BILL ANALYSIS
AB 655
Page 1
Date of Hearing: May 12, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 655 (Emmerson) - As Amended: April 16, 2009
PROPOSED CONSENT (As Proposed to be Amended)
SUBJECT : SELF-STORAGE FACILITIES: LIEN SALES
KEY ISSUE : SHOULD VARIOUS NON-CONTROVERSIAL CHANGES BE MADE TO
THE CALIFORNIA SELF-STORAGE ACT'S REMEDIES AND PROCEDURES?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill proposes various non-controversial changes to the
remedies and procedures of the California Self-Service Storage
Facility Act (the Act) for self-storage facility owners when
occupants are delinquent in paying rent or other charges. The
bill, as proposed to be amended, seeks to permit owners who send
a preliminary lien notice to an occupant by first-class mail
with certificate of mailing to, upon effective date of the lien,
deny the occupant access, enter the space, and remove property
for safekeeping. The bill requires the owner to send an
occupant notice of a lien sale while also providing the occupant
with specified information about how to challenge the lien, and
provides that the lien sale can be no earlier than 21 days after
the date of mailing. The bill requires that the lien sale be
advertised in a newspaper of general circulation if one exists
in the district where the sale will be held. As currently in
print, the bill would provide that the owner may assess a late
fee equal to the greater of $20, or 20% of the monthly rent, and
recover reasonable expenses incurred in collecting rent and
enforcing the lien. However, in response to concerns raised by
this Committee this part of the bill pertaining to late fees
will be deleted. In addition, the author has proposed a
non-controversial technical amendment, whereby the advertisement
for a lien sale shall no longer include the occupant's storage
space number, in order to protect the occupant's privacy and
belongings. This bill is supported by the sponsor, California
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Self Storage Association, 103 self-storage facility owners and
managers, and numerous individuals. This bill has no known
opposition. The bill was approved on April 14, 2009 by the
Assembly Committee on Business and Professions by a vote of 8-0.
SUMMARY : Makes various changes to the remedies and procedures
of the California Self-Service Storage Facility Act (the Act)
for self-storage facility owners when occupants are delinquent
in paying rent or other charges. Specifically, this bill :
1)Permits an owner who sends an occupant a preliminary lien
notice by first-class mail with certificate of mailing, if the
total amount due has not been paid within 14 days of the
termination date provided in the preliminary notice, to deny
the occupant access to the space, enter the space, and remove
the property for safe keeping.
2)Requires an owner, after sending a preliminary lien notice, to
send an occupant a notice of lien sale stating all of the
following:
a) That the occupant's right to use the space has
terminated and the occupant no longer has access to the
property;
b) That any stored property is subject to a lien, the
current amount of the lien, and that the lien will continue
to increase if rent is not paid;
c) That the property will be sold to satisfy the lien after
a specified date not less than 21 days from the mailing of
the lien sale notice;
d) That the occupant may regain full use of the space by
paying the full lien prior to the date of sale that was
provided;
e) A "conspicuous" statement that the occupant may
challenge the sale by filing an action in any court of
competent jurisdiction;
f) That any excess proceeds of the sale (over the lien
amount and costs of sale) will be retained by the owner,
and that the occupant can claim them for one year after the
sale, after which they will escheat to the county where the
sale takes place.
3)Eliminates the occupant's right to return a declaration in
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opposition to the lien sale, as provided under existing law.
4)Requires the lien sale to be advertised once a week for two
weeks consecutively in a newspaper of general circulation in
the jurisdiction where the sale is to be held.
5)Provides that the advertisement must include a general
description of the goods, the name of the person on whose
account they are being stored, the space number of the
occupant, and the name and location of the storage facility.
6)Provides that if there is no newspaper of general circulation
published in the judicial district where the sale is to be
held, that the advertisement shall be posted at least 10 days
before the sale, in at least six conspicuous places in the
neighborhood of the proposed sale.
7)Permits a person claiming a right to the stored goods prior to
any lien sale to pay the lien amount and one month's rent in
advance, in which case the owner must retain the property
pending a court's disposition of it; and prescribes the
procedures to be followed if a court order is not obtained.
8)As currently in print, permits an owner to assess a late fee
equal to the greater of $20 or 20% of the monthly rent, and to
recover reasonable expenses incurred in collecting rent and
enforcing a lien. In response to concerns raised by this
Committee, the author has decided to remove these provisions
from the bill.
