Buyer of sold unit claims lock is cut and property is missing

Mini- Storage Messenger - Buyer of sold unit claims lock is cut and property is missing.

QUESTION: One of the recent buyers at my sale (a junk dealer) told me that one of the units he bought at my sale was missing property the next day when he came back to clean it out. The junk dealer said his lock was cut and I advised him that there must have been a break-in and to call the police. The buyer said that I owe him his money back because we have a bailment during that twenty-four hour period between the end of the sale and the time the buyers come to clean the units out. Is this true? Is there anything I can do to protect myself?

Answer: While I am not certain I can answer this exact question without seeing all of the documents between the operator of the self-storage facility and the buyer, I do have some observations and thoughts on how to minimize your risk.

First, while I understand several operators prefer people do not take the winning units home with them the day of the sale, the advantage is you have a few extra hours to see if the occupant paid or tried to pay. There are, however, a lot of advantages to requiring units to be cleared out before close of business on the date of the sale. By cleaning out the same day no one has left the property overnight, giving rise the possibility that somehow the occupant could get in after the sale, cut the lock and remove the stuff they recently witnessed being sold.
Second, if you do not wish to create a bailment, you need to say so by creating appropriate sale rules and regulations that your buyers sign before you issue them permission to bid or a bidder number for the day. Public sale rules are an interesting subject because there are so many things that belong in them. But let me start on topic, which is the rules need to discuss when a sale is final, how payment is made and how long the purchaser has to remove the property. Public sale rules should go further if you are going to allow the property to remain in the unit for any period of time to discuss the relationship between you, as the operator, and your buyer. Without going into the detail of a 4 page written lease agreement, as you will have with your regular self-storage occupants, the rules should include a liability release, so as to reduce or potentially eliminate your liability to this buyer in the event something happens or allegedly happens to the property while it is still in your facility.

Remember, a bailment occurs when you agree to take some sort of possession or control over someone else’s property to keep it and return it to its rightful owner at some point in the future. A bailment occurs in situations such as dropping a car off with a valet, delivering off your dry cleaning, checking baggage at an airport or hotel, etc. In these situations the valet, drycleaner, or bellman has your property and you expect it returned in good or better condition than at drop off.

The most certain way to avoid a bailment is to do two things: (1) contract around the bailment by having a contract (in the form of written sales rules), with your buyer that sets forth when the property may be removed and when the property must be removed before it is deemed abandoned to be disposed of; and (2) require the buyer to use its own lock on the unit from the time the sale is final until the time the property is removed or abandoned. In these rules you also disclaim a bailment. Generally, with these two items in place you can contract around and avoid the appearance of a bailment despite the “legal opinion” of the junk dealer as in this question. Even without a bailment you do have some duty of care, but I would imagine you exercise that duty of care in the proper operation of your self-storage facility. For example, if the gate is an automatic gate that closes all the time between occupants it would be unadvisable to leave the gate open all night the night of the sale so the buyers can get back in. The gate should operate in the normal way. (You get the idea.) Please remember, you can never contract around criminal liability, thus, if this junk dealer was instead alleging you, as the operator or your employees, broke into the unit to steal valuable things, none of this matters, because he is alleging a criminal act. The best way to avoid being charged with these types of allegations is to have an adequate video camera recording in place at your facility that would show the unit had not been entered and that it was not you or your employees who took property. Of course, creating a good alibi is also helpful, but really video recording is your best bet.
Do not forget about written public sale rules for a lot of reasons. You can avoid so many different disputes by having a good written set of public sale rules and, at the same time it can relieve you from certain other liabilities you may not have thought of such as liability for personal injury or damage to the buyers property, for example an attendee at a sale’s car while parked in your parking lot while they are on your facility is damages.

If you do not have a good set of public sale rules, this would be the place to start to avoid these problems in the future. Speak with an attorney, get a solid set of rules drafted, and you should be able to avoid most of these issues in the future.

You can send your questions, comments, or suggestions for future topics to Jeffrey Greenberger at info@selfstoragelegal.com or mail them to Jeffrey Greenberger c/o Katz Greenberger & Norton LLP, 105 E. Fourth Street, Suite 400, Cincinnati, Ohio 45202 or you can reach Mr. Greenberger at (513) 721-5151, or visit his website at www.selfstoragelegal.com.