BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
AB 983 (Melendez)
As Amended April 11, 2013
Hearing Date: July 2, 2013
Fiscal: No
Urgency: No
TH
SUBJECT
Self-Service Storage Facilities
DESCRIPTION
This bill would revise the California Self-Storage Facility Act
as follows:
" allow an owner of a storage facility to have a vehicle,
watercraft, or trailer towed from the facility if rent and
other charges have not been paid for 60 days, provided the
owner sends all notices required under the Act, and provided
the owner sends advance notice by first-class mail with a
certificate of mailing to the occupant's last known address,
stating the name, address, and telephone number of the towing
company and the street address of the location where the towed
property can be redeemed;
" permit an owner to enforce an lien attached to stored property by
holding a lien sale no sooner than 30 days from the date of
receipt of a Declaration in Opposition to the Lien Sale;
specify that existing law does not impair or affect the right
of the parties to create additional rights, duties, and
obligations in and by virtue of the rental agreement,
including, but not limited to, the right to limit the value of
the property the occupant may store in the storage space or
the right to limit the occupant's right to enter the premises
or storage space; and
make other clarifying changes.
BACKGROUND
Existing law, the California Self-Service Storage Facility Act
(Act), governs self-service storage facilities and specifies
(more)
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certain procedures to be followed when their occupants are
delinquent in their rental payments. When an occupant is
delinquent, the owner must first send a preliminary lien notice
that informs them that if they do not pay the amount due that
their right to use the space will terminate, they will be denied
access, and an owner's lien will be imposed on all stored
property. If the occupant fails to pay the amount, the owner
may then send a notice of lien sale, which states that the
property will be sold to satisfy the lien on or after a
specified date (not less than 14 days after mailing) unless: (1)
the amount of the lien is paid; or (2) the occupant executes and
returns a declaration in opposition to the lien sale. If that
declaration is executed and returned, the owner must file an
action in court to enforce the lien.
This bill, sponsored by the California Self Storage Association,
would modify the Self-Storage Facility Act in two ways. First,
it would permit a storage facility operator to have a vehicle,
watercraft, or trailer towed from the premises prior to a lien
sale if rent has not been paid for a period of 60 days, provided
the operator gives the occupant advance notice and informs the
occupant of the location where the towed property can be
redeemed. Second, it would reverse the burden of enforcing a
lien when a valid Declaration of Opposition to Lien Sale is
received by the operator. Instead of the operator having to
file a lien enforcement action in court, this bill would permit
an operator to proceed with a lien sale 30 days after the
receipt of the declaration unless the occupant files a complaint
in court and effects service on the facility operator. The bill
would also make other clarifying changes to the Act.
CHANGES TO EXISTING LAW
Existing law , the California Self-Service Storage Facility Act,
specifies remedies and procedures for self-service storage
facility owners when occupants are delinquent in paying rent or
other charges. (Bus. & Prof. Code Sec. 21700 et seq.)
Existing law states that the owner of a self-service storage
facility and his or her heirs, executors, administrators,
successors, and assigns have a lien upon all personal property
located at a self-service storage facility for rent, labor, late
payment fees, or other charges, present or future, incurred
pursuant to the rental agreement and for expenses necessary for
the preservation, sale, or disposition of personal property.
However, any lien on a vehicle or vessel subject to registration
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or identification under the Vehicle Code which has attached and
is set forth in the documents of title to the vehicle or vessel
shall have priority over any lien created pursuant to this Act.
(Bus. & Prof. Code Secs. 21702, 21702.5.)
Existing law provides that if any part of the rent or other
charges due from an occupant remain unpaid for 14 consecutive
days, an owner may terminate the right of the occupant to the
use of the storage space at a self-service storage facility by
sending a notice to the occupant's last known address which
contains all of the following:
an itemized statement of the owner's claim showing the sums
due at the time of the notice and the date when the sums
became due;
a statement that the occupant's right to use the storage space
will terminate on a specified date (not less than 14 days
after the mailing of the notice) unless all sums due are paid
by the occupant prior to the specified date; and
a notice that the occupant may be denied access to the storage
space after the termination date if the sums are not paid and
that an owner's lien may be imposed thereafter. (Bus. & Prof.
Code Sec. 21703.)
Existing law provides that if an owner sends an occupant a
preliminary lien notice by certified mail, the owner may, upon
the effective date of the lien, deny the occupant access to the
space, enter the space, and remove property for safekeeping.
(Bus. & Prof. Code Sec. 21705.)
