Alabama Storage Lien Sales: Handling Special Circumstances Under State Regulations

Alabama’s Self-Service Storage Facilities Act allows operators to enforce a lien after 30 days or more of default. However, sales must be commercially reasonable and comply with notice and documentation requirements. 

Special cases, such as military tenants, titled vehicles, and bankruptcy, trigger additional steps under both federal and state law.

Facility owners must understand these special circumstances to protect themselves and recover unpaid rent. Alabama’s lien law covers the basics, but additional rules apply when specific conditions are met.

If operators fail to meet these requirements, they may face lawsuits, fines, or have their sales rejected.

The trick is figuring out when the standard lien process isn’t enough and knowing what additional steps the law requires. 

Each special case comes with its own rules, timelines, and paperwork, and operators have to follow them to the letter.

Key Takeaways

• Special circumstances, such as military service, titled property, and bankruptcy, require additional legal steps beyond Alabama’s standard lien process.
• Storage operators sometimes need to obtain court orders and comply with federal protections to stay on the right side of the law.
• Good documentation and reasonable sales practices help protect facilities during tricky lien enforcement situations.

What Counts As “Special Circumstances” In Alabama Storage Lien Sales?

Alabama law stipulates that certain situations require special handling when it comes to storage lien sales. These circumstances can change how facilities run their lien procedures.

Emergency Situations are one example. Natural disasters, fires, or any other event that blocks normal access to storage units fall into this category.

Medical Emergencies involving tenants can also complicate matters. If a tenant is hospitalized or unable to make decisions, facilities may need to adjust their usual procedures.

Military Deployment is another big one. Active-duty military members get extra protections under state and federal law.

Legal Complications can also arise. These include things like:

• Court orders affecting the unit
• Bankruptcy cases involving the tenant
• Divorce where ownership is in dispute
• Criminal investigations that need evidence preserved

Documentation Issues can also count as exceptional circumstances. Missing or incorrect contact information for tenants can affect how notices are served.

Property Value Concerns sometimes matter as well. If a unit contains high-value items, hazardous materials, or perishable goods, facilities must handle them differently.

Alabama storage facilities should carefully document these special circumstances to ensure compliance with state regulations. The state expects a good reason for any changes to the usual sale process.

Every facility should establish clear policies for identifying and addressing these situations. That way, they treat everyone the same and stay within Alabama law.

Baseline Alabama Requirements Before Any Sale

Alabama law outlines the requirements that self-service storage facilities must meet before holding lien sales. 

These rules govern the attachment of liens to tenant property and outline the commercially reasonable methods permitted for the sale of such property.

Lien Attaches To All Personal Property At The Facility

The operator’s lien covers all personal property at the storage facility when a tenant defaults. That means everything in the rented space and any other items the tenant stores on the premises.

The lien secures more than just unpaid rent. Facilities can claim late fees and other charges in the rental agreement. They can also include reasonable costs they rack up while enforcing the lien.

Alabama law prioritizes this lien over most other claims against the tenant’s property. Only tax liens outrank the storage facility’s rights.

Facilities get these lien rights automatically when tenants default. There’s no need to file extra paperwork. The lien attaches as soon as the rental agreement is breached.

Deny Access / Move Goods Pending Sale

Facilities can block a defaulting tenant from their unit after giving proper notice. This prevents tenants from sneaking out with items that secure the debt.

Operators can also move the tenant’s goods within the property. Shifting items to another unit or area helps get ready for the sale. Facilities have to take reasonable care of any property they relocate.

During this time, care and risk of loss shift to the facility. Operators must protect the tenant’s property from damage, theft, or decay while preparing the property for sale.

Only the facility operator and authorized personnel are permitted to handle the goods before sale. Unauthorized access isn’t allowed.

“Commercially Reasonable” Sale Options (Public Or Private; Parcels Or Units)

Alabama requires that all lien sales be made at a commercially reasonable price. Facilities can choose between public auctions or private sales, depending on the situation.

Property can be sold in a few ways:

• Individual items are sold one by one
• Groups or lots of similar things
• Everything in the unit is a package

Public sales include live auctions and sealed bids. These sales need to allow open bidding from multiple buyers. Public warehouses and storage facilities often go this route for higher-value units.

Private sales refer to direct transactions with individual buyers. Facilities typically do this for items with limited market appeal or when a public auction is not feasible.

Facilities must demonstrate that their sales method and pricing were commercially reasonable. Courts consider whether a reasonable person would consider the sale fair under the circumstances.

