Phil Querin Q&A - Storage Agreement and Lienholder Rights

Want access to MHCO content?

For complete access to forms, conference presentations, community updates and MHCO columns, log in to your account or register.

June 23, 2016
Phil Querin
MHCO Attorney
Querin Law

Question:  What are a landlord’s rights against a lender holding a lien on the tenant’s home following the tenant’s abandonment?  We have a lender who signed the storage agreement, but has failed to maintain the space. What notice should the landlord give?  Do we have to start the abandonment notification all over again?
 

 

Answer: After sending or delivering the 45-day abandonment letter, a landlord is required to store the home on the rented space and shall exercise reasonable care for it; and is entitled to reasonable or actual storage charges and costs incidental to storage or disposal. The storage charge may be no greater than the monthly space rent last payable by the tenant.

 

If a lienholder makes a timely response to a notice of abandoned personal property and so requests, the landlord is required to enter into a written storage agreement with the lienholder providing that the home may not be sold or disposed of by the landlord for up to 12 months. The storage agreement entitles the lienholder to store the home on the previously rented space during the term of the storage agreement, but does not entitle anyone to occupy it.

 

Note that the lienholder’s right to a storage agreement arises upon the failure of the tenant or, in the case of a deceased tenant, the personal representative, designated person, heir or devisee to remove or sell the dwelling or home within the allotted time.

 

The lienholder must enter into the proposed storage agreement within 60 days after the landlord gives it a copy of the storage agreement. It is recommended that landlords include the storage agreement with the lienholder’s copy of the 45-day letter, since the right to storage fees does not vest until the letter has been sent. The sooner the better.

 

The lienholder enters into a storage agreement by signing a copy of it and personally delivering or mailing the signed copy to the landlord within the 60-day period. The storage agreement may require, in addition to other provisions agreed to by the landlord and the lienholder, that:

 

  • The lienholder make timely periodic payment of all storage charges accruing from the commencement of the 45-day period.
  • A storage charge may include a utility or service charge, if limited to charges for electricity, water, sewer service and natural gas and if incidental to the storage of personal property.
  • The storage charge may not be due more frequently than monthly;
  • The lienholder pay a late charge or fee for failure to pay a storage charge by the date required in the agreement, if the amount of the late charge is no greater than for late charges imposed on other tenants in the community;
  • The lienholder must thereafter maintain the home and space in a manner consistent with the rights and obligations described in the former tenant’s rental agreement;
  • The lienholder must repair any defects in the physical condition of the home that existed prior to into the storage agreement, if the defects and necessary repairs are reasonably described in the storage agreement and, for homes that were first placed on the space within the previous 24 months, the repairs are reasonably consistent with community standards in effect at the time of placement.
  • The lienholder shall have 90 days after entering into the storage agreement to make the repairs. Failure to make the repairs within the allotted time constitutes a violation of the storage agreement and the landlord may terminate it by giving at least 14 days’ written notice to the lienholder stating facts sufficient to notify it of the reason for termination. Unless the lienholder corrects the violation within the notice period, the storage agreement terminates and the landlord may sell or dispose of the property without further notice to the lienholder.
  • A landlord may increase the storage charge if the increase is part of a community-wide rent increase for all tenants, the notice is given in accordance with ORS 90.600 (1) (the rent increase statute).

 

Note that during the term of the storage agreement the lienholder has the right to remove or sell the home. Selling the home includes a sale to a purchaser who wishes to leave it on the space and becomes a tenant, so long as the prospective tenant is approved by the landlord pursuant to ORS 90.680 (the tenant sale and approval process). The landlord may condition approval for occupancy of any purchaser upon payment of all unpaid storage charges and maintenance costs.

 

If the lienholder violates the storage agreement (whether by failure to maintain the space or pay the storage fees), the landlord may terminate it by giving at least 90 days’ written notice to the lienholder stating facts sufficient to notify the lienholder of the reasons for the termination. Unless the lienholder corrects the violation within the notice period, the storage agreement terminates as provided and the landlord may sell or dispose of the property without further notice to the lienholder.

 

After a landlord gives a termination notice for failure of the lienholder to pay a storage charge and the lienholder corrects the violation, if the lienholder again violates the storage agreement by failing to pay a subsequent storage charge, the landlord may terminate the agreement by giving at least 30 days’ written notice to the lienholder stating facts sufficient to notify the lienholder of the reason for termination. Unless the lienholder corrects the violation within the notice period, the agreement terminates and the landlord may sell or dispose of the property without further notice to the lienholder.

 

A lienholder may terminate a storage agreement at any time upon at least 14 days’ written notice to the landlord and may remove the property from the facility if the lienholder has paid all storage charges and other charges as provided in the agreement.

 

Upon the failure of a lienholder to enter into a storage agreement or upon termination of the agreement, unless the parties otherwise agree or the lienholder has sold or removed the property, the landlord may sell or dispose of the property without further notice to the lienholder.

 

The abandonment statute, ORS 90.675, does not directly address you question about what happens if a landlord has followed the above protocols and the lienholders rights have been legally terminated.  It is my opinion that the language saying that the landlord may sell or dispose of the property without further notice to the lienholder should not be construed as if the remaining rules (regarding public or private sale, etc.) no longer apply to the lienholder. The landlord does not have to re-issue another 45-day letter, but should continue to follow the remaining sale/dispose protocols described in the statute, and should still recognize the rights of the lienholder to notification of the sale under ORS 90.725(10), and to any available proceeds pursuant to the distribution rules found at ORS 90.675(13).