Legislature(2023 - 2024)BARNES 124
03/24/2023 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Alcoholic Beverage Control Board | |
| HB56 | |
| HB97 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 97 | TELECONFERENCED | |
| *+ | HB 119 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 56 | TELECONFERENCED | |
HB 97-SELF-STORAGE UNITS: LIENS; SALES
3:55:56 PM
VICE CHAIR RUFFRIDGE announced that the final order of business
would be HOUSE BILL NO. 97, "An Act relating to self-storage
facilities for personal property, including vehicles and
watercraft; distinguishing self-storage facility liens from
another type of storage lien; and excluding self-storage liens
from the treatment of certain unclaimed property."
3:56:27 PM
REPRESENTATIVE PRAX, as the prime sponsor, introduced HB 97 and
read from the sponsor statement [copy in the committee packet],
which read as follows [original punctuation provided]:
49 states and the District of Columbia have self
storage lien statutes. Alaska is the last remaining
state without a self storage lien statute. These laws
provide for a non-judicial foreclosure process to
address and remedy nonpayment issues between the
facility owner and the unit renter. Storage liens are
the national standard for settling disputes between
facility owners and unit renters.
Self storage lien laws provide protections for
unit renters. HB 97 would require facility owners to
include specific information regarding the facility
owner's lien rights in the rental agreement. HB 97
would also require the facility owner to wait at least
ten (10) days after the unit renter's default to begin
lien enforcement. After ten (10) days, the facility
owner would be required to send a default notice to
the unit renter.
If the unit renter does not cure the default, the
facility owner would then be required to send a second
notice of default to the unit renter that provides an
additional 20-day window for the unit renter to cure
the default. If the payment issue is not remedied,
then HB 97 would permit the facility owner to proceed
with a sale. The bill details that process and how
proceeds from that sale must be applied.
HB 97 also provides certainty and protection for
storage facility owners. The bill would provide a
specific statutory process for facility owners to
follow to enforce their lien rights in the state.
3:58:48 PM
CHADWICK VANCE, Staff, Representative Mike Prax, Alaska State
Legislature, on behalf of Representative Prax, prime sponsor,
gave the sectional analysis for HB 97 [copy included in the
committee packet], which read as follows [original punctuation
provided]:
Section 1 (page 1, lines 5-7) Amends AS 28.11.025
relating to claims of ownership by private property
owners to add a new subsection (d) stipulating that AS
28.11.025 does not apply to a vehicle in a self-
storage facility under AS 34.35.600 through AS
34.35.670.
Section 2 (page 1, lines 8-10) Amends AS 34.35 to
add a new section to article 5 stipulating that AS
34.35.220 Persons entitled to carrier, warehouse,
and livestock liens and AS 34.35.225 Sale to enforce
liens, do not apply to a self-storage facility.
4:04:15 PM
MR. VANCE continued with Section 3 of the sectional analysis,
which read as follows [original punctuation provided]:
Section 3 (page 1, line 11 - page 6, line 10) -
Amends 34.35 to add a new section titled Article 13A.
Self-Storage Facilities.
Sec. 34.35.600. Self-storage facility liens; fees.
(Page 1, line 12 - page 2, line 7)
This section details that a facility owner has a
storage lien on unit property if the unit renter fails
to abide by a written rental agreement, including
paying the rental charges and reasonable late fees. A
late fee is considered reasonable if the fee does not
exceed the greater of $20 or 20 percent of the monthly
rental fee.
Sec. 34.35.605. Priority of storage lien. (Page 2,
lines 8-12) (a) This section notes that if a vehicle
is an item of the unit property, a storage lien is
superior to a lien or encumbrance established under AS
28.10.371 AS 28.10.401.
(b) Stipulates that a storage lien is superior to a
security interest perfected under AS 45.29. A storage
lien is also superior to another lien or security
lien, except a tax lien.
Sec. 32.35.610. Attachment of storage lien. (Page 2,
lines 13-17)
This section stipulates that a storage lien attaches
on the date on which property is placed in a storage
unit. This section further stipulates that a rental
agreement must contain a statement notifying the unit
renter of the existence of the storage lien and the
method by which the facility owner may enforce the
lien.
Sec. 34.35.615. Enforcement. (Page 2, lines 18-19)
Gives facility owners the right to enforce a storage
lien after a unit renter has been continuously in
default for at least 10 days.
Sec. 34.35.620. Denial of access; removal of unit
property. (Page 2, lines 20-31)
Stipulates that after a default, the facility owner
may deny the unit renter access to the storage unit
and move property to another place for storage. The
section also allows the facility owner to tow or
otherwise remove a vehicle or watercraft from the
storage facility.
Sec. 34.35.625. Default notice (Page 3, lines 1-23)
Requires a facility owner to notify the unit renter as
part of enforcing a storage lien. The lien notice must
include an itemized statement and the date when the
default occurred. The notice must include a statement
of how the unit renter can cure the default, including
a demand that the unit renter cure the default before
the date stated in the lien notice. The date for
curing the default must not be less than 20 days after
the date the facility owner provides the lien notice.
