SF 2398

3rd Engrossment - 88th Legislature (2013 - 2014) Posted on 05/15/2014 10:55am

A bill for an act
relating to commerce; updating the laws regulating liens on personal property in
self-storage; amending Minnesota Statutes 2012, sections 514.971, subdivisions
2, 8, by adding a subdivision; 514.972, subdivision 4; 514.973; 514.974; 514.975.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 514.971, subdivision 2, is amended to read:

Subd. 2.

Self-service storage facility.

"Self-service storage facility" means real
property that is designed and used only for renting or leasing individual storage space in
the facility under the following conditions:

(1) the occupants have access to their individual storage space only for the purpose
of storing and removing their personal property;

(2) the owner does not issue a warehouse receipt, bill of lading, or other document of
title for the personal property stored in the storage space; and

(3) the property has two or more individual storage spaces.

The term does not include a garage used principally for parking motor vehicles or
any property of a financial institution that contains vaults, safe deposit boxes, or other
receptacles for the uses, purposes, and benefits of the financial institution's customers.

(a) "Self-service storage facility" or "storage facility" means real property designed
and used for the purpose of renting or leasing individual storage space to occupants who
are to have access for the purpose of storing and removing personal property. The term
does not include:

(1) property of a financial institution that contains vaults, safe deposit boxes, or other
receptacles for the uses, purposes, and benefits of the financial institution's customers;

(2) a warehouse that issues a warehouse receipt, bill of lading, or other document of
title for the property; or

(3) a commercial parking garage or parking lot that provides short-term motor
vehicle parking.

(b) An occupant must not use a self-service storage facility for residential purposes.

Sec. 2.

Minnesota Statutes 2012, section 514.971, subdivision 8, is amended to read:

Subd. 8.

Storage space.

"Storage space" means an enclosure, cubicle, or room that
is fully enclosed and equipped with a door designed to be locked for security by the
occupant the storage space or spaces at the storage facility that are rented to an occupant
pursuant to a rental agreement.

Sec. 3.

Minnesota Statutes 2012, section 514.971, is amended by adding a subdivision
to read:

Subd. 10.

Verified mail.

"Verified mail" means any method of mailing that is
offered by the United States Postal Service or private delivery service that provides
evidence of mailing.

Sec. 4.

Minnesota Statutes 2012, section 514.972, subdivision 4, is amended to read:

Subd. 4.

Denial of access.

Upon default, the owner shall mail notice of default to the
occupant at the last known address of the occupant as provided under section 514.974. The
owner may deny the occupant access to the personal property contained in the self-service
storage facility after default, service of the notice of default, expiration of the date stated
for denial of access, and application of any security deposit to unpaid rent. The notice
of default must state the date that the occupant will be denied access to the occupant's
personal property in the self-service storage facility and that access will be denied until
the owner's claim has been satisfied. The notice of default must state that any dispute
regarding denial of access can be raised by the occupant beginning legal action in court.
Notice of default must further state the rights of the occupant contained in subdivision 5.

Sec. 5.

Minnesota Statutes 2012, section 514.973, is amended to read:

514.973 ENFORCEMENT OF LIEN.

Subdivision 1.

Generally.

An owner's lien established under sections 514.970
to 514.979 for a claim that has become due must be enforced in the same manner as
warehouse's liens under section 336.7-210. as provided in this section.

Subd. 2.

Notice; to whom and how sent.

(a) The owner must notify the occupant
and any person who has delivered to the owner a written notice of a claim of an interest in
the contents in the storage space when rent and other charges are in default. The notice to
the owner of a claim of an interest must comply with any requirements included in the rental
agreement. If the property is a registered motor vehicle or watercraft, the notice also must
be given to any lienholder or secured party appearing on the document of title or to any
lienholder or secured party known to claim an interest in the motor vehicle or watercraft.

