A guest installment by Tony Jones, Manager, Inside Self-Storage Store
Two years ago, attorney Jeffrey Greenberger, a partner with the law firm Katz, Greenberger & Norton LLP, identified reality television shows like Storage Wars and Auction Hunters as the No. 1 legal threat to self-storage operators. Although Greenberger acknowledged that these shows have done some good for the industry, he also warned they were dangerously shaping public perception about storage lien-sale auctions and highlighted some business practices that could put facilities at risk.
If youre one of the facilities where the show is filming, youre creating Exhibit A in a wrongful-sale triala videotaped, nationally televised copy of this particular lien sale for the tenant and his lawyer to pick apart, he wrote in an article for ISS. As a lawyer, I see errors made in these sales, and it drives me crazy. I keep wondering, when is a tenant going to watch his own goods being sold on national television, recognize the facility did something in error, and file a lawsuit for violations, using the taped raw or edited footage of the sale as proof positive?
Many self-storage facilities have seen an increase in attendance at lien-sale auctions, partly because Storage Wars and other shows perpetuate the notion that buying the contents from a unit in default is a lucrative business opportunity. Inexperienced and novice buyers may become angry when they discover the property they have purchased wont make them rich, and they might not even recoup the amount they spent on the unit. Not only could a former tenant or disgruntled buyer file suit against a facility, his claims may be viewed favorably by a judge or jury whose perceptions about self-storage auctions are also influenced by what they have seen on television.
All of this could be coming to a head in a very public way now that ousted Storage Wars star David Hester has filed a wrongful-termination lawsuit claiming, in part, that the shows producers frequently place valuable items in units up for auction. He also alleges that some of the planted items belonged to the shows stars, while others were borrowed from antique dealers in exchange for an appearance on the show.
A&E, which televises the show, has apparently been silent on many of Hesters claims, but contested the suits charge that it engaged in unfair business practices, according to an article posted on industry blog The Storage Facilitator. Responding to earlier inquiries about the shows authenticity, A&E released a statement saying, There is no staging involved. The items uncovered in the storage units are the actual items featured on the show.
That last tidbit is certainly curious, isnt it? Hester included the statement in his lawsuit. If I were A&E, Id try to delay [the lawsuit] two or three years. The show will probably run its course by then, The Facilitator quoted Greenberger.
If Hesters charges are true, the question is whether the shows participating facilities have been complicit in staging units and misleading auction buyers and the viewing public. Even if they havent actively participated in such behavior, what is their liability? What are the lasting beliefs held by would-be or seasoned auction buyers?
Regardless of the outcome of Hesters legal battle, the problem for operators going forward is they are up against buyer expectations based on what may be hidden inside a unit rather than what is plainly visible. In a wrongful-sale lawsuit, who is a judge or jury most likely to believe? From now on, were going to be in a battle to disprove the value of every item instead of trying to make the tenants prove there was value to their items, Greenberger said.
The full ramifications on the industry from Hesters lawsuit are not yet known, but Greenbergers warnings should give plenty of operators food for thought about how they are currently running their auctions. He even recorded a video for the Inside Self-Storage Store in which he discusses 10 ways reality TV can negatively impact facility operation and provides suggestions for avoiding unnecessary litigation.
He has recorded two other ISS Store videos as well, one discussing words and phrases to avoid in your business and another focusing on important rental-agreement issues. All three are conveniently bundled into a Self-Storage Legal DVD 3-Pack that offers significant savings from buying the videos or DVDs individually.
Now is the time to make sure your lien-sale procedures and auctions are impeccable with as little risk to your business as possible. To help in this endeavor, Greenberger is involved in an interesting venture called Late2Lien, which offers a tool that automates the process of properly completing and sending late and lien notices to self-storage tenants and provides verifiable service and tracking of each step throughout the process. Late2Lien will be exhibiting in booth #210 during the Inside Self-Storage World Expo in Las Vegas.
Greenberger will also present two seminars as part of the expo's education program as well as a four-hour Legal Learning Live workshop. The expo will take place at the Paris Hotel & Resort.
No matter what happens in the Storage Wars lawsuit, its never a bad time to ensure your self-storage business is protected and as legally sound as possible. Have you experienced issues during recent lien-sale auctions that you would attribute to the changing perceptions facilitated by self-storage reality TV? If so, share your stories in the comment section below.