How to manage late payments and abandoned units

To effectively manage late payments, you must rely on the 'Right of Lien'—a legal principle that should be included in your rental contract, allowing you to retain and eventually sell a customer’s goods to recover unpaid debts. The most critical step is following a documented, consistent timeline of communication. Moving too quickly to sell items can lead to legal claims for 'wrongful interference with goods,' while moving too slowly drains your profits.

Establish a Clear Arrears Timeline

Consistency is your best defence. You should have a pre-defined schedule of actions that trigger automatically when a payment is missed. This ensures all customers are treated fairly and you have a paper trail if the matter goes to court.

The 'Right of Lien' and Legal Notices

In the UK, the Torts (Interference with Goods) Act 1977 governs how you handle someone else's property. To legally sell abandoned goods, you must prove you have made every reasonable effort to contact the owner.

Always send your 'Notice of Lien' and 'Notice of Intention to Sell' via recorded delivery to the customer’s last known address. This provides the 'proof of service' required by law.

Taking Possession and Selling Goods

Once the legal notice period has expired (usually 14 to 21 days after the final notice), you can proceed to clear the unit. Following these steps helps maintain professionalism:

• Inventory and Photos: Open the unit with a witness. Take photos of the contents and create a basic inventory. Do not open sealed personal letters or private documents.
• Valuation: Determine if the goods have 'commercial value.' If they are clearly rubbish, you can dispose of them, but keep records of why you deemed them worthless.
• Method of Sale: Selling via a public auction (like eBay or a specialist storage auction site) is the best way to prove you achieved a 'fair market price.'

Handling the Proceeds

You are not legally allowed to make a 'profit' from the sale of a customer’s goods beyond what is owed to you. If the sale fetches £1,000 and the customer owed you £400 (including late fees and auction costs), you must hold the remaining £600 for the customer for a reasonable period (usually six years). If the sale doesn't cover the debt, you can still pursue the customer through the Small Claims Court for the balance.

Best Practices

To keep this process as stress-free as possible, always ensure you have alternative contact details (a 'next of kin' or secondary contact) on file for every customer. Often, 'abandonment' is actually just a customer changing their phone number or moving house and forgetting to update you. A quick call to a secondary contact can often resolve a debt without needing to sell any belongings.