Storage Unit Contracts
I forgot to pay my storage unit fee last month. Can the storage unit sell my stuff? Can they keep all of it (worth thousands) even though I only owe $32 at this point?
Business and Professions Code Section 21700 et seq. sets forth the regulations for self-service storage facilities.
The owner of a storage facility has a lien on all property held in the storage facility. The lien is valid to cover all rent, late fees, and expenses of preserving/disposing of items in a given unit. The lien only attaches/is useable within the confines of the Act. If all or part of the rent for a unit remains unpaid for 14 consecutive days, the owner may terminate the right of use of the space. They do this by sending a notice to the occupant’s last known address. The “last known address” means the mailing address or email address provided by the occupant in the rental agreement or subsequent written notice of a change of address. Bus. Prof. Code § 21701(f). The rental agreement must provide a space for the occupant to provide an alternative address, and if they have done so, then notice must be sent to that alternative address too. This notice:
1) Must be sent to the proper address(es)
2) Must be sent by certified mail, postage prepaid, by regular first-class mail if the owner obtains a certificate of mailing indicating the notice was mailed or by email.
3) Must contain ALL of the following:
a. Itemized statement showing sums due and the date they became due
b. A statement that the right to use the space will terminate on a specific date not less than fourteen days after the mailing of the notice unless all sums due are paid
c. A notice that the occupant may be denied access to the space after the termination date if the sums are not paid and that the owner’s lien may be imposed thereafter
d. AND the name, street address, and phone number of the owner or their agent whom the occupant may contact to respond to the notice
Business and Professions Code Section 21704 sets out the form the preliminary lien notice must take. Only after the notice has been duly prepared and sent, and the sums due not paid by the specified date, does the owner’s lien attach to the property in the unit. At that point, the owner may deny the occupant access, enter the space, and remove the property therein to a safe place.
Then, the owner must send another notice to the occupant – the Notice of Lien Sale. That notice must meet certain criteria disclosing the termination of the right of use, the existence of the lien, and the impending sale. The sale may not be set for less than 14 days from the date that notice is set. Even at this point, the notice must explain if the occupant pays the past due amount in full, they may regain full use of the space and recover their property. The notice must also explain that any excess proceeds of the sale over the lien amount and costs of sale may be reclaimed by the occupant for up to one year after the sale – after that, the proceeds escheat to the County in which the sale is to take place. The Act sets out the specific format of this notice, as well as a blank declaration in opposition to the lien sale that the occupant can fill out.
If no declaration opposing the sale is received, then the owner may proceed to sell the property. An advertisement of the sale must be published once a week for two consecutive weeks in a newspaper of general circulation where the sale is to be held. Bus. Prof. Code 21707(a) is clear that “[t]he sale must be conducted in a commercially reasonable manner.” So, sale of the unit for far over or far under market value would be improper. As would a “sale” that consists of just giving the property to a friend. Etc. Any excess proceeds over the amount of arrears and cost of the sale must be held by the owner on the occupant’s behalf for one year.
A purchaser in good faith of items at the sale takes the items free from any rights of any other person. This is true even if the owner conducts the sale improperly. Bus. Prof. Code § 21711.
The contract for a storage unit must be in writing and contain specific notices. If the agreement is not in proper form, then the owner’s rights under the Act will not apply, and the lien will not attach.