EXISTING LAW :
1)Permits an owner who sends an occupant a preliminary lien
notice by certified mail to, upon the effective date of the
lien, deny the occupant access to the space, enter the space,
and remove property for safe keeping. However, if the owner
sends notice by first-class mail with certificate of mailing,
the owner may not remove the property for at least 14 days
following the effective date of the lien. (Business &
Professions Code section 21705.)
2)Requires an owner to send an occupant a notice of lien sale
stating that any stored property will be sold to satisfy the
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lien after a specified date that is at least 14 days from the
date of mailing, unless the amount of the lien is paid or the
occupant returns a declaration in opposition to the lien sale
in a specified form. (Business & Professions Code section
21705(c).)
3)Requires the lien sale to be advertised in a newspaper of
general circulation or posted in conspicuous places in the
neighborhood of the proposed sale, as specified. (Business &
Professions Code section 21707.)
4)Permits a person claiming a right to the stored goods prior to
any lien sale to pay the lien amount and reasonable expenses,
in which case the owner must retain the property pending a
court's disposition of it. (Business & Professions Code
section 21709.)
5)Provides that an owner may assess a reasonable late payment
fee if an occupant does not pay the entire amount of the
rental fee, as specified. (Business & Professions Code
section 21713.5.)
6)Provides, in the absence of a statutory permitted fee, the
fairness of a late fee is governed by Civil Code Section 1671,
which provides that in a commercial context a contract
liquidating the damages for the breach of the contract is
valid unless the party seeking to invalidate the provision
establishes that the provision was unreasonable under the
circumstances existing at the time the contract was made.
(Civil Code Section 1671, subdivision (b).)
7)Provides that a reasonable late payment fee is one that does
not exceed the following:
a) $10, if the rental fee is $60 or less per month;
b) $15, if the rental fee is greater than $60 but less than
$100 per month; or
c) $20 or 15% of the monthly rental fee, whichever is
greater, if the rental fee is $100 or more per month.
(Business & Professions Code section 21713.5(b).)
Provides that a charge that may be imposed for late payment of
an installment due on a loan secured by a mortgage or a deed of
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trust on real property containing only a single-family,
owner-occupied dwelling, shall not exceed either (1) the
equivalent of 6 percent of the installment due that is
applicable to payment of principal and interest on the loan, or
(2) five dollars ($5), whichever is greater. (Civil Code
Section 2954.4(a).)
COMMENTS : According to the author, "AB 655 updates the
California Self-Service Storage Facilities Act by making it more
consistent with other statutory lien enforcement procedures and
allowing owners to utilize new methods of communication. AB 655
will eliminate the Declaration of Opposition to Lien Sale and
replace it with a clearer Notice of Lien Sale to delinquent
occupants to inform them of their right to file suit to stop the
sale of their property. In most instances the occupant would be
able to file suit in small claims court and once the legal
documents are served, the sale of the occupant's property may
not proceed until a hearing is held. Currently, most delinquent
occupants are confused by the Declaration and its intentions;
therefore, its elimination would clarify the law. Additionally,
this bill will provide more time for the occupant to act after
being notified by mail than under current law, as well as allow
the owner to mail the notice by first class mail with
certificate of mailing. This less expensive method of sending
the notice provides a single method of delivery and thereby
avoids procedural errors that could be made under the current
Act."
Background . As the Business and Professions Committee found,
the Act was enacted in 1980 and has been the self-storage
industry's primary remedy for dealing with delinquent occupants
for over 30 years. That Committee stated that the law provides
storage facility owners with the means to regain possession of
the storage space and to dispose of any contents when occupants
do not pay rent. In addition, the law allows owners to recoup
their lost rent by holding a lien sale.
Method of Service and Time Frame . Existing law permits an owner
who sends a preliminary lien notice by certified mail or by
first-class mail with certificate of mailing to immediately deny
the occupant access to the space as of the effective date of the
lien. However, an owner who sent the notice by certified mail
can immediately remove the property from the space, whereas an
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owner who sent notice by first-class mail with certificate of
mailing must wait 14 days before removing the property. This
bill would provide that under either method of notice, the owner
can enter the space, deny the occupant access, and remove
property if the occupant has not paid the lien amount within 14
days.
