Understanding Warehouse Liens

This script explains what warehouse liens are and how they work under the BC Warehouse Lien Act (the Act).

What is a warehouse lien?

A warehouse lien (also known as a lien for storage) is a charge or claim by a person (a warehouser) in the business of storing goods on goods stored in their warehouse. The Warehouse Lien Act defines a warehouser as a person in the business of storing goods as a bailee for hire. A warehouse lien helps a warehouser get paid for storing goods. For example, if you store goods in a commercial warehouse, under the Act, the warehouser has a lien against your goods. If you do not pay the storage bill, the warehouser can eventually sell them to get the money you owe.

How does a warehouse lien help ensure payment for goods stored?

Warehousers automatically have a lien on goods given to them for storage, whether given by the owner of goods or by any person entrusted with possession of the goods by the owner. If they are not paid – and they still have the goods – they can eventually sell them by public auction to get the money owed to them.

To do this, a warehouser must give written notice of the lien and then written notice of their intent to sell the goods by public auction. But if the owner of the goods (or someone with their authority) left the goods for storage, the warehouser does not have to give notice of the lien. Then, the warehouser must advertise the upcoming sale in a local newspaper. This script explains the details.

Does a warehouse lien exist and what amounts does it cover – section 2 of the Act

A warehouse lien exists automatically – unless it’s void under section 3 (explained in the next section). 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 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 advanced for the goods including interest, insurance, transportation, labour, weighing, and other expenses.
• 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 not left by owner – section 3 of the Act

The warehouser must give notice of the lien to the owner of the goods – but only if owner (or a person with their authority) was not the one who left the goods at the warehouse. If the owner of the goods (or a person with their authority) left the goods at the warehouse, no notice is needed because the owner already knows the goods are there.

The warehouser must also give notice of the lien to anyone who had registered a financing statement of a security interest in the goods by the time the goods were left at the warehouse.

The warehouser has to 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.
• a statement that the warehouser is claiming a lien for the goods under the Act.

Lien not valid if required notice not given

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 of the Act

Warehousers who want to sell the goods to pay off the debt must use a public auction. First, they have to 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).
• 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 of the Act

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 of 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 of the Act

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 (and a calculation statement) to BC Supreme Court.

What happens if the warehouser is paid before the sale – section 7 of the Act?

Anyone with an interest in the goods can pay the debt for storing them and the other charges allowed under section 2. If that 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 warehouse must keep the goods, following the contract they signed when the goods were left with them.

Ways to give notice – section 8 of the Act

The written notice required under the Act must be given in one of two ways:

• delivering the notice to the person.
• 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 have?

To claim a lien, a warehouser must still have the goods. The Act does not permit what is called a “non-possessory lien”. 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. That may happen because it’s not always practical for warehousers to keep all the goods they have not been paid for.

The Act’s notice requirements confuse people because there’s no requirement to give notice of the lien to the owner if the owner (or a person with their authority) left the goods for storage.

More information

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 for collecting debts – for example, hiring a collection agency, suing, seizing and selling assets, and garnishing wages. Check script 250, called “Collection of Debts”. The law in this area can be complex. For legal advice, consult a lawyer.

The Warehouse Lien Act is available at www.bclaws.ca. So is the Warehouse Receipt Act. It may also apply in these situations.

[updated November 2014]

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