Tuesday, July 19, 2016

Active Military Tenants in Default at a Self Storage Facility

Active Military Tenants in Default at a Self Storage Facility

Hopefully, anyone working in the self storage industry is familiar with the Servicemembers Civil Relief Act (SCRA) and how it applies to self storage tenants. The most basic explanation is that self storage operators cannot auction a default unit belonging to an active military tenant. However, there is much more involved in the SCRA and a lot more information self storage operators need to have.

What does “active military” mean?

A question I hear frequently in reference to active military tenants is “what does active military mean?” Is every person in the military “active military” or does the SCRA only apply to deployed military personnel? Active military refers to anyone on full time duty to one of the five main branches of the military or the National Oceanic Atmospheric Administration (NOAA). One does not need to be deployed overseas to be considered active military. There are full time active military jobs on military bases around the United States.

Military personnel in the Reserves are considered to be on active duty when they are doing their regular training one weekend a month and for a two week span sometime during the year. If someone serving in the Reserves is called to active duty by order of the federal government, they begin active duty as soon as they receive their orders.

Is a Spouse of active military personnel covered by SCRA?

The short answer is yes. It is true that the SCRA does not always apply to the spouse, but for your purposes of a self storage operator, you should always assume that the SCRA does extend to the spouse. It would be very difficult for you to know definitively if the spouse qualifies (or does not qualify). Thus, you should always operate as if you need a court order to enforce a lien on the tenant or their spouse who is active military personnel.

How do I know if my tenant (or their spouse) is active military?

ASK. THEM. It is not the responsibility of the self storage operator to discover if a tenant is active military. However, it is a great practice to ask every tenant, in your rental agreement, if they are active military. If they say “no,” great; you will proceed as usual if they do not pay you. If they indicate that they are active military, you will need to follow special procedures in the event of default. If your tenant indicates they are active military, you should ask to see their military ID. You cannot photocopy this ID, but you can take note of some of the information on the ID. If you have a tenant that casually says they are active military, but this is the first time they have mentioned it and they don’t have a military ID, you will need to follow-up and verify military status.  If you have ANY reason to believe a tenant is active military, you need to verify that information.

How do I verify if a tenant is active military?

The easiest way to do this is to go to the Department of Defense SCRA website at: https://scra.dmdc.osd.mil/ In the past, there were concerns about the security of the website, but those issues seem to be resolved. This website allows you to use either the birth date OR the Social Security Number (SSN)  of the person to conduct a search. However, a search conducted without a SSN could produce less certain results.

In the past, operators could also go directly to the individual branch with a written request for $5.20. The website which contained the contact information for each individual branch is no longer found. It is also reported that the Army stopped providing this service due to a lack of manpower. This could explain why the search results often took months to obtain. If this method has worked for you in the past and you still have luck with it, great!

There are also paid searches such as this one,  https://www.servicememberscivilreliefact.com/scra/military-status-verification/ that allow you to search using partial SSNs and other information such as: driver’s license number, address, email address, phone number, family members, etc… The search usually takes about 24 hours and for an added fee, they will provide you an affidavit verifying the search results.

What do I do if my tenant is active military?

You can keep charging late fees and you can deny access, but you cannot sell the unit at auction unless you receive a court order to do so. If you want to pursue a court order, you will need to hire an attorney and pay legal and filing fees. It is also unlikely that a judge will simply go against federal regulations to help you open up rentable space. Attempting to get a court order could be costly and ineffective for you. There is some hope for operators. The SCRA only provides protection until the person has been out of active military for 90 days. You should keep checking the military status to verify. You also have the option to have the tenant sign a waiver of his rights under the SCRA. This must be done in a document separate from the rental agreement. It would be advisable to have an attorney draft this waiver for you because it has to have very specific language in it and if you choose to use it, you might likely find yourself in court.

It is not an ideal situation to have an active military tenant in default. This is especially a problem for self storage facilities located near military bases. Keep in mind that most active military tenants are going to continue to pay their bill unless they are physically incapable of doing so and that is the spirit in which the SCRA was created. Violating the SCRA can be punishable by fines and jail time. It is imperative that a self storage operator follows up accordingly if they have ANY reason to believe a tenant might be in active military status.

About the Author - Cheli Rosa - Director of Marketing, Auctioneer, Company Administrator, Social Media Manager, Mom, Kite Flyer, Pinterest Addict and Amateur Scrapbooker.


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