Declaration of Opposition and New Notice Requirements . Existing
law requires an owner to send a blank document (Declaration of
Opposition) to the occupant with the notice of lien sale. If
the occupant completes the form and returns it to the owner
prior to the date of sale, the owner must seek a court order to
enforce the lien. This bill places the burden on the occupant
to either pay the amount owed, or to file a court action to
prevent the lien sale. The author states that many occupants
find the Declaration confusing, and that the bill provides a
clearer statement to occupants of their rights. This bill
requires that, with the notice of lien sale, the owner provide
the occupant with information about the occupant's rights (e.g.,
to file an action in court, to pay the full amount owed and
recover his or her property, etc.). Moreover, the bill extends
the current provision that the sale can take place within 14
days of notice, to a requirement that the sale take place no
earlier than 21 days after notice is mailed.
Late Fee Approach to Remain Existing Law . The existing statute
provides that owners may assess a "reasonable" late fee, and
provides a range of fees, from $10 to $20 per month, depending
on the amount of monthly rent, pursuant to legislation enacted
in 2000 (AB 2263 (Correa), Chapter 156. For example, existing
law provides that the late fee is $10 if the monthly rent is $60
or less, and ratchets up a bit for higher cost rentals. This
bill, as proposed to be amended, maintains the existing late fee
scheme in this area by deleting all of Section 8 of the bill.
PRIOR ARGUMENTS IN OPPOSITION : The California Newspaper
Publishers Association (CNPA) opposed the bill as introduced,
because it eliminated the requirement that the lien sale
advertisement be published in a newspaper of general
circulation. CNPA stated that publication in a newspaper
guarantees that the community has notice of an event of great
public importance, namely, the severing of an individual's legal
relationship to his or her personal property. However, the
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author amended the bill to reinstate the newspaper publication
requirement, and CNPA withdrew its opposition.
Author's Proposed Late Fee Amendment to Return This Part of Bill
Back to Current Law : As noted above, the author has agreed to
delete section 8 of the bill in Committee to return this part of
the bill to current law.
Additional Author's Technical Amendment : The author has also
proposed to amend the bill in Committee to correct a potential
privacy problem with the current manner in which a lien sale
must be advertised. The proposed amendment provides that the
occupant's name, but not his or her storage space number, will
be included in the lien sale advertisement. The corrected
Section 4 of the bill, beginning at page 4, line 24, would
instead read:
" SEC. 4. Section 21707 of the Business and Professions Code is
amended to read:
21707. (a) After the expiration of the time given in the notice
of lien sale, pursuant to subdivision (b) of Section 21705, or
following the failure of a claimant to pay rent or obtain a
court order pursuant to Section 21709, the sale shall be
advertised and the personal property shall be sold an
advertisement of the sale shall be published once a week for two
weeks consecutively in a newspaper of general circulation
published in the judicial district where the sale is to be held.
The advertisement shall include a general description of the
goods, the name of the person on whose account they are being
stored, the space number of the occupant, and the name and
location of the storage facility. If there is no newspaper of
general circulation published in the judicial district where the
sale is to be held, the advertisement shall be posted at least
10 days before the sale in not less than six conspicuous places
in the neighborhood of the proposed sale. The sale shall be
conducted in a commercially reasonable manner. After deducting
the amount of the lien and costs of sale, the owner shall retain
any excess proceeds of the sale on the occupant's behalf. The
occupant, or any other person having a court order or other
judicial process against the property, may claim the excess
proceeds, or a portion thereof sufficient to satisfy the
particular claim, at any time within one year of the date of
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sale. Thereafter, the owner shall pay any remaining excess
proceeds to the treasury of the county in which the sale was
held."
PRIOR LEGISLATION : AB 790 (Frommer), Chapter 267, Statutes of
2003: authorized an owner to provide 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 2000: authorized the
owner of a self-storage facility to assess occupants a late
payment fee for delinquent rental fee payments, as specified,
and provided that liens imposed include late payment fees.
REGISTERED SUPPORT/OPPOSITION :
Support
California Self Storage Association (sponsor)
103 Self Storage Facility Owners and Managers
Numerous Individuals
Opposition
None on file
Analysis Prepared by : Drew Liebert and Rachel Anderson / JUD. /
(916) 319-2334