Existing law requires owners to send occupants a notice of lien
sale that states the property will be sold to satisfy the lien
after a specified date that is not less than 14 days from the
date of mailing unless: (1) the amount of the lien is paid; or
(2) the occupant returns a declaration in opposition to lien
sale in a specified form under penalty of perjury. (Bus. &
Prof. Code Sec. 21705 (c).)
Existing law provides if a declaration in opposition to the lien
sale, executed under penalty of perjury, is not received by the
owner on or prior to the date specified in the notice of lien
sale, is not completed and signed by the occupant, if the
occupant cannot be contacted or served at the address provided
in the declaration, or if the occupant withdraws the declaration
in opposition to the lien sale in writing, the owner may sell
the property as specified. (Bus. & Prof. Code Sec. 21706.)
Existing law states that if a valid declaration in opposition to
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lien sale is received by the owner prior to the date set forth
in the notice of lien sale, the owner may enforce the lien only
as follows: (1) file an action to enforce the lien in small
claims court, provided that the amount of the lien is within the
monetary jurisdiction of the court; or (2) file an action to
enforce the lien in any other court of competent jurisdiction.
(Bus. & Prof. Code Sec. 21710.)
Existing law permits a person claiming a right to the stored
goods, prior to any lien sale, to pay the lien amount and
reasonable expenses. In that event, the goods shall not be
sold, but shall be retained by the owner subject to the court's
disposition of the property. (Bus. & Prof. Code Sec. 21709.)
This bill would provide, in addition to the right to foreclose
on a vehicle, watercraft, or trailer, the owner of a
self-storage facility may have the vehicle, watercraft, or
trailer towed from the premises if rent and other charges have
not been paid for 60 days and all required notices have been
sent. This bill would also provide that not less than five days
after having the vehicle towed, the owner shall send notice by
first-class mail with certificate of mailing to the occupant's
last known address, stating the name, address, and telephone
number of the towing company and the street address of the
location where the towed property can be redeemed.
This bill would state that when a towing company takes
possession of the vehicle, watercraft, or trailer, the owner of
a self-storage facility shall not be liable for the property or
damage to the property.
This bill would revise the Declaration in Opposition to Lien
Sale to inform the occupant that if they oppose the lien sale,
they can return the declaration and file a lawsuit for hearing
on the validity of the lien no later than 21 days after
returning the declaration.
This bill would provide that if a Declaration in Opposition to
Lien Sale is received by the owner, as specified, the owner may
enforce the lien only as follows: (1) the owner shall not sell
the property for 30 days from the date of receipt of the
declaration; (2) if the occupant files a complaint, and serves
the owner as specified, the owner shall not sell the property
until the court issues a judgment on the complaint in favor of
the owner's lien; or (3) if the occupant does not serve the
owner within 30 days of sending the declaration in opposition to
lien sale, or the owner is granted a judgment in favor of the
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lien, the owner may advertise and sell the property.
This bill would further provide that the Self-Service Storage
Facility Act shall not be construed to impair or affect the
right of the parties to create additional rights, duties, and
obligations in and by virtue of the rental agreement, including,
but not limited to, the right to limit the value of the property
the occupant may store in the storage space or the right to
limit the occupant's right to enter the premises or storage
space.
COMMENT
1. Stated need for the bill
The author writes:
The proposed legislation updates the self-storage lien remedy
and makes it effective, more efficient and less costly to
implement. . . . This bill would require the tenant to file
the action in small claims court or other courts of competent
jurisdiction. The bill also clarifies [what] . . . the
parties may include in the rental agreement allowing for the
parties to agree on the maximum value of the contents of the
unit and to limit a tenant's access to the storage space. It
also provides that in addition to the selling vehicles or
boats in accordance with the owner's lien rights the owner may
have vehicles or boats tow[ed] from the premises when rent and
other changes are not paid for 60 days. The owner must notify
the tenant that the vehicle or boat has been towed and where
it is being stored.
Forty-nine states and the District of Columbia have enacted
[a] self-service storage lien law. California is the sole
state in the nation that permits delinquent tenants to stop a
lien sale and require the facility owner to file suit to
enforce the lien by executing and returning a simple form.
This bill would place the responsibility on the tenant to
bring an action. In 2011 Nevada[,] the only other state with
a Declaration in Opposition to Lien Sale[,] amended [its]
self-service storage lien law . . . to require that suit be
brought by the occupant after the Declaration has been
returned (NRS 108.478). This bill will treat self-storage
operators similar to those in the dry cleaner, foundry,
warehouse and plastic fabricators businesses.
