Legislature(2021 - 2022)GRUENBERG 120
03/16/2022 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB331 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 331 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
March 16, 2022
1:03 p.m.
MEMBERS PRESENT
Representative Matt Claman, Chair
Representative Liz Snyder, Vice Chair
Representative Harriet Drummond
Representative Jonathan Kreiss-Tomkins
Representative David Eastman
Representative Christopher Kurka
Representative Sarah Vance
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 331
"An Act relating to self-storage facilities for personal
property, including vehicles and watercraft; relating to the
treatment of firearms, ammunition, and controlled substances
found in self-storage units; distinguishing self-storage
facility liens from another type of storage lien; and excluding
self-storage liens from the treatment of certain unclaimed
property."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 331
SHORT TITLE: SELF-STORAGE UNITS: LIENS; SALES
SPONSOR(s): REPRESENTATIVE(s) TUCK
02/16/22 (H) READ THE FIRST TIME - REFERRALS
02/16/22 (H) JUD, L&C
03/14/22 (H) JUD AT 1:00 PM GRUENBERG 120
03/14/22 (H) <Bill Hearing Canceled>
03/16/22 (H) JUD AT 1:00 PM GRUENBERG 120
WITNESS REGISTER
REPRESENTATIVE CHRIS TUCK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, presented HB 331.
DANIEL BRYANT, Legal and Legislative Counsel
Self Storage Association
Alexandria, Virginia
POSITION STATEMENT: Presented a PowerPoint, titled "Bringing a
Self Storage Lien Law to Alaska."
MIKE MASON, Staff
Representative Chris Tuck
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Tuck, prime
sponsor, answered questions during the hearing on HB 331.
SHARON BEEMAN
Forbes Storage
North Pole, Alaska
POSITION STATEMENT: Gave public testimony during the hearing on
HB 331.
WILLIAM BREWER, Owner
Fairbanks Storage, LLC
Fairbanks, Alaska
POSITION STATEMENT: Gave public testimony during the hearing on
HB 331.
ACTION NARRATIVE
1:03:42 PM
CHAIR MATT CLAMAN called the House Judiciary Standing Committee
meeting to order at 1:03 p.m. Representatives Vance, Kreiss-
Tomkins (via teleconference), Eastman, and Claman were present
at the call to order. Representatives Drummond, Snyder, and
Kurka arrived as the meeting was in progress.
HB 331-SELF-STORAGE UNITS: LIENS; SALES
1:04:23 PM
CHAIR CLAMAN announced that the only order of business would be
HOUSE BILL NO. 331, "An Act relating to self-storage facilities
for personal property, including vehicles and watercraft;
relating to the treatment of firearms, ammunition, and
controlled substances found in self-storage units;
distinguishing self-storage facility liens from another type of
storage lien; and excluding self-storage liens from the
treatment of certain unclaimed property."
1:04:47 PM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, as prime
sponsor, presented HB 331. He stated that HB 331 would
modernize the lien law in Alaska pertaining to self-storage
facilities, of which there are approximately 150 in the state.
He remarked that Alaska is the only state with no lien laws
specific to the self-storage unit industry. He stated that lien
laws exist to settle disputes between storage facility owners
and unit renters. He drew a comparison of the lien laws to
those in the Landlord-Tenant Act, and he stated that the
proposed legislation would contain protections for both parties.
For storage facility owners, he said that lien laws would aid in
satisfying the debts incurred by renters not paying their rent,
or who fail to comply with the terms of rental agreements. He
stated that HB 331 would allow owners to enforce a lien on the
storage after the renter has been continuously in default for at
least 10 days. He noted that 10 days would be the minimum
number of days elapsed prior to the owner taking action. He
expressed the opinion that it would be unlikely an owner would
take action immediately. He stated that the proposed
legislation would give owners the right to dispose of property
in a storage unit if a renter does not pay the default amount
due by the deadline prescribed in the lien notice. He added
that the proposed legislation would direct how and when an owner
could dispose of the contents in a unit.
1:06:42 PM
REPRESENTATIVE TUCK explained that renters would also be
protected. Unit owners would be required to provide details of
the lien process and the methods of enforcing a lien. In other
words, an itemized statement of the claim would be provided to
renters with instructions on curing a default. He stated that
the proposed legislation would also allow the renter to receive
notifications via email. He added that owners would be required
to allow time for renters to settle any default prior to taking
possession of the private property contained in a storage unit.
