BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 655 (Emmerson)
As Amended May 20, 2010
Hearing Date: June 29, 2010
Fiscal: No
Urgency: No
BCP:jd
SUBJECT
Self-Service Storage Facilities
DESCRIPTION
This bill would revise the existing declaration of objection
that permits an occupant of a self-service storage facility to
object to a lien sale of their items, and 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
make 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
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
(more)
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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, sponsored by the California Self Storage Association,
would modify existing law by, among other things, modifying the
process for that 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 Sec. 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 revise the current declaration in opposition to,
instead, inform the occupant that if they oppose the lien sale,
they can return the declaration and file a lawsuit for hearing
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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, or the owner is granted a judgment in favor of the lien,
the owner may advertise and sell the property.
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
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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
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.
2. May 20, 2010 amendments reinsert the ability of an occupant
to send a declaration of opposition to delay the sale of
property
In response to concerns raised last year about the elimination
of the Declaration in Opposition, which permits occupants of
self-storage facilities to object to the sale of their goods,
the May 20, 2010 amendments reinsert a modified version of that
declaration. Under existing law, the current declaration is
sent to an occupant who may fill it out and return the document.
To inform the occupant of the consequences of returning the
declaration, the document itself requires the occupant to sign,
under penalty of perjury, that: "I understand that the
lienholder may file an action in court against me, and if a
judgment is given in his or her favor, I may be liable for the
court costs." Once that declaration is signed and returned, the
storage facility must file suit to be able to sell the property.
The policy question raised by this bill, and the May 20, 2010
amendments, is who should have the burden of filing an action in
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court when an occupant objects to the sale of their goods.
Unlike existing law, the revised declaration 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 the revised declaration and shifting the
burden to file an action onto the occupant, the proponents
assert that the current declaration does not act as a consumer
protection and that:
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 that 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. Given that this bill
represents the policy choice to shift the burden of filing a
legal action onto people who are already struggling to make
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?
As an alternative to that shifting of the burden, the Committee
should consider whether to, instead, modify the existing process
for the Declaration in Opposition to permit the storage facility
to bring the action in small claims court. That ability would
reduce the costs of the facility when they are required to bring
these actions - that clarification should also include any
appropriate modifications to the declaration (such as ensuring
that the occupant fills out his or her address) that may
facilitate the bringing of those actions.
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SHOULD THE BILL BE AMENDED TO RESTORE THE EXISTING PROCESS, BUT
PERMIT THE FACILITY TO BRING AN ACTION IN SMALL CLAIMS COURT?
In addition to revising the Declaration in Opposition, this bill
would also enhance the notice of lien sale that would accompany
the declaration. That enhanced notice would warn the occupant
that the lien will continue to increase until it is paid, that
the occupant may regain the full use of the space by paying the
full lien amount, and must include 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. While that enhanced notice, combined with the revised
declaration, would appear to provide consumers with notice of
their rights, as discussed above, the bill would also shift the
burden of filing an action in a way that could diminish the
bargaining power of an occupant.
Although not addressing the issue of shifting the burden, the
following clarifying amendment is suggested to strike changes to
Section 21708 of the Business and Professions Code that are no
longer necessary after the recent amendments:
Clarifying amendment:
On page 6, strike out lines 13 through 25, inclusive.
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.
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
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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 7, line 2, 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,
and make other technical and clarifying changes.
Support : Over 120 individuals
Opposition : None Known
HISTORY
Source : California Self Storage Association
Related Pending Legislation : None Known
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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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