During the 2021 Kansas Legislative Session, our lobbyists, Paul Davis and Whitney B Damron, drafted legislation on behalf of the Self Storage Association to make four changes to the Self Storage Act. They successfully passed the bill and it was signed into law by Governor Laura Kelly, with an effective date of July 1, 2021.
Key provisions of the bill and changes to the Act are as follows:
1. Make damage loss limitations in contract enforceable in law.
Section 1. (b) will allow contractual limitations on the value of stored items to be enforceable in court under contract law. Some jurisdictions (e.g., courts) have not adhered to these limitations absent statutory authority. A self-storage operator may have good reason to limit the value of items stored in their facility, including limitations on their own insurance coverage and an interest in not having certain high-value items stored onsite that make theft difficult to discourage (e.g., classic vehicles, firearms, gold coins, rare art, etc.).
This or similar language allowing for damage loss limitations in contract has been approved in a majority of states, including MO, OK, CO and NE.
2. Third party notification of potential default in contractual obligations.
Many Self-storage operators allow for the designation of a third-party contact for notification in case of breach of contract or other times notification of a renter is required. This language would make that offering a mandatory part of the rental agreement. The third party so designated would not have access to the contents of the rental unit pr proceeds from a sale unless expressly allowed under the rental agreement.
This requirement is pro-consumer new language and generally not a part of statutory requirements found in other states.
3. Allow auctions to be conducted in-person and/or online.
Section 2. allows for auctions to be conducted online or in person. National trends, even before Covid-19 restrictions were imposed, are for these kinds of auctions to be conducted in both in-person and online formats. Online sales allow for greater participation in an auction, which ultimately benefits both the self-storage operator and the renter in default, as the likelihood of increased recovery exists with more potential bidders partaking in an auction.
This or similar language allowing for online auctions has been approved in a majority of states, including MO, OK, CO and NE.
4. Public Notice of Sale; Auction.
Under current law, the notice of a sale of the time, place, and terms of the sale must be placed in a newspaper of general circulation in the jurisdiction where the sale is to be held. Our proposal would amend Section 2. (b)(3) to allow for a sale to also be conducted “in any other commercially reasonable manner.”
During hearings on a similar bill in 2020, questions were raised as to what a “commercially reasonable manner” is defined to be.
Our proposal clarifies this issue as follows:
If less than three independent bidders attend the sale in person or view the sale online at the time and place advertised, the manner of advertising the sale shall not be considered to have been commercially reasonable and the sale shall be canceled, rescheduled, and readvertised. Further notice to the occupant shall not be required.
Official public notices in newspapers with expensive print subscriptions, online paywalls and diminishing subscribers is simply not the way the public is typically notified of these sales. Most self- storage operators have a list of interested bidders; they publish on their own website and/or post notifications on self-storage trade websites that generate public interest. Notices placed on self-storage operator websites and trade websites can be viewed for free and a readily available from search engines.
Newspaper ads are simply not where people find out about self-storage auctions anymore. They rely upon social media (Facebook, self-storage-related auction websites, self-storage operator websites and other online media)
This or similar language allowing for online notification has been approved in 17 states, including CO and NE. In addition, five states have reduced publication requirements and three states have no publication requirements whatsoever.