The proposed legislation would also outline how renters may
redeem their property prior to disposal by the owner. Owners
would be required to hold any excess proceeds from the disposal
of property, along with the records, for one year. He added
that the owners would be required to provide these records to
any former unit renters. He stated that the proposed
legislation would contain a notification requirement which
includes a phone call, postal mail, and an email from the owner
to the renter. He further explained that facility owners who
seek to dispose of property must provide a published notice in a
newspaper within the facility's judicial district. The owner of
the facility would be required to advertise any sale one time
per week for two weeks in a commercially reasonable manner. He
expressed the understanding that this would likely attract at
least three bidders who are not related to the facility owner or
each other. He noted that HB 331 would prescribe the
information which must be included in the publication
advertisement and notice of sale, and the sale would take place
not less than five days after the notification of sale.
REPRESENTATIVE TUCK stated that the proposed legislation would
contain a provision on restricted property, such as firearms,
ammunition, and controlled substances, as these would be
transferred to law enforcement. The lien notice must include a
statement that a law enforcement agency will be notified should
restricted property be found in a rental unit, and a renter will
be notified when restricted property is transferred to law
enforcement. He stated that renters would be permitted to file
a claim for the return of firearms or ammunition from law
enforcement within one year.
1:10:19 PM
DANIEL BRYANT, Legal and Legislative Counsel, Self Storage
Association (SSA), gave a PowerPoint presentation, titled
"Bringing a Self Storage Lien Law to Alaska" [hard copy included
in the committee packet]. He began on slide 2, reviewing how
the self-storage business works. He gave an overview of lien
laws, how the lien sale process works, and the proposed Alaska
self-storage lien law. Moving to slide 3, he stated that in
Alaska there are approximately 150 facilities. Almost all of
these facilities are owned by small operators based in Alaska.
He pointed out that the larger storage facility owners are
publicly traded companies, such as Public Storage. Addressing
self-storage operations, he moved to slide 4, which read as
follows [original punctuation provided]:
• The self storage operator and tenant have a
commercial landlord-tenant relationship.
• A broad swath of consumers use self storage for a
variety of reasons.
• Consumers contact storage operators over the phone,
via the internet, or in person to rent a unit.
• Once a unit size is selected, a consumer signs the
rental agreement, the contract that governs the
relationship between the operator and the tenant.
• All rental agreements are month-to-month tenancies
that renew upon the mutual desire of both parties.
Consumers are free to terminate and vacate.
• Vast majority of tenancies are successful for both
parties. Goods are stored and rent is timely paid.
MR. BRYANT further explained that units are rented because
the renter does not have enough space for life transitions,
such as death or divorce. He added that storage unit
rental agreements would not lock a consumer into a multi-
month or multi-year commitment. He stated that most
agreements are successful for both the renter and the unit
owner. He then summarized the information on slide 5,
which read as follows [original punctuation provided]:
Lien Law Overview
• Forty-nine states and the District of Columbia have
a self storage lien law.
• Alaska is the last state without a self storage lien
law.
• Self storage lien laws provide a non-judicial
foreclosure process for addressing situations in which
self storage tenants fail to pay their rent, and the
storage operator must sell the tenant's property to
satisfy the operator's lien for past due rents.
• Statutory lien laws are important to provide a basic
legal framework and guardrails to protect both owners
and occupants.
• This bill would ensure that several steps are taken
before a sale, starting with the execution of a
written rental agreement that informs the occupant of
the lien and the fact the property may be sold or
disposed of upon default.
• Also, the occupant would have to be notified several
times before sale / disposal.
1:13:30 PM
MR. BRYANT continued the presentation on slide 6, explaining the
lien sale process. He pointed out that national data from SSA
indicates storage operators sell approximately 1 percent to 3
percent of leased spaces annually. In other words, 97 percent
to 99 percent of tenants use the space as described in the
rental agreement and never have their belongings subject to a
lien sale. He explained that even though the lien process is
not used often, it is necessary for the successful operation of
a storage facility business. When a renter is in default, he
voiced that the primary goal of storage facility operators is to
recover the space, which can then be rented again to a paying
customer. He explained that lien sales are not an income
generating activity, and an owner would likely recover only 20
cents to 30 cents per dollar lost because of the imposition of
the lien.
MR. BRYANT explained that the Servicemembers Civil Relief Act
(SCRA) provides special protections for service members in all
50 states, including Alaska, and the proposed legislation would
ensure these protections are maintained. He pointed out that
SCRA is explained on slide 7 of the presentation. He added that
failure to comply with the SCRA carries both criminal and civil
penalties and liability.
