The Maryland House of Delegates is considering a bill that would change the state’s self storage lien law by making print advertising of storage auctions optional, sparking resistance from newspaper associations that say the changes could harm unit tenants.
House Bill 786, introduced Feb. 13, would allow for storage unit auctions to be conducted so long as they are advertised in any “commercially reasonable manner,” which has been defined as any method of advertising that results in obtaining a minimum of three potential bidders, according to House Bill 786.
Currently, auctions must be advertised in a general circulation newspaper in the same area where the auction is held at least three days prior to the auction.
Officials at The Maryland-Delaware-D.C. Press Association (MDDC), which advocates for free and open press, said the definition is too broad, and removing the requirement for print advertising eliminates a back-up method for notifying defaulted tenants.
“Self storage companies basically could post something on social media or send out an email to five of their friends and, so long as at least three of them show up, that would be considered reasonable advertising,” said MDDC Executive Director Rebecca Snyder. “We want to see more transparency in these auctions.”
People using self storage units are typically moving around a lot, Snyder said, and print ads act as another system of notification for them before their things are sold.
Under Maryland lien laws, unit owners are able to pay the necessary amount at any time before the auction and receive their property, according to section 18-504 c. of Maryland’s lien law.
“This is a vulnerable group of people and because they’re moving around, efforts to notify them over email or phone might not be successful,” Snyder said. “Ads in community papers are the strongest, most consistent way to notify people, especially when property is being taken.”
Jeffrey Greenberger, a lawyer who practices self storage law at the Cincinnati law firm Katz, Greenberger and Norton, LLP, disagrees.
“A lot of people think that the newspaper advertising is another way to warn the tenant but I’ve contended for years that if they are not going to keep up with their email or phone they are probably not flipping through the legal notices,” Greenberger said.
Senators proposed a similar change to storage auction advertising in a senate bill in 2013, but the changes that would make print advertising optional did not pass, according to Senate Bill 634.
This time around the entire Maryland House Economic Matters Committee has signed on to sponsor the bill.
“My understanding of the bill is that it simply gives more options. It doesn’t mean that there will be no print ads,” said Delegate Sally Jameson, vice-chair of Maryland House Economic Matters Committee. “(The method of advertisement) will be in the contract, so when somebody signs to rent a unit they will know up front how an auction of that unit would be advertised.”
Snyder said more clarity is needed.
“In the bill you see a lot of the phrase ‘specified in the rental agreement,’ but when people are in transition, in a hurry, very few people are actually going to read through all of the fine print,” Snyder said. “It takes advantage of many renters.”
Greenberger said removing print advertising will actually help defaulted tenants.
According to section 18-504 a. of Maryland’s lien laws, when a tenant neglects to pay the rent on their storage unit for more than 60 days, the facility operator, after notifying the tenant twice, is permitted to hold an auction to sell the contents of the unit in order to pay off the tenant’s debt. The operators do not profit from the auction. The proceeds first go to pay back the unpaid rent. Any leftover money goes to the tenant.
“If we cannot get the tenant to pay the next best option is to sell their stuff so they are not left with indebtedness and maybe even get them a little bit of a rebate,” Greenberger said. “The storage operators don’t want to sell tenants’ belongings, they just want to be able to rent the unit out.”
When a tenant goes into default they accumulate fees, Greenberger said.
“The cost of print advertisements publicizing the unit auction is added to the tenant’s fees,” he said. “The benefit of eliminating necessary print ads is the reduction in costs to the tenant. I’m not hell-bent against newspaper advertising, it just costs a lot to the tenants and isn’t as effective anymore as, say, online advertising, in gathering potential buyers.”
Delegate Dereck Davis, chair of the Maryland House Economic Matters Committee, did not respond to requests for comment.
The hearing will be held March 4. If passed, the legislative changes would take effect Oct. 1.