02/05/2024 01:30 PM House JUDICIARY

            HB  97-SELF-STORAGE UNITS: LIENS; SALES                                                                         
                                                                                                                                
2:22:36 PM                                                                                                                    
                                                                                                                                
CHAIR VANCE  announced that the  next 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."   [Before the committee                                                               
was CSHB 97(L&C).]                                                                                                              
                                                                                                                                
2:23:19 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:24:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MIKE   PRAX,  Alaska  State   Legislature,  prime                                                               
sponsor, presented CSHB  97(L&C).  He read  the sponsor statement                                                               
[included  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.                                                                          
                                                                                                                                
2:27:40 PM                                                                                                                    
                                                                                                                                
DANIEL   BRYANT,   Legal/Legislative    Counsel,   Self   Storage                                                               
Association, gave  invited testimony  during the hearing  on CSHB
(L&C),  which   would  require  owners  to   follow  a  unified                                                               
procedure  after  default.    He   provided  information  on  the                                                               
[storage] industry's  background, noting that Alaska  is the only                                                               
state   without   a   self-storage  statute   addressing   liens.                                                               
Statutory lien laws are important,  he said, because they provide                                                               
a basic  legal framework  and guardrails  to protect  both owners                                                               
and occupants.   The  bill would ensure  that several  steps were                                                               
taken before  a sale,  starting with  a written  rental agreement                                                               
that informs the occupant of the  lien and the inevitable sale or                                                               
disposal of  the property upon  default.   He noted that  the law                                                               
would  not apply  to  active-duty service  members,  as they  are                                                               
protected  under  the  Servicemembers Civil  Relief  Act  (SCRA).                                                               
Should default  occur, the owner  must send at least  two notices                                                               
to the  occupant and provide an  opportunity to cure.   The first                                                               
notice  may be  sent by  email  or First-Class  Mail; the  second                                                               
notice may  be sent by email,  Certified Mail, or US  mail with a                                                               
certificate of  mailing at least  10 days after the  first notice                                                               
and provide  a minimum of  20 days to cure  the default.   If the                                                               
occupant is  generally unresponsive, the owner  would be afforded                                                               
three  remedies: tow  certain titled  property, proceed  with the                                                               
sale, or dispose of property that receives no bid or offer.                                                                     
                                                                                                                                
2:33:32 PM                                                                                                                    
                                                                                                                                
MR.  BRYANT explained  that  national lien  sales  are not  money                                                               
makers for storage owners.   The primary objective of those sales                                                               
is to return  the unit back to inventory and  re-rent the unit to                                                               
a  paying customer.   He  noted that  all occupants  may exercise                                                               
their redemption  rights until  the sale is  final.   Lastly, the                                                               
bill outlines  the order of  payment from proceeds  obtained from                                                               
the sale.  After paying the  facility owner and lien holders, any                                                               
excess  balance would  be held  by the  facility owner  for three                                                               
years,  and if  unclaimed, the  money  would be  remitted to  the                                                               
state.   He  opined that  HB  97 strikes  an appropriate  balance                                                               
between  facility   owners  and   unit  renters  and   asked  the                                                               
committee's  support  to bring  a  self-storage  lien statute  to                                                               
Alaska.                                                                                                                         
                                                                                                                                
CHAIR VANCE sought questions from committee members.                                                                            
                                                                                                                                
2:36:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE C.  JOHNSON asked  whether all states  allow email                                                               
notifications.                                                                                                                  
                                                                                                                                
REPRESENTATIVE PRAX deferred to Mr. Bryant.                                                                                     
                                                                                                                                
MR.  BRYANT  answered yes,  email  is  an extraordinarily  common                                                               
means of effectuating the notice.   More than 40 states expressly                                                               
permit that form of notification in statute.                                                                                    
                                                                                                                                
2:37:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRAY asked why Alaska was so far behind.                                                                         
                                                                                                                                
REPRESENTATIVE PRAX did not know the answer.                                                                                    
                                                                                                                                
2:37:51 PM                                                                                                                    
                                                                                                                                
CHAIR VANCE asked whether the  timeframe outlined in the bill was                                                               
sufficient to  notify someone  about the  loss of  their property                                                               
given the unreliability of timely mail in Alaska.                                                                               
                                                                                                                                
REPRESENTATIVE PRAX said yes, 30 days seemed reasonable.                                                                        
                                                                                                                                