MR. BRYANT drew attention to slide 8 which listed highlights
from the proposed legislation. These highlights include rental
agreement requirements, default notice requirements, advertising
requirements, and the manner and method of sales. He pointed
out slide 9 addresses the rental agreement requirements. These
include that the rental agreement would be executed by both
parties; the lien would be attached on the date the property is
placed in the unit; the storage owners would be legally
obligated to ensure the rental agreement contains a statement in
bold notifying the renter of the existence of the storage lien;
and for the owner's lien to be enforceable, occupants must be
informed upon execution of the rental agreement. Moving to
slide 10, he went over the default notices covered by the
proposed legislation, which include, after being informed of the
owner's lien rights, if the tenant defaults, the owner must send
a notice to the occupant regarding the default and provide an
opportunity to cure; the required notice must be to the
occupant's postal address and electronic mail address provided
in the rental agreement, or in the written notice of a change of
address; and hard copy mail must be sent, providing evidence of
the mailing. He added that, as a matter of practice, owners in
every state make several additional attempts to contact renters
in default to remedy any dispute prior to a lien sale.
MR. BRYANT recalled Representative Tuck's earlier reference to
the use of email and explained that this has become a national
trend. He explained that email is useful because approximately
50 percent of self-storage tenants are in transition, and email
addresses typically remain the same when an individual moves.
He stated that the proposed legislation would give tenants the
choice to receive lien notices by email, if provided, and the
owner must send the notice by both traditional mail and email.
He added that nationally most storage owners have found tenants
more responsive to email. He directed attention to slide 12 and
explained that the map depicts the status of legislation in
other states related to the use of email for notifications.
1:18:13 PM
MR. BRYANT drew attention to slide 13, which concerned late fees
in the proposed legislation. He stated that the late fee would
be the standard $20 or 20 percent of the monthly rent, whichever
is greater. He suggested that consumers would be protected by
this amount, which is fair and reasonable, while still
compensating the storage owner for lost revenue. Moving to
slide 14 explained that the map depicts the status of safe
harbor laws for late fees. He explained that states highlighted
in yellow do not have a safe harbor provision related to late
fees, but those states allow late fees. He added that some
owners may elect to charge exorbitant late fees and expressed
his opinion that it would be prudent to provide guidance in
statute on what is fair and reasonable.
CHAIR CLAMAN asked which party would benefit from the safe
harbor provision.
MR. BRYANT answered that the safe harbor provision would apply
to the owner. He explained that the $20 or 20 percent would be
fair and reasonable.
MR. BRYANT, moving to slide 15, described the step which would
be taken following multiple attempts to contact a renter in
default. He stated that once the occupant has been informed of
the lien in the rental agreement, and several attempts have been
made to contact the renter, and the occupant is completely
unresponsive, other methods of contact are available, such as by
text message. He reiterated that an owner's best interest is to
avoid a lien sale; however, at this point, the proposed
legislation would allow the property to be towed, sold, or, if
the property is of very low value, disposed of. Regarding
towing property, such as a vehicle, he stated that many storage
operators do not want to sell this type of property because the
process is cumbersome. He continued that the proposed
legislation would provide operators with the option to have the
property towed after default, and the towing company would have
to comply with the process for selling a titled vehicle. He
added that 43 states allow operators to tow vehicles under
similar circumstances. He pointed out the language on slide 18
pertaining to towing in HB 331. He drew attention to slide 19
and reiterated that owners' lien sales are not "moneymakers" for
storage owners, and the primary goal of the proposed bill is to
enable the owner to get the unit back into the owner's inventory
as a rental.
MR. BRYANT, moving to slide 20, explained the sale of property.
He stated that operators have a strong incentive to advertise in
the most effective means possible to maximize the sale price, as
any proceeds received would be applied to the debt owed. He
added that this also benefits the customer, as any excess
proceeds greater than the debt would be held for the former
occupant. He stated that the owner would then send notice to
the occupant of the excess proceeds for the occupant to collect;
however, he expressed the understanding that it is rare for
there to be any excess proceeds greater than the debt owed. He
reiterated that in nearly all cases, the owner loses money when
selling a customer's property. He described advertising for the
sale, and pointed out the proposed legislation would require an
owner to advertise once in a newspaper of general circulation,
or one time a week for two weeks in a commercially reasonable
manner which is likely to attract three independent bidders, who
are not related to the owner or each other. He explained that
an owner would be allowed to choose either method of
advertising, whichever best suits the circumstances.
