By Jim Clemmensen
The United States is involved in combat operations overseas, and a significant number of American military personnel have been placed on active duty, many in harm’s way. Now, more than ever, it is critical for self-storage facility owners, operators and managers to understand the scope of the Servicemembers Civil Relief Act, or SCRA, a law which is designed to protect active-duty military personnel from certain penalties that may result from business transactions. Your business is subject to the SCRA, and failing to act accordingly could be extremely costly for your self-storage operation.
On December 19, 2003, President Bush signed into law the SCRA to revise and replace the former Soldiers’ and Sailors’ Civil Relief Act of 1940. The purpose of the SCRA is to provide some relief from worry about their daily financial burdens to those on active duty protecting their country.
Relief granted by the SCRA includes the following:
Protections covered by the SCRA include enforcement of storage liens while the renter is on active military duty. Self-storage property liens, which are contractually granted when one rents a self-storage unit to a customer, can be compromised by the SCRA during the time when that customer is called to active duty service in the military. Attorneys familiar with the issue have advised MiniCo that understanding and acting in accordance with the SCRA is very important for all self-storage facility owners renting spaces to members of the military. Knowingly violating the SCRA may result in fines and penalties including imprisonment.
We have been advised that the provision of the SCRA which may impact a self-storage business in the enforcement of storage liens is Section 307, which allows members of the armed services to enjoy the protection of the law from liens, sales, and disposal of property stored at a self-storage facility in the event they are called to active duty and which duty results in their inability to continue to honor their contractual obligations. This protection extends to members of the military reserves when they are called to active duty as well as to regular active-duty servicemen and women.
According to the attorneys, the Supreme Court has ruled that the SCRA must be interpreted with "an eye friendly to those who dropped their affairs to answer their country's call." Of course, although it is not specifically addressed in the SCRA, it would seem that for a servicemember to avail himself of the protections of the SCRA, he may be required to make creditors and other potential lien holders, including self-storage facilities, aware that he has been activated and is on military duty.
On the other hand, since the SCRA does not specifically require a servicemember to provide notice, there appears to be no way to guarantee that self-storage operators would know unless they specifically ask. Therefore, you may consider posting signs requesting that all tenants who are on active duty in any way immediately notify the self-storage manager.
This brief article is intended to make you as self-storage providers aware of the SCRA and to advise you of its potential impact on your businesses. As you attempt to collect the rents due you under your contracts, and especially before you execute on a lien and auction off any tenant’s property, it may be wise to inquire whether that tenant is a servicemember on active military duty as spelled out in the SCRA.
The SCRA is intended to offer protection to active-duty servicemembers, and we have been advised that civil courts are likely to grant servicemembers great leeway in the interpretation and application of the SCRA. We suggest you be proactive in addressing this issue which will also enable you to support our country’s servicemen and women engaged in the current combat.
This article is not intended to act as specific legal advice, and should not be substituted for the advice of an attorney who specializes in the self-storage industry. We urge you to consult your insurance agent and/or your attorney for further information and recommendations regarding your compliance with the SCRA.
Jim Clemmensen is Director of Insurance Operations for Phoenix-based MiniCo, Inc. MiniCo provides industry-leading specialty programs for self-storage businesses including property and casualty insurance and tenant insurance programs. For more information please visit www.MiniCo.com or call 800-528-1056.
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