An Update from the Canadian Self Storage Association`s  Lien Law Committee

As any Canadian self-storage operator will attest to, taking a customer to auction for non-payment can be a confusing and daunting task.  While default industry practice is one thing, the continued lack of industry specific lien legislation (or regulation as shall be discussed) continues to top the issues list for self-storage operators. Furthermore, as the popularity of certain television shows featuring self-storage auctions skyrockets, more and more consumers are asking the important question, “What happens if for some reason I can’t pay?” Self-storage operators and the industry as a whole are doing their best to respond, however, what is the “right” answer?

In 2009, the Canadian Self Storage Association (CSSA) set the formidable goal of passing lien legislation for the self-storage industry in the Province of Alberta.  While operators in other provinces are equally anxious for legislated lien rights and standardization of a lien sale procedure, the CSSA has looked to Alberta for leadership on this important issue.  It is hoped that a successful campaign in Alberta will set a precedent to assist in expediting the passage of similar law or regulation in other provincial jurisdictions.

Although other industries, like the warehousing industry, have the ability by way of legislated rights (i.e. the Warehousemen’s Lien Act) to place a lien on goods when their customers are in default, the self-storage industry does not. As a result of this legislative vacuum, there is no standard lien sale procedure being followed by individual operators, nor are their lien rights even established.  Of equal concern is the resulting wide range of practices to which consumers are presently being exposed, with some operators simply disposing of personal property without any form of due process.

The inherent challenge is that personal property law is a very complex and broad form of law, with a steep legal learning curve for operators and consumers alike. In certain provinces, the issue is compounded by the existence of other umbrella legislation that purports to provide a solution for the self-storage operator, but which upon examination is completely impractical for reasons too numerous to detail herein.

With roughly eighty to eighty-five per cent of self-storage facilities owned by ‘mom and pops’ and independent operators, this is very much a small business issue, but by no means a small issue.   In the Province of Alberta alone, it is estimated there are over 75,000 consumers of self-storage at any given time.  It is essential that the “rules” be clarified, so as to lend some much needed consistency and predictability to the process for both consumer and self-storage operator.

So far, the initiative in Alberta has not been without its challenges. For the last two and a half years, the CSSA has been working diligently and at considerable expense on behalf of the self-storage industry to deliver a legally enforceable industry standard.  Specifically, the CSSA has been in regular dialogue with Service Alberta, the ministry responsible for this file.  It has met with numerous members of Alberta’s Legislative Assembly to frame the issue and build support.  Its membership has participated at an individual operator level by writing the minister in charge to encourage action. The CSSA is even offering (and is in fact asking) to adopt standardized language for self-storage rental agreements and to simultaneously improve communication with consumers, as to their rights and responsibilities.

To date, however, efforts have been frustrated by a lack of political will. On multiple occasions, the CSSA has been asked to investigate alternatives to self-storage lien law, such as abandonment law.  Although a certain amount of legwork was necessary in framing the issue for government, such legal reviews are time consuming and very costly.  At this time, it is the position of the CSSA that all alternative solutions have been thoroughly explored and have proven inadequate.  Additionally, it has been demonstrated that a legislated (or regulated) self-storage lien (not dissimilar to the lien provided for in the Warehousemen’s Lien Act) is not only the most legally pragmatic solution, but also the most fair and reasonable for both consumer and self-storage operator.

Despite the fact that a legislated lien has been widely adopted as an appropriate means of legal recourse for self-storage operators in 48 states in the United States, Service Alberta has favoured an alternative solution to avoid what it views as an unnecessary piece of additional legislation.  To this end, a more mutually acceptable solution may prove to be the enactment of regulated (as opposed to legislated) lien rights for the self-storage industry.

Regulation, for its part, has fewer barriers to implementation and practically speaking carries equal weight to legislation in the court of law. The industry is simply seeking a legally enforceable industry standard to protect operators and consumers alike from the uncertainty of unpredictability of the present legal vacuum. This issue has the potential to be a huge win-win for both parties and therefore while progress has been slow and the file frustrating at times, perseverance is required.  As such, the CSSA is presently seeking a firm commitment by Service Alberta to move forward with the enactment of self-storage lien rights, be them legislated or regulated.  It is presently awaiting the ministry’s response.

Despite progress to date, however, the window of immediate opportunity may be closing on the Government of Alberta to act.  This initiative is now faced with the added pressure of a changing political landscape.  Meanwhile, as of October 2011, Service Alberta has a new Minister, Mr. Manmeet Bhullar of Calgary-Montrose.  The CSSA recently met with the Honourable Minister, is excited to be working with him, and is optimistic that the change in ministers will finally prompt the political leadership required to drive this initiative to a successful conclusion.

The reality is that the self-storage industry is becoming increasingly well- organized and regulators need to take note of the growing number of consumers that depend on the hundreds of small ‘mom and pops’ and independent operators that it represents. Regulation and standardization is desperately needed now, especially with the increased attention and awareness resulting from the mainstream media spotlight.

On a final note, as this initiative is not without significant legal expense, the CSSA very much requires the support of all operators across the country in this first step to have legislation or regulation enacted in Alberta.

If you are reading this and are not presently a member of the CSSA, please consider joining.  The CSSA needs your support, welcomes your participation, and will keep you informed of new developments on this important issue.

Kim Sterling is the President and Chief Operating Officer of StoreSmart Self-Storage and serves as Chair of the CSSA’s Lien Law Committee.