1:23:24 PM
MR. BRYANT reviewed how the sale would be conducted. He stated
that the owner must hold the sale at the storage facility, or
the nearest suitable location to the unit. It could also be on
a publicly accessible internet website. He continued that the
facility owner must hold the sale not less than five days after
the advertisement. He added that these provisions are common in
the legislation in other states. Moving to slide 22, he pointed
out that sales can be conducted online or on-site. He added
that online sales expand the audience of potential bidders by
allowing bidders to submit bids over the course of several days
without attending a one-day sale in person, and this would
create the likelihood of higher bids. He pointed out that
slide 23 depicts a map of states which allow online sales.
Moving to slide 24, he stated that the proposed legislation
would allow owners to dispose of very low value property in
units. He stated that, if the unit renter does not cure the
default and pay the amount due by the deadline, as stated in the
lien notice, and if the facility owner determines it is not
viable to publicly sale the property, the facility owner may
privately sell, give away, donate, or throw away the property.
MR. BRYANT, moving to slide 25, summarized the process after the
sale of the property. He stated that the bill outlines the
order of payments from the proceeds. The facility owner must
mail a notice about the excess proceeds to the renter and hold
these proceeds for one year.
MR. BRYANT concluded the presentation by summarizing the
information on slide 27, which read as follows [original
punctuation provided]:
• Self storage lien laws provide a non-judicial
foreclosure process to address situations in which
self storage tenants fail to pay their rent, and the
storage owner must sell the tenant's property to
satisfy the owner's lien for past due rents and other
fees.
• The lien process is an infrequently used procedure,
but it is necessary for the successful operation of a
storage facility.
• A statutory lien law provides an essential framework
and guardrails to protect storage owners and
consumers.
• Alaska is the last remaining state without such a
law.
• Now is the time to bring a self storage lien to
Alaska.
MR. BRYANT restated that most tenants and owners are satisfied,
and he welcomed questions from the committee.
1:28:05 PM
REPRESENTATIVE SNYDER referred to Section 34.35.665 on page 7,
line 6 of the proposed legislation and asked whether an owner
would be entitled to excess proceeds in the case of a tenant in
default having violated the maximum value of the contents of the
unit, as stipulated in the rental agreement, and the property
was sold at a higher value.
MR. BRYANT answered that the provision was included to allow a
unit owner to limit the value of stored goods so an individual
could not later claim the loss or destruction of items of very
high value. He added that self-storage units are not
appropriate for very high-value items. In response to the
restatement of the question, he explained that any time a lien
sale occurs, the owner is entitled to a maximum of the total
debt owed by the renter. He added that a renter would be
entitled to the proceeds which exceed the debt and any other
qualified claims against the proceeds of the sale. He further
explained that the owner would be required to attempt to contact
the renter.
1:32:02 PM
REPRESENTATIVE EASTMAN referred to the provision related to the
disposal of low-value contents and asked whether an owner could
determine a sale would be inconvenient or elect to not sell an
item, regardless of its actual value.
MR. BRYANT offered that this provision would pertain to units in
default which evidently contain garbage. He noted that other
states had provisions allowing an owner to determine a low
dollar value threshold, and this would allow an owner to elect
not to conduct a sale. In response to a follow-up question, he
answered that, as the bill is written, there does not exist an
appeal process and valuation is left to the facility owner.
REPRESENTATIVE EASTMAN asked what would happen in the case that
an owner valued a renter's property lower than its actual value,
and it exceeded the amount provisioned in the rental agreement.
He questioned the legal remedy for the renter.
MR. BRYANT answered that other states do not incorporate such
language into their laws, and SSA recommends owners execute a
sale for each unit in default, when possible. He stated that
the sale would determine the fair value of the contents of a
unit. He reiterated that the provision under discussion would
be included to provide a remedy for units which are evidently
full of garbage, and an owner may elect not to conduct a sale.
1:37:01 PM
CHAIR CLAMAN suggested that an owner, who does not know the
value of an object, disposes of valuable property. He
questioned what remedy would exist for the renter.
MR. BRYANT answered that the renter could pursue damages through
a civil action called a "wrongful sale."
REPRESENTATIVE TUCK offered that the bill before the committee
has been a work in progress for more than 10 years. He
suggested that the line of questioning underscored the need for
a storage lien bill, and a case has occurred in Alaska where a
renter had valuable property which an owner kept. He added that
similar situations have occurred with firearms. He stated that
cases exist where a renter falls behind, and if the owner has
knowledge of valuable property in the unit, the owner may not
attempt to contact the renter. He expressed the importance of
establishing terms and conditions in statute, so individuals
know their rights.