(b) Except as provided in paragraph (c), the notice must be delivered in person or
sent by verified mail as provided under section 514.974. Notice sent by verified mail is
presumed delivered when it is deposited with the United States Postal Service or private
delivery service and properly addressed with postage prepaid.

(c) The owner may send notices exclusively via electronic mail with the informed,
written consent of the occupant. An occupant may withdraw consent at any time. The
owner may not notify the occupant of the default by electronic mail unless the rental
agreement, or a written change to the rental agreement, contains a written notice in at
least 12-point bold type, if printed, which states: "By choosing the option to receive
e-mail communication in this agreement, the owner will provide you notices and other
information regarding your account through the e-mail reflected in our records, or in a
subsequent written change of e-mail address that has been given according to the facility's
procedures. To indicate that you understand and accept the contents of this notice and
agree to the option to receive electronic communication, you must check the box that
appears next to this paragraph."

(d) The owner must verify that a notice sent by electronic mail has been delivered
by obtaining an electronic receipt that establishes delivery of the notice to the occupant's
e-mail address. If delivery of the electronic mail notice cannot be verified, the storage
facility must deliver the notice in person or send the notice by verified mail. If the notice
must be delivered in person or sent by verified mail after delivery by electronic mail
has failed, the period specified in subdivision 3 does not begin until the date the notice
is delivered in person or by verified mail.

Subd. 3.

Contents of notice.

The notice must include:

(1) a statement of the amount owed for rent and other charges and demand for
payment within a specified time not less than 14 days after delivery of the notice;

(2) pursuant to section 514.972, subdivision 4, a notice of denial of access to the
storage space, if this denial is permitted under the terms of the rental agreement;

(3) the name, street address, and telephone number of the owner, or of the owner's
designated agent, whom the occupant may contact to respond to the notice;

(4) a conspicuous statement that unless the claim is paid within the time stated in
the notice, the personal property will be advertised for sale. The notice must specify the
time and place of the sale; and

(5) a conspicuous statement of the items that the occupant may remove without
charge pursuant to section 514.972, subdivision 5, if the occupant is denied general access
to the storage space.

Subd. 4.

Sale of property.

(a) A sale of personal property may take place no sooner
than 45 days after default or, if the personal property is a motor vehicle or watercraft, no
sooner than 60 days after default.

(b) After the expiration of the time given in the notice, the sale must be published
once a week for two weeks consecutively in a newspaper of general circulation where
the sale is to be held. The sale may take place no sooner than 15 days after the first
publication. If the lien is satisfied before the second publication occurs, the second
publication is waived. If there is no qualified newspaper under chapter 331A where the
sale is to be held, the advertisement may be posted on an independent, publicly accessible
Web site that advertises self storage lien sales or public notices. The advertisement must
include a description of the goods, the name of the person on whose account the goods are
being held, and the time and place of the sale.

(c) A sale of the personal property must conform to the terms of the notification.

(d) A sale of the personal property must be public and must be held at the storage
facility, or at the nearest suitable place at which the personal property is held or stored.
Online sales are permitted. Owners shall require all bidders, including online bidders, to
register and agree to the rules of the sale.

(e) The sale must be conducted in a commercially reasonable manner. A sale is
commercially reasonable if the property is sold in conformity with the practices among
dealers in the property sold or sellers of similar distressed property sales.

Subd. 5.

Averting the sale.

Before any sale pursuant to this section is conducted,
the occupant or any other person entitled to notice under subdivision 2, paragraph (a), may
redeem the property by paying the amount sufficient to satisfy the lien and the reasonable
expenses incurred complying with this section. If sufficient payment is made, the personal
property may not be sold.

Subd. 6.

Surplus.

A storage facility may satisfy its lien from the proceeds of any
sale pursuant to this section, provided that the storage facility must hold any sum obtained
from the sale that exceeds the amount sufficient to satisfy the lien and the reasonable
expenses incurred complying with this section for delivery on demand to the occupant
and give notice to the occupant of the occupant's right to the funds as provided in section
514.974. Any balance remaining unclaimed by the occupant for more than one year after
the sale of the goods must be deposited into the state unclaimed property funds account
under sections 345.31 to 345.60.

