Procedure to Auction Storage Unit After Unpaid Rent
If the proper procedures are followed, a storage facility may hold a lien auction sale as soon as two months after a renter's missed payment. The owner must follow the specific statutory guidelines of the CA Self-Service Storage Facility Act which governs lien sales.
Preliminary Lien Notice.If any part of the rent remains unpaid for 14 consecutive days, the Owner must send the Renter a "Preliminary Lien Notice," which shall be sent by either certified mail or by first-class mail along with certificate of mailing. The Preliminary Lien Notice must substantially conform to the form set forth in Business and Professions Code, and must include the following:
(i) An itemized statement of the Owner's claim showing sums due at the time of the notice and date when the sums became due;
(ii) Owner may assess a reasonable late payment fee subject to the following requirements: (a) rent remains unpaid for at least ten days after it becomes due [which means there is a ten day grace period after the due date for during which no late fees may be incurred], (b) only be one late fee may be assessed per late payment, and (c) the late fee amount must be specified in the rental agreement, and must not exceed:
$10 for a rental price of $60 or less per month; or
$15 for a rental price of $61-$99 per month; or
$20 or 15% of the rental price, whichever is more, for a rental price of $100 or more per month.
(iii) A statement that the Renter's right to use and enter the storage facility unit will cease on a specific date, which shall be no less than 14 days from the Preliminary Lien Notice ("termination date");
(iv) A notice that Renter may be denied access to the storage space after the termination date if the rent has not been paid;
(v) A notice that an Owner's Lien may be imposed thereafter.
Notice of Lien Sale; Publication; and Proceeds from the Sale.If the Preliminary Lien Notice has been sent and the balance due has not been paid by the termination date, an Owner's lien attaches as of that termination date to the personal property within the unit. As of the termination date, Owner may enter the unit, deny the Renter access to the unit, and remove any property found within the unit to a place of safekeeping.
Next, the Owner must send the Renter a "Notice of Lien Sale" that shall include the following:
(i) the Renter's right to use the storage unit has terminated and the Renter no longer has access to the stored property;
(ii) the stored property is subject to the Owner's lien, the current amount of the lien, and that the lien will continue to increase if rent is not paid;
(iii) the date the storage facility will be sold/auctioned to satisfy the lien, which shall be no less than 14 days from the Notice of Lien Sale ("auction date"), unless the Renter executes and returns by certified mail a declaration in opposition to the lien sale;
(iv) a statement that the Renter may regain full use of the storage unit by paying the full lien amount prior to the auction date;
(v) 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 Renter for up to one year from the auction date, and thereafter the proceeds will escheat to the county in which the sale took place.
Along with the Notice of Lien Sale, the Owner must send the Renter a blank "Declaration in Opposition to Lien Sale." To avoid a lien sale at this stage, the Renter may pay the lien amount, or send a Declaration in Opposition to Lien Sale to the Owner via certified mail. If a valid Declaration is received by the Owner prior to the auction date, the Owner must enforce the lien through court proceedings.
After the auction date provided in the Notice of Lien Sale has passed, the Owner must publish the information about the lien sale in a newspaper of general circulation (the "Publication"), one time per week for two consecutive weeks. The Publication shall include (a) a general description of the property; (b) the name of the Renter (whose account the property is being stored); (c) the name and location of the storage facility.
During the publication period, the Renter may pay off the lien together with one month's rent in advance. In that event, the property must not be sold, but must be retained by the Owner pending a court order directing disposition of the property. If a court order is not obtained within 30 days, the Renter shall pay the Owner monthly rent as provided in the rental agreement. If the Renter does not pay such rent, the Owner may sell or dispose of the property.
If no rent is paid, the Owner may sell the property once all requirements above have been satisfied. The sale of the property is typically handled by a professional auctioneer. The Renter still may have rights to the auction proceeds, even if the Owner fully complied with the legal requirements. The Owner can keep the lien amount plus the costs of the sale. If the Renter does not claim any excess proceeds within one year, the excess proceeds must be given to the county.