1:40:13 PM
REPRESENTATIVE VANCE referred to page 5, line 11 in the proposed
legislation and asked whether 5 days between public notification
and the execution of a sale would be adequate.
MR. BRYANT answered that the national average ranges between 5
to 15 days. He expressed the opinion that 5 days after
advertisement of the sale would be adequate for online sales.
REPRESENTATIVE VANCE asked for an explanation of the process
from the time rent is due to the advertisement of the sale.
MR. BRYANT explained that an owner is required to wait 10 days
[after rent is due] to determine whether a renter is in default,
and the process would not start before day 11. He said there
would be 21 days following the notice to the renter to cure the
default. He stated that the advertising process would occur
after this. He reiterated that the guidance offered by SSA
would be to slow the process to attempt contact and to seek
other remedies prior to a sale.
REPRESENTATIVE VANCE expressed her concern that many rural
Alaskans may not have access to email or postal mail because of
commercial fishing, or other activities. She asked what
protections would exist for individuals who may not prioritize
storage unit rent with no malicious intent.
REPRESENTATIVE TUCK stated that there has been discussion
regarding a provision requiring owners to make a phone call. He
described his personal experience of being stranded in rural
Alaska with no access to the internet. He suggested that the
decision to expand the provision to require a phone call would
be one of policy.
1:45:17 PM
REPRESENTATIVE SNYDER expressed similar concerns about
individuals out of cellular range in excess of the timelines
provided in the bill. She asked whether it had been considered
to include a provision for a renter to disclose potential
seasonal absences in the rental agreement to improve
communication with the owner.
REPRESENTATIVE TUCK offered that the federal government has
addressed such matters for military families for similar
reasons. He offered that any tenant may negotiate with a
landlord or facility owner, and he would encourage renters to do
so. He stated that to include provisions beyond the minimum
proposed in the bill would be one of policy.
REPRESENTATIVE SNYDER referenced the term "commercially viable"
and asked whether including a definition of this was considered.
REPRESENTATIVE TUCK answered that a previous version of the bill
stipulated that an appraiser would establish a value threshold
of the property. He reiterated that such an inclusion would be
a policy determination.
1:47:53 PM
CHAIR CLAMAN asked whether the Uniform Laws Commission had taken
a position regarding self-storage facilities.
MR. BRYANT responded that he is unaware of the commission's
involvement. He added that SSA has reviewed existing laws in
various states. In response to a series of follow-up questions,
he stated that he had not specifically sought to learn about the
Uniform Laws Commission's position on self-storage facilities.
Concerning the best model for the proposed legislation, he
responded that North Dakota has recently updated its law, which
provides simple baseline requirements and consumer protections.
Concerning the worst model for the proposed legislation, he
responded that Rhode Island has a confusing law regarding
notification provisions, which includes process serving and a
lengthy and costly advertisement requirement. He shared that a
member of SSA has reported spending over $700 to comply with
this advertising requirement. He noted that there had been a
significant decline in readership [of publications], which does
not benefit owners to advertise.
1:51:33 PM
CHAIR CLAMAN referred to the requirement in the proposed bill to
advertise in a newspaper of "general circulation" [in the
judicial district] and noted that a storage unit owner in the
City of Bethel would be in the same judicial district as the
City of Nome; therefore, an owner could post a notice in a
newspaper of general circulation in Nome.
MR. BRYANT offered the clarification that the newspaper
advertisement is not providing notice to the renter, but to
drive bidders to the upcoming sale. He stated that the
notification to the renter starts with the rental agreement and
the subsequent outreach to a tenant in default. He stated that
an advertisement could prompt a renter to make contact prior to
a sale, but he characterized this as unlikely.
CHAIR CLAMAN referenced the civil action for wrongful sale and
asked whether this would be included in the bill and, if so, in
what section.
MR. BRYANT answered that, to his knowledge, it would not be
included in the bill. In response to a follow-up question, he
stated that a wrongful sale is a reference to a common lawsuit.
He stated that he is not familiar with where this type of law is
in the statute.
1:54:52 PM
MIKE MASON, Staff, Representative Chris Tuck, Alaska State
Legislature, cited AS 34.35, which pertains to liens in a very
detailed section of law. He offered to provide the information
to the committee.
REPRESENTATIVE TUCK, in response to Representative Eastman
concerning the definition of "restricted property", answered
that he had collaborated with Legislative Legal Services to
develop the definition, and it includes anything illegal in
nature, specifically firearms. He noted that the possession of
a firearm is not illegal; however, a firearm may relate to a
criminal investigation. In response to a follow-up question, he
answered that the definition includes firearms, ammunition, and
controlled substances, which are defined in AS 11.71.900.
