BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 655
Assemblymember Emmerson
As Amended May 19, 2009
Hearing Date: July 14, 2009
Business and Professions Code
BCP:jd
SUBJECT
Self-Service Storage Facilities
DESCRIPTION
This bill would remove the ability for an occupant of a
self-service storage facility to object to a lien sale by
executing a declaration of objection, and, instead, require the
occupant to file an action in court.
This bill would additionally:
standardize the time frame in which the owner may deny an
occupant access to a space, enter the space, and remove the
property for safe keeping;
enhance the notice of lien sale;
permit a person claiming a right to stored goods to pay the
lien amount and one month's rent in advance, but if a court
order is not obtained within 30 days, the claimant must pay
the owner a monthly rental charge, and if that is not paid,
the owner may sell or dispose of the property without
liability; and
other clarifying changes.
BACKGROUND
Existing law, the California Self-Service Storage Facility Act,
governs self-service storage facilities and specifies certain
procedures to be followed when their occupants are delinquent in
their 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
(more)
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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 returned, the owner must file
a court action to enforce the lien.
This bill would modify existing law by, among other things,
removing the ability to return the above declaration of
objection, enhancing the notice of lien sale, and standardizing
the time frame between the sending of the preliminary lien
notice and the ability to deny an occupant access, as specified.
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 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 to safe keeping.
However, if the owner sends the preliminary lien 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. (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 21705 (c).)
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 repeal provisions that currently allow an
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occupant to stop a lien sale by returning a declaration in
opposition to that sale, and, instead require an occupant to
challenge the sale by filing a court action.
This bill would provide that if a preliminary lien notice has
been sent and the total sum due has not been paid within 14 days
of the specified termination date, the owner may deny the
occupant access to the space, enter the space, and remove the
property for safe keeping.
This bill would require an owner, after sending a preliminary
lien notice, to send the occupant a notice of lien sale that
states all of the following:
the occupant's right to use the storage space has terminated
and that the occupant no longer has access to the property;
the 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;
that the property will be sold to satisfy the lien after a
specified date that is not less than 21 days from the date of
mailing the notice;
a statement that the occupant may regain full use of the space
by paying the full lien amount prior to the (above) specified
date;
a conspicuous statement that the occupant may challenge the
sale by filing an action in any court having jurisdiction to
render a judgment in the amount of the lien; and
that any excess proceeds of the sale (over the lien amount and
costs of sale) will be retained by the owner and may be
reclaimed by the occupant or claimed by another person at any
time for a period of one year from the sale and that the
proceeds will then escheat to the county where the sale takes
place.
This bill would provide that prior to any lien sale, any person
claiming a right to the goods may pay the amount necessary to
satisfy the lien together with one month's rent in advance. In
that event the goods shall not be sold, but shall be retained by
the owner pending a court order directing the disposition of the
property.
This bill would provide that if a court order is not obtained
within 30 days, as specified, the claimant shall pay the owner
the monthly rental charge for the space where the property is
stored. If the claimant does not pay that rent, the owner may
dispose or sell the personal property in accordance with the
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above lien sale provisions. Furthermore, this bill would
provide that the owner shall have no liability for the sale or
other disposition of the personal property to any claimant who
fails to secure a court order or pay that rental charge.
COMMENT
1. Stated need for the bill
According to the author:
AB 655 will make several changes to the California
Self-Service Storage Facility Act that will make it more
consistent with other statutory lien enforcement procedures
in California as well as other states. This bill eliminates
the Declaration of Opposition to Lien Sale and replaces it
with a more clear Notice of Lien Sale to delinquent
occupants to inform them of their right to file suit to stop
the sale of their property. AB 655 will also change the
required method of sending the Notice of Lien Sale from
certified mail to first-class mail with certificate of
mailing.
2. Impact of removing the declaration of opposition
The committee received numerous letters from various
self-storage facilities within California that all state: "I am
especially troubled by the current requirement under the law of
sending the Declaration in Opposition. Only California and
Nevada have such a requirement and it places a significant
burden upon many of the small businesses within the Self storage
Industry in California." The declaration at issue is one that
owners must send to the occupant along with the notice of lien
sale. If the occupant completes the form and returns it to the
owner prior to date of sale, the owner must seek a court order
to enforce the lien.
