Understanding Warehouse Liens
|This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Nathan Ganapathi and Anna Kurt, Ganapathi Law Group in October 2017.|
When someone leaves goods at a storage facility, the business has a legal claim on the goods. This is called a “warehouse lien”. It can help the business recover their fees.
What you should know
A warehouse lien helps a storage facility get paid
Under the law in BC, a warehouse lien is a legal claim made on goods stored with a “warehouser”. A warehouser is someone in the business of storing goods. The warehouse lien helps ensure a warehouser gets paid for storing goods.
If the warehouser isn’t paid, the lien allows them to keep the stored goods and sell them to recover their storage fees and related costs.
How a warehouse lien is established
Warehousers automatically have a lien on goods left with them for storage when the goods are left by:
- the owner of the goods,
- someone with the owner’s authority, or
- any person entrusted with the goods by the owner.
In the third case, there is an additional requirement for the warehouser to preserve their lien. Where the goods were left for storage by a person entrusted with them by the owner, the warehouser must give written notice of the warehouse lien to the owner of the goods. The warehouser must give this notice within two months of the goods being left with them.
If someone has registered a security interest in the goods, the warehouser must also give the notice of the lien to them.
This notice must include:
- 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 warehouse lien on the goods.
If a warehouser does not get paid
If a warehouser does not get paid storage fees they are due, the warehouser can sell by public auction any goods on which they have a warehouse lien. In doing so, they must follow a process set out under BC law.
The warehouser must give written notice of their intention to sell
First, the warehouser must give written notice to specific parties that they intend to sell the goods. These parties include the owner of the goods, the person owing the storage fees, and anyone who had a registered security interest in the goods at the time the goods were left for storage.
The notice must describe the goods and the storage arrangements, as well as:
- an itemized statement of the warehouser’s charges, showing the amount due at the time of the notice,
- a demand to pay the charges due by a certain date, not less than 21 days from the delivery of the notice, and
- a statement that, unless the charges are paid by the date in the notice, the goods will be sold by public auction at a time and place set in the notice.
The warehouser must advertise the public auction
If the warehouser’s charges are not paid by the date in the notice, the warehouser must advertise the public auction. The ad must be published at least once a week for two consecutive weeks in a newspaper in the local area where the auction is to be held.
The warehouser must wait at least 14 days after the first ad is published before holding the public auction.
Anyone with an interest in the goods can pay off the debt
At any time before the goods are sold at auction, any person claiming an interest in the goods can pay off the warehouse lien. This involves paying the storage fees that are owing as well as the warehouser’s expenses in preparing for the sale.
If this happens, the warehouser must deliver the goods to the person who paid the debt — as long as 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.
What happens to the sale proceeds
Where the goods are sold at auction, the warehouser must satisfy the warehouse lien from the sale proceeds. This involves covering their charges for storing and preserving the goods, and any reasonable charges from the sale.
If any money is left after these charges are paid, the warehouser must pay it to the person entitled to it. If it’s not clear who is entitled to any remaining money, the warehouser must pay it into court.
Can self-storage operators claim a warehouse lien?
No. BC law defines “warehouser” as a person in the business of storing goods “as a bailee for hire." A bailee for hire is someone who takes care of property left with them as someone would take care of their own property. Self-storage facilities do not meet this definition.
What happens to a warehouse lien if the warehouser gives the goods up?
To claim a warehouse lien, a warehouser must have the goods. 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.
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