REPRESENTATIVE EASTMAN questioned the requirement that law
enforcement store ammunition for a year. He asked whether law
enforcement may seek storage fees.
REPRESENTATIVE TUCK answered that he would be speculating to
answer to the preferences of a law enforcement agency. He noted
that the agency may subsequently auction the restricted property
[after one year]. He added that law enforcement agencies have
storage facilities for personal property.
MR. MASON added that the proposed bill has a one-year timeframe
during which a renter may file a claim.
REPRESENTATIVE EASTMAN asked whether other states charge
individuals to reclaim property or whether an individual could
elect for law enforcement store the property at no charge.
REPRESENTATIVE TUCK postulated that a person could deviously do
so.
1:59:33 PM
MR. MASON added that restricted property would be transferred to
a law enforcement agency by a facility owner as part of a lien.
He added that the renter would be responsible for claiming a
weapon or ammunition from the agency.
REPRESENTATIVE EASTMAN asked for additional information on
controlled substances.
REPRESENTATIVE TUCK stated that AS 11.71.900 is within the
criminal law statute. He stated that this contains
classifications of controlled substances and the professional
accreditation required for an individual to handle these
substances. He offered the example of controlled substances as
a drug, substance, or immediate precursor included in the
schedule set out in AS 11.71.140 through AS 11.71.190 or
included in the schedules by emergency regulation under AS
11.71.125.
CHAIR CLAMAN offered speculation that a unit owner may not have
knowledge of a controlled substance being stored.
2:02:14 PM
REPRESENTATIVE KURKA suggested that individuals could bid on
storage unit contents, and the landlord may advertise the sale
without knowing the contents of a unit. He asked whether the
owner would be required to conduct a thorough search of the unit
to identify restricted items. He added that these items could
be quite small.
REPRESENTATIVE TUCK answered that the proposed bill would not
direct these procedures, and a case could occur in which
something not obvious is missed.
REPRESENTATIVE KURKA questioned the scenario where a unit, which
contains a large quantity of firearms, is sold. He asked
whether the owner would be liable for the failure to transfer
this property to law enforcement.
MR. BRYANT responded that, if the contents were discovered
later, the language "if the owner discovers" would provide some
protection that the contents of the unit were reasonably
reviewed. He expressed the opinion that it would not likely
result in liability. He added that other states do not detail
provisions pertaining to firearms and other contraband, and this
language would be unique to Alaska.
REPRESENTATIVE KURKA, pertaining to the notification
requirements, asked what would happen in the case of the sudden
death of a renter who is storing valuable items which are
bequeathed to family members.
MR. BRYANT answered that probate law would apply, and the
executor of the estate would be responsible for notifying
beneficiaries and the facility owners as a creditor.
2:08:48 PM
CHAIR CLAMAN opened public testimony on HB 331.
2:09:25 PM
SHARON BEEMAN, Forbes Storage, referred to page 2, line 27 of HB
331, which relates that a facility owner shall mail a lien
notice to the unit renter. She encouraged the use of email as
an option to contact the renter. She argued that typically
mailing addresses change more often than email addresses.
Referring to page 7, lines 12 to 13, she recommended that the
notification requirement language be changed from "and" to "or"
concerning email.
MS. BEEMAN referenced the concerns among committee members
regarding the length of time for the auction process. She
stated that, in her experience, the 10-day period relating to
default on a payment would not necessarily result in immediate
auction. She explained that her employer would contact the
renter first by phone to collect payment. She further explained
that, after 10 days of default and 21 days later, the company
would access the unit to begin the auction at this time. She
estimated that the process would take approximately two months.
She added that the cost of the proposed requirements in the bill
appear to be insurmountable. She explained that proceeds from
an auction are used to cover costs, which includes advertising
and mailing.
2:15:08 PM
CHAIR CLAMAN asked whether the rental agreement contract or
state statute controls the process for the company she
represented.