CHAIR VANCE asked what kind  of notification would be provided to                                                               
a  renter  when making  the  agreement  and whether  expectations                                                               
would be clearly communicated.                                                                                                  
                                                                                                                                
MR.  BRYANT  confirmed  that  the  agreement  would  be  written,                                                               
informing the  occupant of the  lien's existence  and ultimately,                                                               
what would transpire should monetary default occur.                                                                             
                                                                                                                                
2:40:53 PM                                                                                                                    
                                                                                                                                
CHAIR  VANCE questioned  the  sale and  disposal  of property  in                                                               
Section 34 and  asked Mr. Bryant to describe  the notification of                                                               
sale, as proposed in the bill.                                                                                                  
                                                                                                                                
MR.  BRYANT  shared  his  understanding   that  as  a  matter  of                                                               
practice,  every  facility  owner   goes  above  and  beyond  the                                                               
statutory minimum to remedy the  payment dispute in a manner that                                                               
does  not  require  sale  of   the  property.    Nonetheless,  he                                                               
acknowledged  that the  bill required  nothing  more of  facility                                                               
owners subsequent to the second notice being sent.                                                                              
                                                                                                                                
REPRESENTATIVE PRAX directed attention to  page 3, line 15, which                                                               
described the second notice of default.                                                                                         
                                                                                                                                
2:44:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE C.  JOHNSON asked whether there  would be recourse                                                               
for disposing of  illegal property or property that  is costly to                                                               
dispose of, such as batteries.                                                                                                  
                                                                                                                                
REPRESENTATIVE  PRAX  said  the   bill  does  not  address  those                                                               
scenarios;  nonetheless, he  shared  his  understanding that  the                                                               
facility owner would be liable.                                                                                                 
                                                                                                                                
2:47:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRAY questioned  the magnitude  of this  issue in                                                               
Alaska.                                                                                                                         
                                                                                                                                
REPRESENTATIVE PRAX  did not  know the answer.   He  directed the                                                               
question to Mr. Bryant.                                                                                                         
                                                                                                                                
MR. BRYANT  did not  have specific data  on Alaska.   Nationally,                                                               
approximately 1  to 3 percent  of units  go through the  sale and                                                               
auction  process.   In  other words,  97 to  99  percent of  unit                                                               
renters follow the terms and conditions of the rental agreement.                                                                
                                                                                                                                
REPRESENTATIVE PRAX shared a personal anecdote.                                                                                 
                                                                                                                                
2:49:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CARPENTER inquired  about a  scenario in  which a                                                               
vehicle with a lien was stored in a unit under default.                                                                         
                                                                                                                                
REPRESENTATIVE  PRAX  explained  that as  written,  the  facility                                                               
owner's  lien would  supersede the  bank's lien.   He  shared his                                                               
understanding that a  forthcoming amendment would make  it so the                                                               
bank's lien would supersede the facility owner's lien.                                                                          
                                                                                                                                
2:52:28 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:53:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX  clarified his  misstatement,  acknowledging                                                               
that CSHB 97(L&C) was before the  committee.  He asked his staff,                                                               
Ms. Elliot, to  explain the changes from the  original version of                                                               
the bill.                                                                                                                       
                                                                                                                                
2:53:47 PM                                                                                                                    
                                                                                                                                
MARGARET ELLIOT,  Staff, Representative  Mike Prax,  Alaska State                                                               
Legislature,  on behalf  of Representative  Prax, prime  sponsor,                                                               
presented a summary  of changes in CSHB 97(L&C)  [included in the                                                               
committee packet],  which read  as follows  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Section 3, page 2, lines 19-20:                                                                                            
     • Adds language requiring the unit renter to disclose                                                                      
     on the rental agreement any lien holders that                                                                              
     may have an interest in the stored property.                                                                               
                                                                                                                                
     Section 3, page 3, lines 5-6:                                                                                              
       • Adds the following language: "and any other lien                                                                       
     holder identified in the rental agreement".                                                                                
      Requires a facility owner to notify any lien holders                                                                      
     that a unit renter is in default in the same                                                                               
     manner the unit renter is notified.                                                                                        
                                                                                                                                
     All other sections remain unchanged.                                                                                       
                                                                                                                                
2:55:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARPENTER reaffirmed that CSHB 97(L&C) was before                                                                
the committee, not the original version of the bill.                                                                            
                                                                                                                                
2:55:39 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:56:17 PM                                                                                                                    
                                                                                                                                
CHAIR VANCE announced that CSHB 97(L&C) would be held over.