There are three S words you never want to hear in the operation of your self-storage business: search (as in warrant), subpoena and suit (as in lawsuit). But whether you want to want to hear them or not, these things can occur. You need to understand what they are and how to address them.
Search Warrant
Let’s start with the simple one: search warrant. This is a document signed by a judge that gives police or other law-enforcement authorities the right to enter and search a property and seize certain materials. If you’re lucky enough to be told a warrant is being executed at your facility, you may not interfere. You shouldn’t tell the tenant the warrant is being executed, either. The best you can do is offer your lock-cutting tools so police don’t ruin your door while removing the lock on the unit.
Make sure the officer tells you when he’s done so you can determine whether you can re-secure the space. If you re-lock it too early, it might lead to a charge against you of tampering with evidence, which you don’t want. Yet, if there’s still property in the space once the police have completed their work, you should secure it.
Sometimes a search warrant removes all property from the unit. In this case, document that nothing was left. After waiting a few days, you can put the unit back up for rental, unless you hear otherwise from the tenant.
Subpoena
Subpoenas are more interesting. These documents are served from various people, normally attorneys or law enforcement. They seek the production of specific information or documentation, or compel you to appear and testify at a court proceeding.
If there’s good news about a subpoena, it’s that you’re supposed to get time to respond to it. This gives you the opportunity to turn it over to your attorney, who will help you understand exactly how to answer.
Not every subpoena is issued properly, and there are consequences for responding to an incorrectly issued subpoena. For example, subpoenas often ask for things that may not exist, and you can only respond with information you actually have. You may not provide alternative information or more than what the subpoena asks. Therefore, your attorney should always look at any such paperwork.
If you’re subpoenaed to appear somewhere, it may be because the person issuing the subpoena doesn’t know what to ask for, so he wants to compel you to testify. Often, your attorney can work out a production of documents in lieu of your appearance, saving you a trip to the courthouse or a deposition.
I’ve seen a spike in the number of subpoenas issued to storage facilities by the federal government, particularly from organizations such as U.S. Immigration and Customs Enforcement. Often, these are blanket subpoenas asking for all sorts of information. Your attorney can usually work through these agencies to narrow down the scope of the request.
Remember, anytime you turn over documents under a subpoena, particularly one from the federal government, these records can become public. It’s not desirable to turn over your entire tenant list to immigration just because it’s looking for one person. Your attorney can be extremely valuable in negotiating that response down to a manageable amount of data.
Lawsuits
While no one likes to get sued, we live in a country that’s extremely litigious, and it’s likely you’ll be sued at some point. When you’re served with a lawsuit, there will always be a summons attached or enclosed that will tell you when and where you have to appear, or when you have to answer the lawsuit to avoid a default judgment against you.
This is perhaps the most important thing you can understand about a lawsuit. If you’re sued and served and you don’t respond in time or at all, the court doesn’t take your failure to appear as denial of liability. Rather, it takes it as acceptance of the allegations made in the lawsuit and will grant a default judgment against you. It’s always important to act immediately on any lawsuit you receive, no matter how mindless or baseless it is, with your attorney. This isn’t a field in which you’re accustomed to playing. You don’t understand the rules or how to even play the game. There are tight deadlines associated with any lawsuit. Missing them can cost you, even up to losing the case.
Many self-storage operators have insurance that might cover a lawsuit. However, all insurance policies contain a provision that requires you to report any claim asserted against you within a certain period of time; if you fail to do so, you waive your coverage. In other words, if you don’t tell your insurance company about a lawsuit filed against you within the time period outlined in the policy, it doesn’t have to pay the claim, even if the suit grows and becomes larger than you expected.
Never ignore or put off a lawsuit. Get in touch with your insurance carrier and lawyer right away so you don’t find yourself losing a bogus complaint on a technicality.
While no self-storage owner wants to face a search warrant, subpoena or lawsuit, any of these legal situations can—and will—happen. Understand your rights, seek advice from your attorney, and follow the law to ensure you and your business are property protected.
This column is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney.
Jeffrey J. Greenberger is a partner with the law firm Katz, Greenberger, & Norton LLP in Cincinnati and is licensed to practice in the states of Ohio and Kentucky. Mr. Greenberger’s practice focuses primarily on representing the owners and operators of commercial real estate, including self-storage owners and operators. His website, www.selfstoragelegal.com, contains legal opinions and insights as well as an article archive. You can send your questions, comments or suggestions for future topics to [email protected].
