Changes in CO Storage Lien Laws

On August 10th, a new Self Storage Lien statute took effect in Colorado. The old statute, which was passed in the 70's, had become obsolete and needed updating.

The Colorado Self Storage Association (COSSA), in conjunction with the National Self Storage Association (SSA), proposed an update to the statute. Schur Success Auction & Appraisal appeared before both the Colorado House and Senate to testify on behalf of COSSA. After a little tweaking, the bill received full support from both houses. The bill was passed, and became effective last week.

The changes are significant for owners/operators, but have little impact on storage buyers. Nonetheless, you need to know about them. There are 4 key changes.

1) Sheriff notification

2) Legal Notice - publication

3) Default notification / email & verified mail

4) Vehicles and Personal watercraft.

The first has little impact on anyone.

1) Sheriff Notification:
The old law required that a duplicate copy of the lien notices be sent to the Sheriff for the county where the facility is located. The Sheriff's have been asking operators for years to stop sending the notices, but the statute required this notice. No longer!

2) Legal Notice / Publication:
The most significant change is the posting of legal notices in the local newspaper. When the law was passed, there was no such thing as the internet,, Facebook, or Google. Newspaper legal notices were necessary to both a) notify the renter of a default) and b) notify the public of a pending auction. Clearly, technology has surpassed the statute.

Although some bidders use the legal notices to learn about the auctions, the vast majority of bidders use the internet to locate sales. Of those bidders that still use legal notices, most do so to see the inventory, not the details of the sale. Legal notices can cost hundreds of dollars for each posting and did little to resolve the problem.

The new statute changes the legal notice from a requirement to an option in most cases. The law now requires that the operators must advertise in a "commercially viable manner" that draws at least 3 independent bidders. If they can bring three bidders, they do NOT need to publish. In rural areas, that may be difficult, but clearly it's not an issue in metro areas. So, no more legal notices in the City.

3) Default Notification:
The next significant change is in HOW owners notify renters that they are in default and that they are risking an auction. The revised statute allows for e-mail notifications and no longer requires "certified" mail. There are some contractual requirements between the renter and the owner to meet this new standard.

4) Vehicles and Personal Watercraft:
The last significant change has to do with vehicles, motorcycles, boats, personal watercraft, and other such things that have titles. Previously, owner/operators had to go through a very lengthy process to conduct vin verifications, tile searches, post bonds, etc., just to sell a vehicle.

The new provisions allow an operator to simply have the vehicle removed by a licensed tow company after 60 days. This means storage auctioneers are not likely to be selling these vehicles. If found inside a unit, we'll sell everything EXCEPT the vehicle.

These changes have little impact on buyers, but really streamline the process for the operators. None are designed to make any more money for the operators, but rather are designed to make it easier to recover their losses and to bring the statute current with technology:

Summary:

The information above serves only to highlight some of the significant changes in the statute, and are not intended to be relied upon as legal advice. You are encouraged to study the statute yourself, and contact competent legal counsel prior to acting on this information.

REFERENCE: Colorado Revised Statutes (CRS) 38-21.5-101 to 38-21.5-105. The statute specifically states that operators who fail to follow the statute may be subject to liability.

For additional information, contact Rich at Success Auction & Appraisal, Inc.

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