Subd. 7.

Special procedures for motor vehicles.

(a) If the personal property upon
which the lien is claimed is a motor vehicle or watercraft, the owner may sell the motor
vehicle or watercraft as provided in this section or have the motor vehicle or watercraft
towed by a towing company.

(b) The owner's lien is terminated upon the towing company taking possession
of the property.

(c) If a motor vehicle or watercraft is towed as authorized in this subdivision, the
owner:

(1) shall send, by the method provided under subdivision 2, the name, address, and
telephone number of the towing company that will perform the towing and the street
address of the storage facility where the towed property may be redeemed; and

(2) is not liable for the motor vehicle or watercraft or any damages to the motor
vehicle or watercraft once the towing company takes possession of the property. Nothing
in this section relieves the towing company from liability for damage for which the
company would otherwise be liable.

Subd. 8.

Liability for damage.

An occupant or other person entitled to notice
under subdivision 2, paragraph (a), who is injured by a violation of this section may
bring a civil action to recover damages.

Subd. 9.

No effect on other rights.

The rights provided under this section are in
addition to all other rights allowed by law to a creditor and a debtor.

Sec. 6.

Minnesota Statutes 2012, section 514.974, is amended to read:

514.974 ADDITIONAL NOTIFICATION REQUIREMENT.

In addition to the requirements of section 336.7-210, the Notification of the proposed
sale of personal property must include a notice of denial of access to the personal property
until the owner's claim has been satisfied. Any notice the owner is required to mail to the
occupant under sections 514.970 to 514.979 shall be sent to:

(1) the e-mail address, if consented to by the occupant, as provided in section
514.973, subdivision 2;

(2) the mailing address and the any alternate mailing address provided by the
occupant in the rental agreement.; or

(3) the last known mailing address of the occupant, if the last known mailing address
differs from the mailing address listed by the occupant in the rental agreement and the
owner has reason to believe that the last known mailing address is more current.

Sec. 7.

Minnesota Statutes 2012, section 514.975, is amended to read:

514.975 RENTAL AGREEMENTS.

Subdivision 1.

Disclosure.

The rental agreement between the owner and the
occupant must include a disclosure of the lien rights of the owner upon failure of the
occupant to pay rent including the right to deny access to certain personal property
contained in the self-service storage facility, and the extent and the limits of insurance
carried by the owner covering the occupant's personal property stored in the leased
premises. A rental agreement may not exempt an owner from liability for damages to an
occupant's personal property caused by the owner's negligence. The rental agreement
must request the occupant to insert an alternate mailing address. A rental agreement must
contain a provision that allows the occupant to provide an optional alternate contact person.
The rental agreement must contain a space that the occupant must initial if the occupant
declines to provide an optional alternate contact person. The alternate contact person is
used solely for purposes of providing notice of default under section 514.973. Adding an
alternate contact does not give that contact an interest in the contents of the storage space.

Subd. 2.

Value of stored property.

If the rental agreement entered into between
the owner and the occupant contains a provision placing a limit on the value of property
that may be stored in the occupant's space, this limit is the maximum value of the stored
property, provided that the provision is printed in bold type or underlined in the rental
agreement. The limit on the value of property may not be less than $1,000. The rental
agreement may provide that the occupant may increase the limit on the value of property
with the written permission of the owner.

Subd. 3.

Military protections.

A rental agreement or an application for a rental
agreement must contain a provision disclosing whether the applicant is a member of the
uniformed services as the term is defined in United States Code, title 10, section 101(a)(5),
or a member of the National Guard or a reserve component under United States Code,
title 32, section 101.

Sec. 8. EFFECTIVE DATE.

Sections 1 to 7 are effective August 1, 2014, and apply to all rental agreements
entered into, extended, or renewed on or after that date.