Protect your storage facility by partnering with J. Wesley Atkinson for expert real estate law services. Stay compliant with Alabama lien rules and safeguard your business—contact us today to schedule a consultation.

Servicemembers (SCRA) — When A Court Order Is Mandatory

The Servicemembers Civil Relief Act blocks storage facilities from enforcing liens against active-duty military without a court order. 

Federal law, 50 U.S.C. § 3958, stipulates that facilities must verify the military status of individuals before holding auctions.

Statute: 50 U.S.C. § 3958 (Enforcement of Storage Liens)

Under 50 U.S.C. § 3958, storage facilities can’t enforce liens against servicemembers without a judge’s okay. This rule covers the whole time someone’s on active duty and for 90 days after.

Storage operators must obtain a court order before conducting a lien sale. Judges might say no if military service has made it tough for the servicemember to pay their storage bill.

Key Requirements:

• A court order is required for any lien enforcement
• Protection covers active duty plus 90 days after
• Applies to all personal property in storage
• No exceptions for late payments

The law’s goal is to keep servicemembers from losing property while they’re on duty. Storage facilities that skip these steps risk federal penalties and lawsuits.

Practical Proof Steps (DoD Status Check, Contract Flagging)

Storage facilities must verify a person’s military status before initiating lien actions. The Department of Defense has an online tool to confirm if a delinquent tenant is on active duty.

Verification Process:

1. Check the DoD Defense Manpower Data Center
2. Use the tenant’s full name and Social Security number
3. Save screenshots of the results
4. Flag contracts for any service members

Facilities should establish contract flagging systems to identify protected tenants. Staff training is important so that employees can recognize SCRA indicators, such as military addresses or deployment notes.

Red Flags for SCRA Protection:

• APO/FPO mailing addresses
• Military base contact info
• Deployment letters
• Power of attorney docs

Regular checks help avoid mistakes. Operators should verify the status when tenants sign the lease and again before any lien action is taken.

DOJ Enforcement Example—Auction Without Court Order Led To Penalties

The Department of Justice goes after SCRA violations in the storage industry. Federal actions show the risks for facilities that auction servicemember property without a court order.

In some cases, storage companies paid big penalties for holding unauthorized lien sales. 

These violations typically result in monetary damages, attorney fees, and ongoing compliance monitoring.

Common Penalty Components:

• Monetary damages for affected servicemembers
• Civil penalties up to $110,000 per violation
• Attorney fees and court costs
• Compliance monitoring for up to three years

The DOJ requires companies that violate these rules to establish SCRA compliance programs. That means staff training, regular database checks, and audits of lien enforcement.

Storage facilities must maintain accurate records of their military status checks. If they can’t prove they conducted the checks, their liability increases significantly in the event of an enforcement action.

Vehicles, Boats, And Other Titled Property Inside Units

Storage facilities must follow special procedures when they discover titled property, such as boats, RVs, or other vehicles, in units that are delinquent. 

These items need extra notifications to lienholders and specific paperwork through the Alabama Department of Revenue.

35-Day Notice Of Public Auction Via ALDOR Portal + Owner/Lienholder Notifications

Facilities must notify the Alabama Department of Revenue at least 35 days before selling any titled property stored in their units. They do this through the ALDOR online portal system.

The facility needs to identify all vessels that require Alabama titles, as well as other titled vehicles. To notify properly, they need the vehicle identification number or hull identification number.

ALDOR checks its records for registered owners and lienholders. Then, the department sends notices to these parties about the upcoming auction.

Required Information for ALDOR:

• VIN or HIN number
• Storage facility contact details
• Auction date and location
• Amount owed on storage lien

Tax lien holders are also notified. The 35-day window provides everyone with an opportunity to claim the property or settle the outstanding amount.

Bill Of Sale + Title Issuance Steps After Sale

The winning bidder doesn’t receive a clear title immediately after purchasing a titled property at a storage auction. They must follow specific steps through the revenue department.

The storage facility provides the buyer with a bill of sale, confirming that the lien sale was conducted legally. That document lists the auction details and sale price.

The buyer takes this bill of sale to their local revenue office for vessel titles or motor vehicle titles. Alabama adds a waiting period before issuing new titles for lien sale purchases.

Title Transfer Requirements:

• Original bill of sale from the facility
• Proof of legal lien sale process
• Payment of title fees and taxes
• Completed title application

The new owner must wait until any redemption periods expire. This protects original owners and lienholders from improper sales.

Keep Auction Logs And Ads Separate From General Unit Contents

Facilities maintain separate records for titled property auctions, in addition to regular storage unit sales. These records demonstrate that the facility followed proper legal procedures.