MS. BEEMAN answered that the contract and common policy control
the process. She explained her company's contract provides that
nonpayment for six days following the due date will result in a
late fee, and the following month would be the soonest at which
the auction process could begin. In response to a series of
follow-up questions, she stated that Alaska has no lien laws;
therefore, the provision is in the contract. She responded that
the advertisement practice is not in the contract [or statute],
rather it is a matter of common practice. She added that the
practices of her company have been based on vehicle storage and
sales rules. She stated that she had provided a copy of her
company's rental agreement to the bill sponsor. Regarding any
complaints from renters about the procedures for collecting for
nonpayment, she responded that she has never received a
complaint regarding the auction process. She referred to a
television series which depicts storage auctions. She likened
this to her company's process because a unit is opened,
photographed, closed, locked, and never entered. She further
explained that the photos are posted online at the time of
auction, and one week is given for the submission of bids. To
the question whether notifications in newspapers online are for
the purpose of contacting the renter, or for the purpose of
advertising the auction, she responded that advertisements are
to attract bidders.
MS. BEEMAN, in response to Representative Eastman, answered that
her company only offers month-to-month lease terms.
2:20:52 PM
The committee took a brief at-ease.
2:21:03 PM
WILLIAM BREWER, Owner, Fairbanks Storage, LLC, testified in
support of HB 331 and offered some recommended changes. He
stated that he has based his business practice on regulations in
Washington and California. He stated that the proposed
legislation would provide a benefit similar to the Landlord-
Tenant Act. He referred to the language proposed in Section
34.35.625, paragraph (11), which pertains to lien notices and
Section 34.35.685 which pertains to restricted property. He
questioned the idea that firearms and ammunition would be
considered restricted property. He stated that his current
practice for abandoned firearms is to contact local law
enforcement for a serial number search, and if the serial number
search "comes back clean," the firearm is legally included in
the auction. He stated that a firearm revealed to have been
stolen would become restricted property and seized by local law
enforcement. He suggested that a firearm should only be
considered restricted property if it is determined to have been
stolen. He stated that the proposed bill would allow the
original owner of the firearm to recover the firearm from law
enforcement; however, the facility owner would not be able to
sell it in an auction to recover lien costs. He argued that
controlled substances should remain restricted property, but
"clean" firearms should not. He referred next to the language
proposed in Section 34.35.635, paragraph (1), pertaining to
disposal publication. He stated that the advertising in the
classified section of a local newspaper is cost prohibitive, and
local rates charged are rarely recovered during the auction
process. He stated that his current practice is to post a
notice in three public places, including the local post office
and the storage facility office. He postulated that the
postings reach an equivalent number of people of a classified
advertisement. He stated that there exists a variety of online,
social media applications which are viable alternatives to
newspaper advertising.
2:24:56 PM
REPRESENTATIVE EASTMAN expressed agreement with Mr. Brewer
regarding restricted property. He questioned the longest lease
term his company would offer to a renter.
MR. BREWER answered that his company offers monthly leases for
storage units, with a 10-day notice to terminate by either
party. In response to a follow-up question, he said he has had
seasonal workers as renters who had been difficult to contact.
He stated that late fees may be incurred after 10 days; however,
flexibility is provided to these customers, and, in some cases,
these renters are allowed up to 60 days prior to the public
notice of sale. He added that he would also contact renters via
email and certified mail, providing 30 days for the renter to
cure the default, and the lien process would begin 3 days after
the 30-day grace period. He offered that costs are incurred,
and it is infrequent a renter would leave property of any value.
He emphasized that a lien sale has always cost more than what is
recovered. He stated that he has better outcomes by offering
flexibility to renters.
REPRESENTATIVE EASTMAN asked whether Mr. Brewer had experienced
a disgruntled customer following a lien sale.
MR. BREWER answered that he has had a couple of renters who were
unhappy with the outcome, but they understood the terms of the
agreement and the sale had become necessary. He added that he
has not been contacted by an individual with the claim there was
no notification of an imminent lien. In response to Chair
Claman, he confirmed that the customers were disgruntled with
the situation but not with his business practices. He stated
that certified mail is sometimes returned, and email alone is
not necessarily the single best way to contact renters. He
shared that he attempts to contact renters by phone, email, and
certified mail prior to initiating a lien.
REPRESENTATIVE EASTMAN noted that the timelines Mr. Brewer has
described are more generous to the renter than those proposed in
the bill. He correlated this with Mr. Brewer's accounts of
customer satisfaction.
2:29:37 PM
CHAIR CLAMAN, after ascertaining that there was no one else who
wished to testify, closed public testimony on HB 331.
2:29:50 PM
REPRESENTATIVE TUCK, explaining the timeline of the lien process
set forth in the proposed legislation, referred to page 2, lines
17 and 18 of the proposed legislation, which read, "A facility
owner may enforce a storage lien after a unit renter has been
continuously in default for at least 10 days." He referred to
page 3, lines 2 and 3, which read, "(3) a demand that the unit
renter cure the default before the date stated in the lien
notice; the date for curing the default must be not less than 21
days after the date the facility owner provides the lien
notice;". He referred to page 4, line 15, which addressed that
the sale would be advertised once a week for two weeks, and he
pointed to page 5, line 11, which referenced another 5 days in
the process.
