Lien sales are a reality in the self-storage business, but few owners and operators are experts at handling the ever-changing legalities surrounding these sales. That’s not to mention having to stay on top of tracking late payments and sending late notices to tenants.
“I have a very large client that says this is the pain point of his business, and it exposes him to $1 million of liability,” said Jeffrey Greenberger, founder of Late2Lien and a partner at law firm Katz Greenberger & Norton LLP in Cincinnati.
Greenberger often reviews rental agreements and legal documents for self-storage operators. With the establishment of Late2Lien, he set out to automate the process so that his clients know they’re always using the correct documentation, following the correct legal procedures and notifying their tenants on a set schedule.
How It Works
Late2Lien automates all late and lien notices, with an option to include all the postings that are required to take a storage unit through to sale.
“It’s a compliance business,” Greenberger said. “You tell us what date to take over looking for a late tenant — Day 1, Day 15, Day 15, it doesn’t matter. You give us access to your management software with a special password, and if anyone has jumped over the fence, we take the information we need out of your software and we begin the process of processing them through the whole procedure.”
Late2Lien first checks the tenant’s military status. Without a court order, it’s illegal to sell the contents of a storage unit rented by a military member or dependent when the military member is deployed. Late2Lien then does a thorough check on a postal database for any addresses for the tenant.
“My job is to make the forms legally compliant in every state, to make sure those notices are what the law requires,” Greenberger said. “We send it the way the law requires, and we process any returns.”
Other complicating factors for self-storage operators are legalities surrounding sales. Some states require the use of auctioneers, who typically schedule sales a year in advance. Other states allow online storage auctions. Some states require placing newspaper ads to promote storage auctions.
The Late2Lien tool incorporates external dates — such as newspaper publishing dates and scheduled auction dates — into the equation so that operators can easily process lien sales.
Operators can monitor the progress of their liens at a glance on Late2Lien’s secure online portal.
“What we tell our clients is that it’s a liability-sharing agreement,” Greenberger said. “You are responsible for keeping the data good, keeping the addresses right and getting the names in there right, and we’re responsible if the notice is wrong. If we make a mistake, then we’re liable.”
Greenberger said it’s common for self-storage managers to use old forms that were filtered through several previous managers and no longer are being filled out properly.
“We’re going to take that [responsibility] away from the manager and let them do what they do best, which is work with customers and [improve] curb appeal,” he said.
Faster Payments, Peace of Mind
Since rolling out in 2013, Late2Lien has earned several loyal fans in the self-storage community, including large nationwide operators and mom-and-pop facilities, according to Greenberger.
“One of our biggest clients have run a study, and they concluded that every tenant that goes into a lien status probably costs them in time and lost productivity about $60, between [generating] notices, updating software and running to the post office,” Greenberger said.
In addition to adding a layer of checks and balances, Late2Lien also speeds up payments. Greenberger said the automated tool eliminates the manager’s ability to grant leniency to late payers — tenants “have a very hard, fast deadline, and they are regularly reminded of that hard, fast deadline.”
Robert Broadbent, owner of Foothill Mini Storage in Nevada, is one of Late2Lien’s customers.
“Implementing Late2Lien brought us a 36 percent increase in collections by accurately and consistently automating the lien process,” Broadbent said. “Time savings free up my managers who now have time to follow up on leads, and I worry less about lien sales. Managers and I know that documents are accurate and stored safely.”
Paying for It
Late2Lien costs $12 per use, plus postage costs. Quantity discounts are available. Greenberger suggests that operators include the expense in the rental agreements so that they can recover that money.
“These laws are changing,” Greenberger said. “From an operator perspective, not having to hire [an attorney] every time the lien law changes” results in significant savings over time.