Under the New York Lien Law, the owners of self-storage facilities are, after complying with certain procedural requirements, permitted to sell the contents of a delinquent renter’s storage unit in order to recoup unpaid amounts due from tenants. Through executive order, Governor Cuomo has provided relief to commercial and residential tenants facing eviction. It is unclear whether this relief also applies to the tenants of self-storage facilities. On October 30th, a bill was introduced in the New York Senate that, if enacted, would explicitly prohibit the owners of self-storage facilities in New York State from selling their tenants’ belongings until one year after the end of the Covid-19 state of emergency in New York. For these purposes, the Covid-19 state of emergency is broadly defined to include any period of time where an executive order is effective that closes or otherwise restricts public or private businesses or places of public accommodation, or requires postponement or cancellation of all non-essential gatherings of any size for any reason in response to the Covid-19 pandemic within the state of New York.
The proposed New York State Senate bill is currently with the Senate’s Committee on Rules. It is unclear when, or if, it will become law in New York State. That said, there may be a trend emerging around the country to enact similar laws. We note that at least three California cities have already provided relief to tenants of self-storage facilities from eviction. In addition, at least one New York City Councilmember is reportedly working on legislation that would, if enacted, have adverse effects on the owners of self-service storage facilities, including regulating the fees self-storage facility owners can charge.
Over the years, a number of our clients have made self-storage facilities a larger component of their holdings. At this point, it is unclear what long-term effect these types of governmental restrictions may have on the owners of self-storage facilities. We recommend you take this opportunity to review your self-storage facility holdings to ensure that they are complying with current applicable laws and are taking appropriate steps to prepare for potential governmental restrictions that may be on the horizon.
We will continue to closely monitor developments in this space. Please contact Rhona J. Kisch (212) 574-1510, Adam D. Lesnick (212) 574-1393 or Ian H. Silver (212) 574-1209 if you have any questions or would like any assistance in connection with your real estate needs.
Also, please visit our Commercial Lease and Loan Restructuring Task Force for additional information.
Seward & Kissel has established a COVID-19 Resource Center on our web site to access all relevant alerts that we distribute.