MR. MASON referred to earlier testimony concerning
advertisements and drew attention to page 4, lines 13 to 17, and
noted the option to either advertise in a newspaper or in a
commercially reasonable manner, so an owner would not be
required to do both.
REPRESENTATIVE KURKA asked how much Mr. Bryant had talked with
Alaskan storage facility owners.
MR. BRYANT answered that one member of his trade organization
based in Louisiana had interacted with some Alaskan facility
owners, but he had had very little contact with others.
REPRESENTATIVE TUCK, in response to Chair Claman, answered that
he had been in contact with Alaskan storage facility owners, and
a previous bill had included feedback from one facility owner,
and he had also been in contact with an appraiser.
REPRESENTATIVE VANCE, referring to page 4, line 18 of the
proposed bill, pointed out this pertains to a vehicle as the
unit property and asked if there was a provision of the bill
which would pertain to boats or watercraft.
REPRESENTATIVE TUCK answered that the definition of vehicle
includes watercraft and trailers and can be found on page 10,
line 20 in the proposed bill. He pointed out that [Section
34.35.645] addresses the redemption of vehicles. He offered to
follow up to the committee with the specific portion of the bill
which includes watercraft, trailers, and recreational vehicles.
CHAIR CLAMAN offered that on page 2, line 22, the language
pertains to vehicles and watercraft.
2:35:39 PM
REPRESENTATIVE VANCE put forward the case in which a facility
owner damages property while moving it. She questioned who
would be liable for the damage.
REPRESENTATIVE TUCK expressed uncertainty on who would be
liable, but he offered that facility owners had emphasized they
do not like to move vehicles and avoid doing so unless it
becomes necessary. He expressed the assumption that the same
liability would exist while storing the vehicle, if it were to
become damaged.
MR. BRYANT, in response to a question from Representative Vance,
stated that facility owners would carry insurance to cover such
damage. In response to a question from Representative Eastman,
he said that SCRA would preclude enforcement of such a law on
active-duty service members in all 50 states. He added that an
owner would only be able to enforce a lien with a court order.
REPRESENTATIVE EASTMAN asked how owners of facilities would be
protected from violating federal law in cases of unknowingly
storing property belonging to active-duty service members.
MR. BRYANT answered that he would encourage facility owners to
include a provision which discloses this in the rental
agreement. In response to a follow-up question, he expressed
the understanding that no such language is included in the
proposed bill, and he offered to collaborate on developing the
language for inclusion in the bill.
2:40:49 PM
CHAIR CLAMAN suggested that the federal regulations created a
peculiar loophole. To avoid paying rent or being subject to a
lien, he postulated that a renter could claim the belongings are
those of an active-duty military member.
MR. BRYANT offered that this scenario is not a common
occurrence. He restated that facility owners should ascertain
whether any property in a unit is owned by an active-duty member
and to conduct additional research to verify the facts.
CHAIR CLAMAN suggested that the sponsor prepare a thorough
description of the status quo for the committee's consideration
at a future hearing.
REPRESENTATIVE TUCK stated that the drafting of the bill had
been based on laws in Washington and California.
2:44:24 PM
CHAIR CLAMAN announced that HB 331 was held over.
2:45:12 PM
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 2:45 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 331 v. A 2.16.2022.PDF |
HJUD 3/16/2022 1:00:00 PM HJUD 4/20/2022 1:00:00 PM |
HB 331 |
| HB 331 Sponsor Statement v. A 3.16.2022.pdf |
HJUD 3/16/2022 1:00:00 PM HJUD 4/20/2022 1:00:00 PM |
HB 331 |
| HB 331 Sectional Analysis v. A 3.16.2022.pdf |
HJUD 3/16/2022 1:00:00 PM HJUD 4/20/2022 1:00:00 PM |
HB 331 |
| HB 331 Statement of Zero Fiscal Impact 3.12.2022.pdf |
HJUD 3/16/2022 1:00:00 PM HJUD 4/20/2022 1:00:00 PM |
HB 331 |
| HB 331 Additional Document - Self Storage Association PowerPoint Presentation 3.16.2022.pdf |
HJUD 3/16/2022 1:00:00 PM HJUD 4/20/2022 1:00:00 PM |
HB 331 |