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This legislation will also reduce the burden on our courts as
in many instances, when a storage facility files suit, the
tenant fails to attend the court hearing wasting the limited
court time available.
2. Modification of lien sale provision
The most notable feature of this bill is the way it modifies the
existing process for stopping a lien sale of property stored at
a self-service storage facility. Under existing law, after an
occupant is 14 days overdue in paying rent, the facility owner
may send a notice of preliminary lien informing the occupant
that a lien will attach in 14 days unless rent and fees due
under a rental agreement are paid. On the 28th day that fees
and rent remain unpaid, the lien attaches and the owner may send
the occupant a Notice of Lien Sale along with a blank
Declaration of Opposition to Lien Sale. The lien sale process
may commence after a further 14 days (the 42nd day) unless the
occupant pays the amount due or returns a completed Declaration
of Opposition to Lien Sale within the 14-day period. If a valid
Declaration of Opposition to Lien Sale is received by the
operator, the attached lien may only be enforced if the operator
files an enforcement action in a court of competent jurisdiction
(e.g. a small claims court).
This bill would reverse the burden of enforcing a lien when a
valid Declaration of Opposition to Lien Sale is received by the
operator. Instead of the operator having to file an enforcement
action, this bill would permit an operator to proceed with a
lien sale 30 days after the receipt of the Declaration of
Opposition to Lien Sale unless the occupant files a complaint in
court and effects service on the facility operator. It should
be noted that this represents a fundamental, significant change
in law - the current statutory provisions have been in place
(and apparently working) since 1981.
The policy question raised by this bill is who should have the
burden of filing an action in court when an occupant objects to
the sale of their goods. Unlike existing law, the revised
process proposed by this bill would place the burden to file an
action on the occupant, not the self-storage facility (in other
words, the occupant would have to sue the storage facility to
stop the sale of their items).
In support of shifting the burden to file an action onto the
occupant, the proponents assert that the current process is
ineffective and does not protect consumers. They state that:
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Out of 98 suits filed by storage operators against tenants who
had returned Declarations the customer requesting the hearing
failed to appear in 91 of those suits. The storage operator
won all 98 suits filed either because the delinquent customer
failed to appear or the tenant had no viable defense.
Despite this assertion, the fact that one side nearly always
prevails in litigation does not mean that the process by which
the actions are brought is flawed - the litigation process
itself serves the function of having a neutral third party
decide a dispute. Since the occupant failed to appear in 91 out
of the 98 cases described above, it is difficult to determine
the number of cases in which tenants would have actually
prevailed if they had appeared in court.
The proponents also cite informal survey data provided by 207
privately owned self-storage facilities in California showing
that it takes between 4 to 8 months and $600 to $1500 to resolve
a contested lien sale under the present system. While the
current process does arguably impose a burden on self-storage
owners whose occupants object to the sale, shifting the burden
onto the occupant raises several issues for individuals who are
physically unable to file a timely action. For example, an
occupant may reside out of state and be unable to travel to
California and file an action in time to challenge the sale.
Further, unlike a facility operator, the renter of a
self-storage unit is likely to be in a greatly disadvantaged
position when it comes to enforcing their rights, both in terms
of access to resources and familiarity with the relevant
process.
Finally, the supporters assert that this bill would "update" the
lien remedy process by bringing it into conformity with similar
laws in 49 states and the District of Columbia, and that it
would allow self-storage operators to dispose of property on
terms similar to those presently enjoyed by dry cleaners,
foundries, warehouses, and plastic fabricators. It is not clear
that uniformity with the laws of other states or other
industries presents a strong policy rationale for shifting the
existing allocation of burdens. Aside from what may be isolated
cases, the supporters have not produced much evidence showing
that the present system is inadequate. Nor have they
demonstrated that the present system is too burdensome or one
sided, such as with documentation showing that the costs
incurred by an operator seeking enforcement of a lien often
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exceed the value recovered during a lien sale. Consequently,
this bill seems to eliminate a key consumer protection measures
that has been a part of this Act for over 30 years without a
very compelling policy rationale.
Given that this bill represents a policy choice to shift the
burden of filing a legal action onto people who are already
having difficulty making payments on their storage units -- the
Committee should consider whether that burden shift is, in fact,
appropriate in the present economic climate where individuals
are already facing financial troubles due to unemployment,
furloughs, and a struggling economy.
SHOULD THE BURDEN OF FILING AN ACTION BE SHIFTED TO THE
OCCUPANT?
