2012 Self-Storage Lien Bill

(Effective January 2012)

Self-Storage Bill
This bill is effective January 1, 2012.  Current law is still in effect until then – for example, you may NOT use “verified mail” for legal notices prior to 1-1-12. (Self Storage statute modernization (SB 690).  This was the bill introduced at the request of TSSA.  The bill was sponsored by Senator John Carona in the Senate, and Representative Sid Miller in the House. 

Summary: 
In summary, the bill accomplishes the following:

  • alternatives to certified mail currently required (verified mail for Notice of Claim and Notice of Intent to Sell); (email for Notice of Claim IF lease contains the required new notice language)
  • additional protections for military servicemembers (this will necessitate using a revised Notice of Claim as of 1-1-12)
  • consolidates all self-storage laws into Ch. 59
  • expressly exempts self storage from falling under Texas Health Care Privacy law
  • clarifies timeline
  • removes the requirement to send Notice of Claim to lienholders (back to sending it only to the tenant/vehicle owner) in “special” vehicle forelosure sales

Mandatory “action items” as a result of the bill:
you must use a revised Notice of Claim form as of 1-1-12 (see “Additional Protections for Servicemembers: Notice of Claim” section below) if you desire to use email to send Notices of Claim as of 1-1-12, you must use a new lease with the required notice language, or update your  existing lease to contain the required notice language (see “Alternatives to Certified Mail” section below, and the separate article in this publication titled “Changes Needed to Self-Storage Forms in Light of 2011 Legislative Session”).

Further Detail:
Alternatives To Certified Mail: “Verified” Mail and Email
Under current law, the Notice of Claim and (in special foreclosures) Notice of Intent to Sell (to lienholders) must be sent certified mail (over $5 / letter with return receipt).  As of 1-1-12, these notices may be sent by any method of mailing that provides evidence of mailing,  e.g. delivery confirmation (80¢), certificate of mailing ($1.15), signature confirmation ($2.45), Fed Ex, etc. 
 
As of January 1, 2012, the Notice of Claim (but not the Notice of Intent to Sell) may instead be sent by email IF (and ONLY if) the lease contains conspicuous language that notice may be given by email if the tenant elects to provide an email address.  You MUST have a new lease, or a lease amendment, in order to use email notice in lieu of mail notice. 
 
Keep a record of any email and mailing so that, if questioned, you can prove that you sent the Notice of Claim in accordance with the legal requirements.  If sending the Notice of Claim via email, at minimum, you can “copy yourself” on any email sent and make sure you can access that copy on your email for at least four years (the statute of limitations for breach of contract actions).  Ideally, though, talk to your IT expert and determine the best way to archive sent email, so that if necessary, you can prove that you sent the Notice of Claim via email. 

Additional Protections For Servicemembers: Notice of Claim
As of 1-1-12 the Notice of Claim must contain special “military” language requesting any tenant in the military to notify the lessor of the tenants military status ASAP.  So, you MUST use a revised Notice of Claim form containing this required language for all Notices of Claim sent after 1-1-12.
 
The new law expressly allows you to require proof of a tenant’s military service, e.g. DOD form or other documentation reasonably acceptable to you.  There is nothing wrong with asking for, or even requiring, a military ID from a tenant who tells you (by checking the boxes on the TSSA Tenant Information Sheet or TSSA lease) that he or she is active-duty military.  You MAY NOT photocopy a military ID, but you may write down all information it contains.  You may require of any tenant, military or not, any proof of identification your desire.  You may photocopy any identification except for military IDs.

Consolidation of Law
No more flipping back and forth between Ch. 70 and Ch. 59!

The new law consolidates all applicable Ch. 70 provisions into Ch. 59.  The self-storage statutes will now be much more user-friendly.  Also, as an added benefit, vehicle and boat foreclosures will be the same.  (For several years there has been a slightly different process for vehicle vs. boat foreclosures.)  Specifically, as of January 1, 2012, there is no requirement in the vehicle foreclosure process to send the Notice of Claim within five days of seizure.  Also as of January 1, 2012, there is no requirement to send the vehicle Notice of Claim to lienholders (only to the tenant/vehicle owner).

Exemption From Health Care Privacy Law
The new law exempts self storage from Ch. 181, Texas Health and Safety Code.  Among other things, Chapter 181 requires (due to the passage of HB 300, see below) “covered entities” to take affirmative steps to protect health care information, prohibits most sales of health care information, and requires training for employees.
 Problematic unintended consequences would have inevitably resulted if the medical records privacy law were applicable to self storage.  For example, if a facility unknowingly sold medical records stored by a tenant, it could be in violation of the law.  And, facilities may have had a duty to train all their employees on medical records privacy laws.

As a result of the Ch. 181 exemption for self storage, the “burden” for storage and disposal of medical records is where it should be -- your tenants are responsible for their own medical records that they choose to store at your facility.

Clarifies Timeline
There have been no changes to the statutory timelines for the lien foreclosure process, but the timeline language for sending the Notice of Claim and for publishing the newspaper notice of public sale have been clarified.

Current language says that certain action must happen “before the 15th day after” a certain event.  The new language says that certain action must happen “on or before the 14th day after” the event.  Again, this will NOT affect operations at all; it is just (hopefully!) clearer language in the statute.