Warehouse Liens (Script 254)
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This script explains what warehouse liens are and how they work under the BC Warehouse Lien Act (the Act).
- 1 What is a warehouse lien?
- 2 Does a warehouse lien exist and what amounts does it cover—sections 2 and 3
- 3 Notice of warehouse lien if goods left not by owner—section 3
- 4 Lien not valid if required notice not given—section 3
- 5 Notice that warehouser intends to sell the goods—section 4
- 6 Advertising that the goods will be sold by public auction—section 4
- 7 What happens with the sales proceeds—section 6
- 8 Ways to give notice—section 8
- 9 Can self-storage operators claim a warehouse lien?
- 10 What problems does the Act present for a warehouser?
- 11 More information
What is a warehouse lien?
A warehouse lien (also known as a lien for storage) is a charge or claim by a person in the business of storing goods (known as a “warehouser”) on goods stored in their warehouse. A warehouse lien helps a warehouser get paid for storing goods. It lets them keep those goods and eventually sell them to recover the cost of storage if the owner of the goods does not pay for the storage. Warehousers automatically have a lien on goods given to them for storage, whether the goods are given by the owner of goods or by any person who the owner gave the goods to.
Does a warehouse lien exist and what amounts does it cover—sections 2 and 3
A warehouse lien exists automatically—unless it’s void under section 3 (explained in the next section). Also, the lien exists regardless of who left the goods for storage: the owner of the goods, someone with the owner’s authority, or someone who received the goods from the owner or from a person with the owner’s authority.
A warehouse lien covers reasonable charges for all the following things:
- storing and preserving the goods;
- any money the warehouser paid for the goods including interest, insurance, transportation, labour, weighing, and other expenses; and
- any notice the warehouser had to give under the Act, and advertising and selling the goods if they are not paid for before they are advertised and sold.
Notice of warehouse lien if goods left not by owner—section 3
The warehouser must give notice of the lien to the owner of the goods, but only if owner (or a person they authorized) was not the one who deposited the goods for storage at the warehouse. If the owner of the goods (or a person they authorized) left the goods at the warehouse, no notice is needed because the owner already knows the goods are there. On the other hand, if a person who had the goods (because the owner or a person they authorized gave them the goods) put the goods in storage, then the owner is entitled to notice of this.
The warehouser must also give notice of the lien to anyone who had registered a financing statement of a security interest in the goods. This security interest must have existed at the time the goods were left at the warehouse.
Importantly, the warehouser must give notice of the lien within 2 months of when the goods were left at the warehouse. The notice must have all the following information:
- a brief description of the goods;
- the location of the warehouse where the goods are stored, the date they were left there, and the name of the person who left them; and
- a statement that the warehouser is claiming a lien for the goods under the Act.
Lien not valid if required notice not given—section 3
The lien no longer exists against a person if the warehouser does not give notice to that person, as section 3 requires. For example, if a warehouser knew that a person who is not the owner of the goods (or a person acting with the owner’s authority) left the goods for storage—and the warehouser does not give notice of the lien to the owner—the lien no longer exists against the owner after 2 months from when the warehouser knew who the owner was. Similarly, if the warehouser knew that a financing statement had been registered against the goods when they were left, but does not give notice to the person with the security interest in the goods, the lien no longer exists against that person after 2 months from when the warehouser knew who the person was.
Notice that warehouser intends to sell the goods—section 4
Warehousers who want to sell the goods to pay off the debt must use a public auction. First, they must give written notice to the following four parties (using one of the two methods in section 8) that they intend to sell the goods:
- the person who owes the debt to the warehouser for the goods.
- the owner of the goods.
- anyone who has registered a financing statement of their security interest in the goods by the time the goods were left at the warehouse.
- anyone else the warehouser knows to have—or claim to have—an interest in the goods.
This notice must have all the following information:
- a brief description of the goods;
- the location of the warehouse where the goods are stored, the date they were left there, and the name of the person who left them;
- an itemized statement of the warehouse’s charges, showing the amount due at the time of the notice;
- a demand to pay the amount due (and other charges that may accrue) by the date shown in the notice, not less than 21 days from the delivery of the notice if it is personally delivered (if the notice is mailed, then 21 days from when the notice should reach its destination by regular mail); and
- a statement that, unless the charges are paid by the date in the notice, the goods will be advertised for sale and sold by public auction at a time and place set in the notice.
Advertising that the goods will be sold by public auction—section 4
If the charges are not paid by the date in the notice, the warehouser must advertise the sale before holding the public auction. The advertisement must be published at least once a week for 2 consecutive weeks in a newspaper in the local area where the sale is to be held, and must contain all the following:
- a description of the goods to be sold;
- the name of the person who owes the debt for the charges covered by the lien;
- the time and place of the sale.
The warehouser must wait for at least 14 days after the first advertisement is published to sell the goods.
What happens with the sales proceeds—section 6
The warehouser must use the money from selling the goods to pay off the debt for storing them and the other charges allowed under section 2. If any money is left after these charges are paid, the warehouser must pay it to a person entitled to it, along with a statement showing how the amount paid was calculated. If it’s not clear who is entitled to any remaining money, or if a person entitled to the money has not demanded it within 10 days of the sale, the warehouser must pay it into the Supreme Court of British Columbia, along with a calculation statement.
What happens if the warehouser is paid before the sale—section 7 Anyone with an interest in the goods can pay the debt for storing them and the other charges allowed under section 2. If this happens, the warehouser must then deliver the goods to the person who paid the debt—if that person is entitled to the goods. Otherwise, the warehouser must keep the goods pursuant to the contract they signed when the goods were left with them.
Ways to give notice—section 8
The required written notice must be given in one of two ways:
- delivering the notice to the person; or
- mailing the notice to the person at the person’s last known address, by registered mail.
Can self-storage operators claim a warehouse lien?
No—only a warehouser can claim a warehouse lien. The Act defines a warehouser as a person in the business of storing goods as a bailee for hire. Self-storage operators are not bailees for hire, so they cannot claim a warehouse lien.
What problems does the Act present for a warehouser?
To claim a lien, a warehouser must still have the goods. The Act does not permit a “non-possessory lien”, meaning a lien over goods that a person no longer has. So if a warehouser has returned the goods to the person who left them before being paid for storing them, the lien is no longer valid. Warehousers must be careful not to give up goods that they have a lien on before they are paid for storing those goods.
A warehouse lien is only one type of lien. Other types exist, in both common law and under other statutes, and a lien is only one type of remedy. Other remedies are available to collect debts, including hiring a collection agency, suing, seizing and selling assets, and garnishing wages. Script 250, “Collection of Debts”, has more information. The law in this area can be complex. For legal advice, consult a lawyer.
The Warehouse Receipt Act, may also apply in these situations, but it’s beyond the scope of this script.
[updated October 2017]
The above was last reviewed for accuracy by Anna Kurt and Nathan Ganapathi, and edited by John Blois.
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