Sunday, August 24, 2014

South Carolina Updates Lien Law

South Carolina is the latest state to update its legalization that affects self storage operations. House Bill 3563 will amend previous legalization in the state as it related to allowing self storage facilities to communicate via electronic communication in the event that rent is seven or more days past due.

Currently, self storage operators are allowed to communicate information on the sale of the contents in past due self storage units by placing a notice in the newspaper. Instead, the bill would allow self storage owners and operators to send this information in a “periodical” or “commercially reasonable” medium. However, the terms relating to which medium should be used are not clearly communicated in the bill.

There is already opposition of the bill with persons arguing that the altering of the notification process will eliminate public service, which is problematic for interested parties such as ex-spouses, children, family members and others who may have a claim in the property being sold.

Members of the Seminole County Property Appraisers (SCPA) are arguing that the bill is mistakenly assuming that a lien sale advertisement is solely to attract speculators. Instead, they are positing that the purpose is also to inform the community of what is going on in order to give relatives and others with a relationship to the tenant the opportunity to pay off the account and claim the property. The ambiguity of the term “periodical” is also a point of contention since it could be placed in a private publication with limited notification to the public. Also, the SCPA is contending that the lack of transparency in the process could result in insider bidding, where all bidders are familiar with each other. The primary argument being made by the SPCA is that the current notification system is not broken so there is no reason to change it.

However, the bill is supported by both the South Carolina Self Storage Association and the national Self Storage Association. Proponents of the bill argue that the process would allow the consumer debt to be properly absolved, which lessens the burden on the self storage operator.

An important point to note is that the tenant must waive his or her right to be notified in writing and consent to the electronic notification. Therefore, the majority of the concern from the SPCA would not be valid since the tenant would have the opportunity to decide what he or she would like to do in the event of delinquency. The bill would be effective as soon as the governor of South Carolina signs it.


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