated. The SSA and the Dakotas Self Storage Association obtained a significant overhaul of the South Dakota lien law that addresses most of the SSA’s priority issues. South Dakota House Bill 1289 was signed into law by Governor Noem in March and took effect on July 1, 2022.
House Bill 1289 amended the lien law as follows:
Newspaper advertising. Many state lien laws require one or more advertisements in the newspaper before an operator may proceed to sale. Under previous law, South Dakota owners were required to advertise the sale twice in a newspaper of general circulation prior to sale. Now, South Dakota owners must only advertise the sale once in a newspaper of general circulation.
Further still, the law permits owners to bypass the advertising requirement entirely for units valued at $300 or less. The law now states, “after the time specified in the notice given under this section expires, if the owner determines, based on the owner's previous experience, that the personal property subject to the lien created has a value of $300 or less, the owner may dispose of the property at the owner's sole discretion.” However, owners should be cautious when using this disposal remedy. Owners can expose their business to potential legal lability if they assume the property is worth less than $300 when it was worth more and the occupant challenges the sale. When in doubt, always assume the property is worth more than $300 and advertise and conduct the sale. The sale will conclusively prove the value of the property in the unit.
Notice by email. Many self storage tenants are in transition and prefer to receive lien and other notices via email. Unlike physical addresses, email addresses typically remain the same when an individual moves. South Dakota operators will soon be able to provide notice via email. However, if they do not already do so, owners must amend their rental agreements to provide space for the occupant to disclose the email address, if the owner wishes to provide notice in that manner. Unlike other states, South Dakota does not require a specific demonstration of delivery or a response.
Contractual value limitation. Many operators include in their rental agreement a limitation of the value of the property that the tenant may store in the unit. Value limitations are a necessary tool for operators because they have no reasonable means to know the type or value of property that customers are storing on a self-service basis. In the event of a lawsuit, this is a powerful tool to reduce any potential damages owed to a tenant. Statutory recognition for this type of provision was included in the 2022 amendments. If any South Dakota operator has not already done so, we strongly recommend that all operators amend their rental agreement to include a value limitation to protect their business.
Optional towing. Many storage operators do not want to go through the process for selling titled property. The process can be cumbersome, and many operators are not frequently called upon to conduct these sales. Towing avoids the need for a sale and allows operators to return the space to inventory faster. Starting July 1, 2022, if the personal property subject to the lien in is a motor vehicle, boat, trailer, snowmobile, or off-road vehicle, and rent or other charges remain unpaid for sixty (60) days, the personal property is considered abandoned and the property may tow the personal property using the process prescribed in §§ 32-36-8 to 32-36-11. Operators should consider amending their rental agreements to inform occupants of this optional remedy.
Ownership disclosure. The 2022 amendments require that South Dakota storage owners amend their rental agreements to provide a space for the occupant to disclose any other party with an ownership interest in the stored property. Failure to disclose another party permits the owner to conclusively determine that the occupant wholly owns everything in the unit. If another party is disclosed, the owner must send the required notice to those individual(s) in addition to the occupant and any lienholders. South Dakota owners should ensure that all rental agreements entered into, extended, or renewed after July 1, 2022 have space for the occupant to disclose another party with an ownership interest. For existing tenants who prove difficult to locate to execute a new rental agreement, we recommend sending them a notice to their last known address that informs them of the change in law and requests that they inform the owner of any property in their unit that is owned by another party. That notice should be saved in the occupant’s file.
Online sales. The law now expressly permits owners to conduct lien sales online as opposed to exclusively in-person at the facility. Online sales expand the audience of potential bidders by allowing bidders to submit bids without attending a one-day sale in person. More bidders increase the likelihood of higher bids. Online auctions provide an optional mechanism for the owner to conduct lien sales. Online auctions can also allow owners to return units to inventory more quickly rather than waiting for multiple delinquent tenants to justify the time and cost of a live auction. Some owners feel in person is better for their specific facility and clientele, while others believe online auctions provide greater access to additional bidders that drives prices and is appropriate for their facility. South Dakota owners can now use either option. Regardless of the method of sale chosen, owners must ensure that their default notices reflect the accurate location of the sale -- an online auction website or a physical address for an in-person sale.
Excess proceeds. In the unlikely event that the sale generates more than the outstanding debt, the owner must hold the balance for delivery on demand to the occupant. If the occupant does not claim the balance of the proceeds within three (3) years of the date of sale, the proceeds must be paid to the Office of State Treasurer as unclaimed property pursuant to Chapter 43-41B.
