Storage unit auctions are an important part of owning a storage facility. If you are new to the self-storage industry, you can imagine it is not a fun experience to have to sell belongings of delinquent tenants. There are many misconceptions in regards to what, when, and how a storage unit auction works. So before you work on scheduling an auction for a delinquent tenant, here is what you need to know.
What is a Storage Unit Auction?
First, it is important to understand that the procedures surrounding Storage Unit Auctions are strictly governed by state laws and regulations. As a storage unit owner or manager, you will want to reach out to your states Self Storage Association to ensure that you are following the correct procedures. To find more information about where to find state auction information visit: https://www.selfstorage.org/
Second, profits made from the storage unit auction goes to the dues owed on the account and any additional amounts earned are subsequently returned to the storage unit tenant. Depending on the laws of your state, if the tenant does not claim the money it may have to be sent to the Secretary of Revenue. The storage facility owner doesn’t make any profit by hosting storage unit auctions.
Third, facilities are required to provide public notice of the lien sale and allow past-due tenants to pay their bills and reclaim their possessions and to make the public aware of the upcoming auction. General places to advertise this information is online and in a local newspaper. Double-check if there are any requirements for your state in how you give public notice about the lien sale.
How Does a Storage Unit Auction Work?
An auction can take place after the state-designated time restrictions. For example, in Pennsylvania, the lien (auction) process starts once a tenant is 30 days past due. Once the process is started, you need to follow the regulations by the state in announcing and preparing for the auction.
Before an auction takes place, the rules will be announced to those in attendance. Everyone looking to participate should sign in with a valid id, phone number, and email address. Attendees should sign a form stating they understand the rules of the auction.
Bidders can bid on the contents of the units up for auction. This takes place by usually looking through the entrance of the unit and taking note of the contents inside. Once each bidder has been able to examine the unit, the live auction starts and the unit is sold to the highest bidder. Just like in the reality tv show, Storage Wars, bidders can only bid on the entire contents of the unit.
What Happens After the Bidding?
Bid winners have an allotted time to pay for the unit. Generally speaking, payments are required immediately after the auction. Depending on the rules surrounding the auction, certain payment options might not be accepted. A general rule of thumb is that that storage unit auction is cash only events. Attendees need to be made aware of such payment requirements prior to the event start. Also, depending on the state sales tax, it might be applicable at the time of payment.
Once payment is received you can then set a move out time for the new unit owner to remove the contents of the units. If you do not review the contents of the storage unit prior to the auction, inform the buyer to please return any personal items such as legal documentation, photo albums, and other general sentimental items back to the office.