3. Towing of vehicles
The second key feature of this bill is that it would permit a
storage facility operator to have a vehicle, watercraft, or
trailer towed from the premises prior to a lien sale if rent has
not been paid for a period of 60 days, provided the operator
gives the occupant a 5-day advance notice that the vehicle will
be towed and notifies the occupant of the location where the
towed property can be redeemed. This part of the bill has two
issues that may deserve further scrutiny by the Committee.
First, it is unclear whether allowing a third-party towing
company to tow and store vehicles in the manner contemplated
would result in increased costs to the renters of storage units.
Ostensibly, the owner of a storage facility would be able to
pass any towing and/or outside storage costs on to the renter
via a rental agreement or contract, ultimately resulting in
increased costs being imposed on the consumer. Second, this
provision of the bill states that "[w]hen the towing company
takes possession of the vehicle, watercraft, or trailer, the
owner shall not be liable for the property or damage to the
property." Staff notes that this immunity provision is not
limited to only licensed towing companies, but could also
provide immunity if a storage facility operator elected to have
an unlicensed towing company remove the vehicle, watercraft, or
trailer.
Furthermore, the bill requires the owner of a storage facility
to provide notice to the occupant or renter of a storage unit
that his or her property was towed "not less than five days"
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after the towing. The use of the phrase "less than" would allow
an owner to delay sending the required notice for an indefinite
amount of time, during which the renter would presumably
accumulate significant storage fees owed to the towing company.
Accordingly, the renter may end up with two significant bills:
one for past due self-service storage fees, and another for
towing and outside storage costs. Additionally, the use of the
word "after" removes any last chance for the renter to take
corrective action prior to his or her property being towed.
SHOULD A RENTER'S PROPERTY BE SUBJECT TO TOW AS SPECIFIED?
4. Additional provisions
Finally, this bill would enact a series of additional clarifying
changes to the Self-Storage Facility Act. However, one such
change may be more substantive than clarifying. Under existing
law, the Act expressly states that it shall not be construed to
impair or affect the right of the parties to create additional
rights, duties, and obligations in and by virtue of a rental
agreement. (Bus. & Prof. Code Sec. 21713.) This bill would
amend that provision to state that the act shall not be
construed to impair or affect the right of the parties to create
additional rights, duties, and obligations in and by virtue of
the rental agreement, including, but not limited to, the right
to limit the value of the property the occupant may store in the
storage space or the right to limit the occupant's right to
enter the premises or storage space. This "clarifying" change
in the statute could be interpreted as giving a storage facility
operator new authority to restrict an occupant's right to enter
the premises or storage space by contract in a manner more
restrictive than that provided for in the Act, which allows for
the termination of an occupant's right to use the storage space
after 28 consecutive days of non-payment of rent.
SHOULD THE PROPOSED CLARIFYING LANGUAGE BE STRICKEN?
Support : A Storage Place - Hemet; Chancello Group, Inc.; RV
Storage Depot; Schmitt & Co.; Security Public Storage; Sure Save
American Self Storage
Opposition : None Known
HISTORY
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Source : California Self Storage Association
Related Pending Legislation : None Known
Prior Legislation :
SB 279 (Emmerson, Chapter 65, Statutes of 2011) required lien
sales concerning property in a self-storage facility to be
advertised in a newspaper of general circulation in the judicial
district where the sale is to be held.
AB 655 (Emmerson, Chapter 439, Statutes of 2010) revised the
existing declaration of objection that permits an occupant of a
self-service storage facility to object to a lien sale;
standardized the time frame in which an owner may deny an
occupant access to a space, enter the space, and remove the
property for safe keeping; and enhanced the notice of lien sale.
AB 790 (Frommer, Chapter 267, Statutes of 2003) authorized an
owner to provide a preliminary lien notice by regular
first-class mail (in addition to certified mail) if he or she
obtains a certificate of mailing indicating the date of mailing,
but prohibited the owner from removing property until 14 days
after the lien date if using this method rather than certified
mail.
AB 2263 (Correa, Chapter 156, Statutes of 1996) authorized
self-storage facilities to assess a reasonable late payment fee
for delinquent rental fee payments based on the monthly rent of
the facility.
Prior Vote :
Assembly Judiciary Committee (Ayes 9, Noes 0)
Assembly Business, Professions and Consumer Protection Committee
(Ayes 11, Noes 1)
Assembly Floor (Ayes 72, Noes 3)
Senate Business, Professions and Economic Development Committee
(Ayes 10, Noes 0)
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