Relates to liens on self-service storage facilities

Summary of provisions

Section 1 of the bill amends subdivision 7 of section 182 of the lien law to require two notices be provided to the occupants as well as an alternative contact person prior to conducting a lien sale. It requires that the second notice be personally delivered or sent between five and ten days after the first notice has been delivered. The occupants will have at least 30 days from the receipt of the second notice to pay the amount due or bring a special proceeding to dispute the validity of the lien or the amount claimed.

Section 2 of the bill amends subdivision 2 of section 182 of the lien law by adding a new sentence to paragraph (c), requiring every occupancy agreement to state conspicuously that the occupant's personal property in a leased space will be subject to a claim of lien and can be sold to satisfy the lien if he/she defaults or fails to pay rent for the storage of personal property abandoned after the termination of the agreement. It also adds a new paragraph (d) to require that every occupancy agreement to ask for the name and address of another person to whom the required notices may be sent. However, failure of an occupant to provide an alternative address shall not affect an owner's remedies under this section or under any other provision of law.

Section 3 provides for this act to take effect January 1, 2016.

Justification

In recent years, storage auctions have gained much popularity as a result of televisions shows such as Storage Wars and Auctions Hunters where bidders uncover treasures and antiques that are worth thousands of dollars. These shows have not only increased awareness of storage auctions, but also attracted more people to participate in the auction process in the hope that they too will find valuable items. Given the increased demand for storage auctions, it has become even more important to ensure that storage unit occupants are given sufficient notice to recover their personal property before it is auctioned off.

Under the Lien Law, self-service storage facility owners have lien enforcement rights to collect overdue fees and to recover their storage space from delinquent occupants by conducting a lien sale of their personal property. Unlike most auctions, where a bid is placed on a single item, it is a usual commercial practice for bidders in storage unit auction to bid on the entire contents of the unit.

Prior to conducting this auction, storage facilities owners are required to deliver a pre-lien notice to the occupant, stating that the goods will be advertised for sale and sold at public or private

sale unless he/she pays within a specified time, that are not less than 10 days.

However, the problem arises when this one-time notice is not properly delivered to the occupant. Since storage auctions can allow the sale of the entire contents of the unit without inspecting and inventorying each item, occupants may be unfairly prejudiced if they do not receive the notice, especially when the stored property includes valuable items. In addition, the current law provides only 10 days for the occupant to bring a special proceeding upon the service of the notice to dispute the validity of the lien or the amount claimed. For people who are unfamiliar with the legal proceeding, 10 days may not give them enough time to file the necessary paperwork to initiate the proceeding.

In order to prevent premature and wrongful sale of property, the legislation strengthens the notice requirement in relation to the owner's enforcement rights. Under this bill, the occupancy agreement must include a conspicuous notice that the occupant's personal property in the leased space will be subject to a claim of lien and can be sold to satisfy the lien upon default of abandonment of the stored items. In addition, the owner must make two attempts to contact the occupant as well as any alternative person that the occupant lists in the occupancy agreement. The bill allows at least 30 days from the receipt of the second notification for the occupants to cure the default by paying the outstanding fees. Furthermore, it extends the time limit for bringing special proceeding from 10 days to 30 days of the service of the second notice.

Prior legislative history

None

Fiscal implications for state and local governments

None known.

Effective date

This act shall take effect January 1, 2016.