The lien notice must also include a conspicuous
statement noting that, unless the unit renter cures
the default the facility owner will dispose of the
unit property.
Sec. 34.35.630. Authority to dispose of unit property.
(Page 3, lines 24-27)
This section allows the facility owner to dispose of
the unit property if a unit renter does not cure a
default and pay the amount due by the deadline stated
in the lien notice.
Sec. 34.35.635. Sale and disposal of unit property.
(Page 3, line 28 - page 4, line 3)
Section (a) allows a facility owner to sell unit
property at the storage facility or nearest suitable
location, or on the internet.
Section (b) Allows the facility owner to privately
sell, give away, donate, or throw away unit property
that is not commercially viable to dispose of by a
public sale.
Sec. 34.35.640. Redemption by unit renter, vehicle
owner, or vehicle lien holder. (Page 4, lines 4-14)
Section (a) notes that, before the sale of the
property, the unit renter may redeem the unit property
by paying the amount due, in which case, the facility
owner shall immediately return the unit property to
the unit renter.
Section (b) states that if a vehicle owner of record
or a lienholder pays the amount due before the
facility owner disposes of the vehicle under AS
34.35.635, the facility owner shall transfer
possession of the vehicle to the vehicle owner or
lienholder who pays the amount due.
Section (c) states that a facility owner is no longer
liable for property after it is returned under (a) or
(b) of this section.
Sec. 34.35.645. Good faith purchasers. (Page 4, lines
15-19)
A person who purchases unit property in good faith and
without notice of noncompliance takes the unit
property free of any rights of the unit renter, the
facility owner, and any lienholders, even if the
facility owner has not complied with AS 34.35.600 -
34.35.670.
Sec. 34.35.650. Vehicle title. (Page 4, lines 20-23)
This section stipulates that if a vehicle is sold at a
public sale and is titled, the Department of
Administration shall transfer title to the vehicle to
the purchaser who purchased the vehicle and who
requests the transfer.
Sec. 34.35.655. Proceeds of sale. (Page 4, lines 24-
29)
This section details how the storage facility owner is
to apply the proceeds from the disposal of private
property to satisfy a storage lien. If disposal
proceeds remain after a storage lien is paid off,
facility owners must hold proceeds for the unit renter
or a recorded lienholder for a period of three years
after the disposal sale. If excess proceeds are not
claimed within the three-year period, the funds shall
be considered abandoned and remitted to the Department
of Revenue.
Sec. 34.35.660. Limit on value of property stored.
(Page 4, line 30 - page 5, line 2) This section
details that if a rental agreement specifies a limit
on the value of property that a unit renter may store
in the storage unit, the specified limit is considered
to be the maximum value of the unit renter's property
stored in the rented unit.
Sec. 34.35.665. Additional rights and obligations.
(Page 5, lines 3-7) This section stipulates that the
provisions of AS 34.35.600 34.35.670 do not prevent
a rental agreement from containing other rights,
duties, and obligations. The rights provided to a
facility owner by AS 34.35.600 34.35.670 are in
addition to other rights provided by law to a creditor
against a debtor.
Sec. 34.35.695. Definitions. (Page 5, line 8 - page 6,
line 10) This section defines terms used in the Act
including amount due, default, electronic mail,
facility owner, rental agreement, self-storage
facility, storage lien, storage unit, unit property,
unit renter, vehicle and watercraft.
Section 4 (Page 6, lines 11-13) Amends AS 34.45 to
add a new section to article 1, Sec. 34.45.095
Application. This section clarifies that AS 34.45.010
34.45.085 do not apply to a self-storage facility
under AS 34.35.600 34.35.670.
Section 5 (Page 6, lines 14-18)
Amends the uncodified law of the State of Alaska to
add a new section that stipulates this Act only
applies to rental agreements entered into on or after
the effective date.
4:07:30 PM
DANIEL BRYANT, Legal and Legislative Counsel, Self Storage
Association, gave a PowerPoint presentation, titled "Bringing a
Self Storage Lien Law to Alaska." He began on slide 2 through
slide 4 and stated that there are approximately 150 self storage
facilities across Alaska, with almost all being locally owned
and operated small businesses. He explained that the
relationship between a self storage operator and the individual
storing property is a commercial landlord-tenant relationship.
He said that storage unit rental agreements are generally month-
to-month tenancies, with the majority of these agreements
successful for both parties.
4:09:38 PM
MR. BRYANT continued to slide 5 through slide 7 and stated that
Alaska is the only state with no self storage lien laws. Self
storage lien laws provide for a non-judicial process in which
operators can foreclose on tenants who have failed to pay rent.
He said that the proposed legislation would provide protection
for both operators and tenants by creating a process for a
tenant to recover property; however, if the tenant fails to do
so, the operator would be allowed to remove the property and
find another tenant for the storage unit. He stated that the
lien process is an uncommon procedure, and at most 3 percent of
leased spaces require this process. He said that the
Servicemembers Civil Relief Act protects active-duty service
members from having their property sold, and the failure to
comply with the act carries civil and legal penalties.