By replacing the declaration with an enhanced notice of lien
sale that includes a "conspicuous statement" that the occupant
may challenge the sale by filing an action in any court having
jurisdiction to render a judgment in amount of the lien
(arguably including small claims court), this bill would shift
the burden of filing an action from the owner to the occupant.
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.
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While the current process does arguably impose a burden on
self-storage owners whose occupants object to the sale, the
shifting of 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 to challenge
the sale. Similarly, an individual who is in the military and
stationed overseas would have the opportunity to object to the
sale under existing law, but would be otherwise unable to
physically travel to California and file an action to protect
their belongings.
Absent complete information regarding the number of times an
objection is actually sent and the reasons for sending those
objections, the committee should consider whether it is
appropriate to remove this consumer protection that has been in
place for 28 years. If, as the author states, "[m]ost
delinquent occupants are confused by the Declaration and its
intentions," the author should work with committee staff to
clarify the declaration so that the protection can be preserved
while clarifying existing law.
SHOULD THE AUTHOR WORK WITH COMMITTEE STAFF TO, INSTEAD, CLARIFY
THE DECLARATION TO ELIMINATE CONFUSION THAT MAY EXIST?
The committee should consider whether this would be an
appropriate issue for the Law Revision Commission to study and
issue a report - such a report would provide guidance for how
best to clarify, or if supported by evidence, eliminate the
declaration of objection.
ALTERNATIVELY, SHOULD THE LAW REVISION COMMISSION STUDY THE
DECLARATION OF OBJECTION?
3. Immunity provision
Under existing law, any person claiming a right to goods that
have been stored may pay the amount necessary to satisfy the
lien and the reasonable expenses incurred. In that case, the
goods shall not be sold, and are retained by the owner pending a
court order directing disposition of the property.
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This bill would modify that provision by, instead, requiring
that person to pay the amount necessary to satisfy the lien
together with one month's rent in advance. If a court order is
not obtained within 30 days following the date of that payment,
the claimant must pay the owner the monthly rental charge for
the space, and if they do not make that payment, the owner may
sell or dispose of the property. The bill would additionally
provide that the owner shall not be liable for the sale or other
disposition of the personal property to any claimant who fails
to secure a court order or pay the required rental charge.
It is unclear how an owner would be liable if they are complying
with their proposed statutory duties thus, the following
amendment is suggested to clarify that the immunity applies only
when the owner has fully complied with the requirements of the
chapter. That same immunity appears in Business and Professions
Code Section 21708 that governs the issue of the owner
delivering possession of any personal property to a person with
a perfected security interest that has paid the total amount
due, as specified.
Suggested amendment:
On page 5, line 37, after "section" insert:
, provided the owner has fully complied with the requirements
of this chapter.
4. Additional provisions
Under existing law, an owner may send a preliminary lien notice
either by certified mail or by first-class mail with certificate
of mailing. When the notice is sent by certified mail, the
owner may deny an occupant access to the space, enter the space,
and remove property, if the lien is not paid by the date
specified in the lien notice (the termination date). An owner
must wait 14 days to take the above actions if the notice is
sent by first-class mail with a certificate of mailing. This
bill would standardize that time frame by providing that an
owner who has sent a preliminary lien notice (by either type of
mailing) may enter the space, deny the occupant access, and
remove property if the occupant has not paid the lien amount
within 14 days of the termination date specified in the notice.
This bill would also extend the sale date from not less than 14
days after the notice of lien sale, to not less than 21 days,
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and make other technical, clarifying changes.
Support : over 120 individuals
Opposition : None Known
HISTORY
Source : California Self Storage Association
Related Pending Legislation : None Known
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.
Prior Vote :
Assembly Business and Professions Committee (Ayes 8, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Floor (Ayes 76, Noes 0)
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