The Organized Life

How Storage Auctions Work

Self storage auctions have gotten a lot of attention lately on the TV show “Storage Wars”. Though most self-storage companies have never participated in that show, many (if not all), do host auctions throughout the year.   

Self-storage companies sell the contents of customers’ spaces to recoup losses only after the customer has failed to pay rent for a period of time set by law, and has not responded to several formal requests for payment in writing and by phone.   This lien process is governed by state laws that control every step a self-storage company should take.  There is also government oversight to ensure these rules are followed. 

A self-storage company can only reach its customers with the address, phone number and email provided by the customer.  It is therefore imperative for customers to keep this information up to date. Otherwise, important account alerts and notifications will be missed. 

 “The auctions are a somber occasion for us; we’re human beings too,” says a self-storage industry vice president who would like to remain anonymous. “When we have a self-storage space and sell it because the person didn’t make the payments as agreed, we know that these are someone’s personal belongings. We don’t like it but we have to do it.” Many self-storage companies require that the successful auction bidder return personal items such as photographs, tax records, and bills or passports that are found in the storage space back to the storage company’s office. The customer then has a certain period of time (e.g. 30 days) to pick them up at the office, frequently at no charge. The customer may also be able to contact the office and ask to have their contact information given to the buyer to allow the buyer the option of returning any property back to the customer.

An auction is the ultimate result of a lien. A lien is a right to hold property belonging to another person until the debt owed by that person is paid. If the debt is not paid, that lien right permits an operator to sell the customer’s goods to pay the debt. These lien sale auctions, however, seldom bring in enough money to cover both the rent due and the cost of holding the sale. Auctions also are time-consuming and take employees away from their regular job duties. In short, self-storage companies strongly prefer that their customers pay their rent on time because an auction is almost always a money-losing proposition.

If the auction sale does not cover the balance owed by the customer, the remaining amount due often goes to a collection agency. If the auction brings in more, the excess is sent via check to the customer as legally required. Any such checks that are returned by mail as undeliverable are deemed abandoned property and disbursed as required by the applicable state law.

Beyond the prospect of being auctioned, getting behind on rent payments is problematic for the customer in other ways as well.  Once a customer falls behind on rent, it can be difficult to catch up as late and then lien fees are also charged to cover the costs of collection.

Customers often ask for leniency or payment plans to help pay down their balance, but unfortunately, it is often not possible for self-storage companies to grant those requests unless the customer is prepared to terminate the lease and move out at the same time. Generally, if a customer wants to stay, the balance must be paid in full by the customer to avoid going to auction.