4:12:10 PM
MR BRYANT moved to slide 8 through slide 15 and stated that HB
97 would provide requirements for rental agreements and notices
of default. The agreement would be a written and signed
agreement, and the lien date would be based on the date of the
agreement, if applicable. He said that the first notice of
default would be required to be sent by electronic mail (email)
or first-class mail, after the tenant has been in default for at
least 10 days, and the second notice would be sent at least 10
days after the first notice, giving the tenant 20 days to cure
the default. He stated that the reason for allowing the use of
email to notify tenants is because many tenants are in
transition and not able to receive first-class mail. He said
that the proposed legislation allows for a late fee of up to $20
or 20 percent; whichever is greater. He added that 37 states
have a late fee as part of the state's storage facility lien
law. After the period in which the tenant has been given the
opportunity to cure the default, he said, if a tenant does not
respond to the default notices, the owner of the facility then
can tow, sell, or otherwise dispose of the tenant's property.
4:15:42 PM
MR. BRYANT continued to slide 16 through slide 22 and stated
that the reason towing would be an option is because of the
complications of selling a titled vehicle. He displayed a map
of the 45 states which allow for towing under such
circumstances. He said that a storage facility owner is "lucky"
to receive 30 cents for every dollar lost when selling defaulted
property, and the primary goal of a sale is to clear the unit so
it can be rented to another tenant. The sale would be required
to be held at the storage facility, the nearest suitable
facility, or online. The tenant would have the opportunity to
redeem the property before a final sale. He added that online
sales increase the number of bids on property, and 41 states
allow this. He displayed a map showing the states which allow
online sales.
4:17:52 PM
MR. BRYANT continued to slide 23 through slide 26 and stated
that the proposed legislation would allow for the disposal of
property if unsold. If there are proceeds in excess of the
default amount, the facility owner must hold the funds for three
years. If the amount is unclaimed, the facility would be
required to remit the excess funds to the State of Alaska. He
concluded by giving a final overview of HB 97.
4:19:28 PM
REPRESENTATIVE CARRICK questioned the current process if tenants
default on their rental agreement.
REPRESENTATIVE PRAX answered that it takes significantly longer
to foreclose on a storage unit because it must go through a
process similar to foreclosure on a vehicle. In response to a
follow-up question, he said that if a tenant only provides email
as a form of contact but was unable to access the email account
to see the notice of default, the tenant would be "out of luck."
4:22:33 PM
VICE CHAIR RUFFRIDGE asked whether HB 97 is modeled after
existing legislation in other states.
MR. BRYANT answered that it draws from legislation from multiple
states and is most like legislation in North Dakota.
4:23:46 PM
REPRESENTATIVE CARRICK asked what the justification is for a
specific late fee in statute.
MR. BRYANT answered that 32 states have this same late fee in
statute.
REPRESENTATIVE PRAX added that the fee is a standard fee based
on conversations with storage facility owners.
4:25:10 PM
REPRESENTATIVE SADDLER asked what effect defaulting on a storage
unit would have on the credit of an individual.
REPRESENTATIVE PRAX answered that he is unsure.
MR. BRYANT added that it would be unlikely for a self-storage
facility owner to report this scenario to a credit reporting
agency. In response to a follow-up question, he reiterated that
active-duty service members are protected from storage unit
liens by federal statute.
4:28:50 PM
REPRESENTATIVE CARRICK asked how the legislation is beneficial
to the tenant of a self-storage unit.
REPRESENTATIVE PRAX responded that HB 97 would add the benefit
of a written contract for the tenant, and it would create a
standard procedure for the owner of the facility. In response
to a follow-up question, he said that facility owners are not
trying to make money from lien sales, only recover lost revenue
and make the unit available again.
4:33:39 PM
VICE CHAIR RUFFRIDGE announced that HB 97 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB97 Alaska Lien Law Presentation - 2023.pdf |
HL&C 3/24/2023 3:15:00 PM |
HB 97 |
| HB0097A.PDF |
HL&C 3/24/2023 3:15:00 PM |
HB 97 |
| HB 97 Sponsor statement.pdf |
HL&C 3/24/2023 3:15:00 PM |
HB 97 |
| HB97_Sectional_Analysis.pdf |
HL&C 3/24/2023 3:15:00 PM |
HB 97 |
| Fiscal Note HB97.pdf |
HL&C 3/24/2023 3:15:00 PM |
HB 97 |
| Sara Rasmussen Resume.pdf |
HL&C 3/24/2023 3:15:00 PM |
|
| David Koch Resume.pdf |
HL&C 3/24/2023 3:15:00 PM |
|
| Christopher Jaime MCB Resume.pdf |
HL&C 3/24/2023 3:15:00 PM |
|
| GlobalFCU Letter HB97 Concerns.pdf |
HL&C 3/24/2023 3:15:00 PM |
HB 97 |