Storage Unit Laws and Lien Sales in California
One of the new trends in reality television is auction shows, including programs such as Auction Hunters and Storage Wars which depict storage facility liens sales. Wonder how those sales work? What rights as a renter or owner do you have? Read on!
A storage facility lien sale may occur when a renter of a storage facility fails to pay the owner rent. In addition to any rental agreement between the storage facility owner and renter, the California Self-Service Storage Facility Act, found in the California Business and Professions Code, regulates lien sales. If the proper procedures are followed, a lien sale may take place within two months of a missed payment. Once a storage unit is sold, a good faith purchaser has no obligation to the renter/old owner of the property within the unit. So it is unlikely that any personal property will be recovered and the only recourse will be to pursue to the storage facility owner for compensation.
The procedures a storage facility owner legally must follow are very specific. The owner cannot do anything until a payment is at least 14 consecutive days late. Then, a “Preliminary Lien Notice" may be sent, which should notify the renter that her right to use and enter the storage facility will cease on a specific date (“termination date"), which is no less than 14 days from the Preliminary Lien Notice.
After the termination date, the owner must send a Notice of Lien Sale indicating a date after which the storage facility will be sold or auctioned. This date must be no less than 14 days after the Notice of Lien Sale. To avoid a lien sale at this stage, a renter may pay the lien amount, or send a declaration in opposition to the lien sale to the owner via certified mail. This declaration must meet specific requirements and may lead to a court case.
Once the date provided in the Notice of Lien Sale has passed, the owner must still place an advertisement in a publication one time per week for two consecutive weeks with information about the anticipated lien sale. A renter may still choose to pay off the lien even during the publication period, but it may not mean an immediate return of her property. It is likely that a court would get involved to determine the distribution of property.
Late fees may be charged and added to the lien amount, but they must be “reasonable." This means that there is a 10 day grace period after the due date for a payment during which no late fees may be incurred. Thereafter, there may only be one late fee assessed per late payment. The late fee may not exceed $10 for a rental price of $60/month or less or $15 for a rental price of $61-$99/month. For rental agreements of $100 or more per month, the owner may charge $20 or 15% of the rental price, whichever is more.
If a lien sale goes forward, a renter still may have rights to money, even if an owner fully complied with the terms of the legal requirements for lien sales. After a sale, the owner of the storage facility may maintain the proceeds equal to the lien amount and costs of the sale. Any proceeds in excess of that must be retained by the owner for one year post sale and may be claimed by the renter. If they are not claimed, the owner may NOT keep them but must give them to the county.