Auction ads for titled property need different information than standard unit sales. They must state that titled vehicles are being sold and mention the ALDOR notification process.

Separate Documentation Needed:

• ALDOR notification confirmations
• Lienholder contact attempts
• Titled property inventory lists
• Bills of sale with VIN/HIN numbers

The facility should photograph the titled property separately from the contents of other units. That way, there’s clear evidence of which items needed special handling.

These records protect the facility if anyone challenges the process later. They demonstrate compliance with Alabama storage lien law requirements for the sale of titled property.

Bankruptcy Filed By The Occupant

If a storage tenant files for bankruptcy, facility operators must immediately cease all collection activities and lien sales, as mandated by federal law. 

Operators must obtain court permission or reach agreements before taking any enforcement steps.

Section 362 Basics For Storage Operators (No Collection, No Sale, No Lock-Cut)

The federal bankruptcy automatic stay, as outlined in Section 362, creates an immediate legal barrier for storage operators. 

Self-storage operators must cease all collection activities as soon as they become aware of a tenant’s bankruptcy.

Prohibited Activities Include:

• Sending demand letters or notices
• Calling for payment
• Going ahead with scheduled lien sales
• Cutting locks to access units
• Disposing of stored property

The stay applies even if the operator was not initially aware of the bankruptcy. Once notified, all collection efforts must cease immediately.

If operators violate the automatic stay, they might face contempt of court charges. Courts can order fines and legal fees. The bankruptcy court has considerable power to penalize violations.

Emergency Access Exceptions: Operators can only access units in true emergencies, like fire hazards or safety issues. Sometimes, they still need court approval depending on the situation.

Seek Stay Relief Or Stipulation; Document All Communications

Operators have two primary methods for resuming collection activities during bankruptcy. They can file a motion for stay relief or negotiate a stipulation agreement with the debtor.

A Motion for Stay Relief allows operators to request permission from the bankruptcy court to enforce the lien. The motion must show legitimate reasons, such as the facility’s interests not being adequately protected.

The court usually grants relief if the property value is much higher than the debt. Operators must demonstrate that the automatic stay is causing genuine hardship or that the debtor lacks equity in the stored items.

Stipulation Agreements offer a faster route through direct negotiation with the debtor or their lawyer. These agreements outline payment terms and specify the consequences if the debtor defaults again.

Essential Documentation Requirements:

• Written records of all bankruptcy notices received
• Copies of all court filings and responses
• Communication logs with debtor’s counsel
• Property inventory and valuation records

Operators should keep detailed files during the bankruptcy process. Good documentation protects against legal challenges and proves compliance with court orders.

Lien disputes can quickly become costly. J. Wesley Atkinson offers contract formation services that ensure your documentation is solid and enforceable—schedule a consultation with us now to review your records.

Deceased / Unreachable Occupants & Surplus Funds

If storage lien sales involve deceased or unreachable occupants, Alabama law outlines specific rules for handling surplus funds remaining after costs and fees are paid. 

These cases require careful attention to state procedures for distributing proceeds and managing unclaimed funds.

Order Of Proceeds (Costs, Rent/Fees With Priority, Attorneys’ Fees)

Alabama storage lien sales follow a strict order when distributing proceeds. The facility applies funds in this order:

First Priority:

• Storage facility costs and expenses
• Sales, advertising, and auction fees
• Administrative costs related to the lien process

Second Priority:

• Outstanding rent and storage fees owed by the occupant
• Late fees and penalties from before the sale
• Lock and security costs

Third Priority:

• Reasonable attorneys’ fees if legal action was needed
• Court costs and filing fees
• Professional service fees for lien processing

If the occupant is deceased, the facility cannot simply retain any extra funds. The estate might have a legal right to what’s left after paying all legitimate costs.

If the occupant is unreachable but still alive, the same order applies. The facility must account for all funds and comply with state rules regarding surplus money.

Unclaimed Surplus—State Portal & Holding Expectations

Surplus funds from storage lien sales are deposited into Alabama’s unclaimed property system if the occupant can’t be located. The state sets strict timeframes and steps for this process.

Facilities must hold surplus funds for a period of one year after the sale. During that year, they must attempt to contact the occupant or their heirs.

Required actions include:

• Certified maitre d ‘ to the   last known addresses
• Phone calls to numbers on file
• Basic internet searches for new contact info

After the holding period ends, the facilities report and send unclaimed funds to the Alabama State Treasury. The Alabama Treasury Department manages these funds and maintains a searchable database for rightful owners.

