Compliance Advisor

Compliane Adv LOGO

Safe Deposit Box, SCRA: Drilling for Past Due Rent

eNews Headline: Is a Safe Deposit Box Protected by the SCRA?

Question: Do we needed to consider the Servicemembers Civil Relief Act (SCRA) in regard to safe deposit box (SDB) drilling? We do not currently have anything in our procedures for that. Do you have any suggestions? 

Answer: In most states, a safety deposit box is considered a leasehold, and like any other lease, is protected under the SCRA. 

Very similar to the rental of a storage unit, before a bank can repossess the box for late payment for a servicemember that entered active duty after leasing the box, it must get a court order.

Here are some suggestions you might adopt to address the situation before you drill a safe deposit box for past due rent.

  • You could notify customers as a courtesy that there are special protections for servicemembers that may come into play but that’s purely a business decision for the bank.
  • You could check the military database as you would before taking any action to foreclose on a mortgage.
  • You can check your own records to see if the individual has requested any SCRA protections such as interest rate reduction on a loan.
  • You can look at the persons deposit account (if they have one) to see if they are getting DFAS deposits.
  • Texas law requires specific notification requirements that you must follow before you can drill a box. You could add a sentence to your past due notice stating If you are a member of the Armed Forces, please contact the bank at (xxx) xxx-xxxx.
  • You can just not drill the box if you have any reason to believe the person might be a servicemember.
  • Finally, if the bank does not enforce its “storage lien” but merely wishes to drill the box to make it available, it could.  The customer would still owe the rent, but the remedy for collection (ie sale of contents) would be subject to SCRA. The bank can ask for the rent but should be prepared to hand over the contents of the box regardless.

Capitol Comments

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in the rendering of legal, accounting or other professional advice - from a Declaration of Principles adopted by the American Bar Association and a Committee of Publishers and Associations.
Click for Capitol Comments!