Lease: No Lease for Delinquent Unit – What do I do?

by Richard Marmor, Esq.
AZSA Legal & Legislative Chair

You have a real problem. Based on the frequency with which AZSA receives this question, we are reprinting Richard Marmor’s answer, found in the Frequently Asked Questions section in the Members Area of the website. All members can log in to the website using the email address you gave AZSA and password. Having trouble logging in? Call or email us (602-374-7184 or azsa@azselfstorage.org) and we’ll make sure the email address we have for you is correct and all members of your team have a profile so they can use these valuable resources as often as needed. 

Now back to the issue: No lease? You have a real problem.

Your right to a lien and thus to auction requires a lease:

The operator of a self-service storage facility has a possessory lien from the date the rent is unpaid and due on all personal property stored within the leased space... [A.R.S. §33-1703(A)]

If the occupant is in default for a period of more than thirty days, the operator may foreclose the lien by selling the property stored in the leased space at a public sale, for cash, or if the property is protected property, by disposing of the property pursuant to this section. [A.R.S. §33-1704(A)]

The key words in both of those grants of rights are “leased space”:

“Leased space” means the storage space or spaces at the self-service storage facility that are rented to an occupant pursuant to a rental agreement. [A.R.S. §33-1701(A)(6)]

“Rental agreement” means any written agreement provided to the occupant that establishes or modifies the terms, conditions or rules concerning the use and occupancy of leased space at a self-service storage facility. [A.R.S. §33-1701(A)(14)]

Therefore, no lease = no right to auction.

Legally, the best action to take is to go to court and seek an order of eviction. That probably requires the use of an attorney, costs money and takes time, but it presents little or no exposure to liability to the contents’ property owner for the loss or disposition of the property.

Some operators will take a measured risk and sell the contents at auction anyway. While they expose themselves to liability to the contents’ owner for conducting a sale they had no right to conduct, the exposure is seen as small if:

1.      The apparent value of the contents is low. (It is a good idea to take lots of pictures of the contents so you can prove their marginal value later if you are sued.) In effect, “So what if I get sued over property that was only worth $100-200?”

and/or

2.      There has been no contact with the contents’ owner for a long time, so the argument can be made that the contents were abandoned. Obviously, the longer the non-contact the better.

Therefore, never allow a tenant to move into a unit with a promise to sign a lease a later time.

[This article deals with a law related subject at a general level and I not intended for you to rely on. You should consult a lawyer before making a final decision in a situation involving any legal issue.]

Richard Marmor has been in the self-storage industry for over 30 years, as a facility owner and consultant. He was the founding president of AZSA and is its lobbyist at the Arizona Legislature, where he authored many of the self-storage industry’s laws. An attorney, Richard also created most of AZSA’s forms; he is a regular speaker at AZSA educational workshops around the state; and his articles appear regularly in the AZSA newsletter and website.