For deceased occupants, heirs and estate representatives can claim surplus funds from foreclosure-related sales through legal channels. This usually takes probate court paperwork and proof of inheritance rights.

Facilities must maintain detailed records of all transactions involving surplus funds. These records help defend against legal claims and show compliance with state rules.

Documentation Pack For Special Situations (Quick Checklist)

Storage facility owners need certain documents when handling special lien sale situations. Each scenario requires different paperwork to remain compliant with Alabama storage lien law.

Essential Documents for All Special Situations:

• Original rental agreement with a lien clause
• Payment history records
• Default notice with certified mail receipt
• Lien enforcement documentation
• Property inventory list

Death of Tenant:

• Death certificate copy
• Probate court contact attempts
• Estate representative correspondence
• Extended notice period documentation

Military Deployment:

• Military status verification
• SCRA compliance checklist
• Extended timeline adjustments
• Command notification records

Abandoned Personal Items:

Facilities have to document which items can’t be sold. Personal papers, family photos, and medical records all need special handling.

• Personal item inventory
• Disposal method documentation
• Retention period records
• Witness statements for the item condition

High-Value Items:

Items worth more than the usual storage contents need extra documentation.

• Professional appraisal records
• Insurance notification forms
• Enhanced security measures log
• Special advertising requirements proof

Legal Disputes:

If tenants challenge the lien process, facilities need a complete documentation package.

• All communication records
• Timeline verification documents
• Compliance checklist completion
• Legal counsel consultation notes

Operators should organize these documents by date. That helps demonstrate proper procedure in case anyone reviews the process later.

“Commercially Reasonable” Sale — What It Looks Like In Practice

Alabama storage lien sales must meet commercially reasonable standards to comply with state law. That means adhering to established business practices for advertising, timing, and sales location.

Align Ads, Timelines, And Location With Statute

Advertisement Requirements: Storage facilities have to advertise sales in newspapers that reach the local area. The ad needs to run at least once per week for two straight weeks before the sale.

Legal notices should include a few key details:

• Unit numbers up for sale
• Tenant names (if available)
• Sale date, time, and location
• Terms of sale (like cash only, etc.)

Timeline Considerations: Alabama law requires providing a 30-day notice before holding a lien sale. You can’t cut corners here to meet commercially reasonable sale standards.

The timing of the sale matters. Running sales during business hours on weekdays usually attracts more serious buyers, not just individuals seeking a quick thrill.

Location Standards: You must hold sales at the storage facility or at another public location that is easily accessible. Select a location where buyers can view the units before bidding.

Ensure there’s sufficient parking and that the units are accessible and safe. If people can’t easily access the units, you might see fewer bidders—and honestly, that could raise questions about whether the sale was truly fair.

Before your next storage auction, ensure every document meets Alabama legal requirements. J. Wesley Atkinson offers reliable estate planning and real estate guidance—contact us today to schedule your legal review.

Frequently Asked Questions 

What is the basic lien process for storage facilities in Alabama?

Alabama law allows storage owners to enforce a lien after 30 days of tenant default. The sale must be commercially reasonable and comply with notice, advertising, and documentation requirements.

How long must a tenant be in default before an auction can happen?

The tenant must be in default for at least 30 consecutive days before an Alabama storage owner may begin the lien sale process.

What happens if the tenant is a servicemember?

Under the Servicemembers Civil Relief Act (SCRA), storage owners must obtain a court order before selling the belongings of an active-duty servicemember or within 90 days after duty.

Can vehicles or boats be sold at a storage lien auction in Alabama?

Yes. Titled property like vehicles and boats must follow Alabama’s abandoned motor vehicle process, including a 35-day notice, public auction, and title transfer through the state.

How does bankruptcy affect a storage lien sale?

If a tenant files for bankruptcy, the automatic stay halts all lien sales. Storage owners must pause proceedings until they receive permission from the bankruptcy court.

What records must storage owners keep for compliance?

Essential records include signed leases, payment ledgers, certified mail notices, advertising copies, bidding logs, and sales receipts. Missing documentation can render a lien sale invalid.

What happens to surplus funds after a storage auction?

After paying auction costs and overdue rent, surplus proceeds must be returned to the tenant or their estate. Unclaimed funds go to Alabama’s unclaimed property division.

Can improper documentation void a storage auction in Alabama?

Yes. Courts often side with tenants if notices, ads, or payment records are incomplete. A missing proof document can nullify the lien and expose owners to liability.