The updated Annotated South Dakota Lien Law analyzes all of the new amendments and provides recommendations for implementation is available here.
LIEN LAW UPDATES
North Dakota Lien Law - August 2021
South Dakota Lien Law - August 2021
BUILDING CODES UPDATE
Changes to the International Building Code Affect Self Storage
With the support of its Code Committee, the Self Storage Association successfully pursued several key changes to the 2021 International Building Code.
- An exception has been added to IBC Section 2902.3.3 to permit an increase in the location (to greater than every other floor) and maximum distance of travel (to greater than 500 ft) for restrooms. The location and travel distance must be approved by the code official.
- The maximum allowable height of sprinklered facilities made of Type IIB materials (unprotected steel) and Type IIIB materials (noncombustible or fire-retardant-treated wood stud exterior walls and any interior construction) has been increased from 3 stories to 4 stories. The Code continues to have total floor and building square footage limits.
- Pursuant to modified IBC Section 903.2.9, storage facilities are exempt from the automatic sprinkler system requirement if: (1) the total fire area is 12,000 sq. ft. or less; (2) the combined total fire areas are 24,000 sq. ft. or less; (3) the facility is no greater than one story above grade plane; and (4) all storage spaces are accessed directly from the exterior.
These changes go into effect as they are adopted by local and state governments over the next several years. Prior to the adoption on the local and state level, storage developers can request that the code official rely on the 2021 changes as acceptable alternative methods of construction pursuant to section 104.11 of the existing International Building Code.
Please email Joe Doherty with any questions or to receive supporting documentation for these changes.
North Dakota Gov. Burgum signed SB2330 http://ow.ly/NmBa50E8uni into law on March 24, 2021. The law addresses all of the SSA’s priority issues and takes effect on August 1, 2021. SSA is preparing a manual that explains the new provisions of the law, which will be available soon.
North Dakota Lien Law Significantly Updated
The SSA and the North Dakota Self Storage Association obtained a significant overhaul of the North Dakota lien law that addresses all the SSA’s priority issues. North Dakota Senate Bill 2330 was signed into law by Governor Burgum and takes effect on August 1, 2021.
Newspaper advertising. Many state lien laws require advertisements in the newspaper before an operator may proceed to sale. Generally, in those states, the operator must advertise once or twice in the newspaper before the sale. Starting August 1, 2021, North Dakota storage operators need not advertise in the newspaper but must advertise the time, place, and terms of the sale in a commercially reasonable manner at least seven days before the sale. An advertisement is deemed commercially reasonable if at least three (3) independent bidders attend the sale in person or online at the time and place advertised. North Dakota operators will now be allowed to advertise online through auction websites and sites such as Facebook Marketplace and Craigslist.
Notice by verified mail. North Dakota operators will soon be able to send required notices via verified mail, which is a term of art and includes U.S. Mail with certificate of mailing. U.S. Mail with certificate of mailing provides proof that the notice has been sent and automatically forwards to a new address. This provides a greater assurance that the tenant will receive the notice and is less expensive than certified mail.
Notice by email. Many self storage tenants are in transition and prefer to receive lien and other notices via email. Unlike physical addresses, email addresses typically remain the same when an individual moves. North Dakota operators will soon be able to provide notice via email.
Contractual value limitation. Many operators include in their rental agreement a limitation of the value of the property that the tenant may store in the unit. Value limitations are a necessary tool for operators because they have no reasonable means to know the type or value of property that customers are storing on a self-service basis. In the event of a lawsuit, this is a powerful tool to reduce any potential damages owed to a tenant. Statutory recognition for this type of provision was included in the 2021 amendments.
Optional towing. Many storage operators do not want to go through the process for selling titled property. The process can be cumbersome, and many operators are not frequently called upon to conduct these sales. Towing avoids the need for a sale and allows operators to return the space to inventory faster. Starting August 1, 2021, if the personal property subject to the lien in North Dakota is a motor vehicle, watercraft, or trailer, and rent or other charges remain unpaid for sixty days, the owner may have the property towed in lieu of selling it.
Late fee safe harbor. Once the law takes effect, North Dakota operators will be expressly permitted by statute to charge a late fee of twenty dollars or twenty percent of a delinquent monthly rent payment due under the rental agreement, whichever is greater, for each delinquent payment of rent, fees, or other charges due under the rental agreement.