Norris, McLaughlin & Marcus

Archive for April, 2012

The Owner’s Lien

The Pennsylvania Self-Service Storage Facility Act provides that a self-service storage facility owner has a lien on stored property for rent, labor or other charges, present or future, incurred for storing the property, and for expenses necessary for its preservation or expenses reasonably incurred in its sale or other disposition.  The lien attaches as of the date the property is placed in storage at the self-storage facility.

Why is having a lien important?  Well, it’s important because it makes the facility owner a secured as opposed to an unsecured party.  A simple example of secured debt is a mortgage.  If you don’t pay your mortgage, the bank can foreclose on your home.  The home is the collateral for the debt.  If the borrower fails to make mortgage payments, the bank has security.  A simple example of unsecured debt is credit card debt.  There is no collateral to protect a credit card company although that changes once the debt is reduced to a judgment.

The lien takes priority over any other lien or security interest except for a lien that existed before the date the property was placed in storage.   So, if someone places in storage a piece of equipment that was financed and therefore has a secured debt against it already, the self storage lien is behind that first lien in terms of priority.  Why is that important?  Well, because you have to honor the lien that is in first position.  The moral of the story is that you have to be careful not to sell property that has a lien against it.  We will talk later about how you can check for liens.