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The local or state Department of Social Services, in most cases, has enacted laws that create a lien against all property which is owned by a support obligor when such support obligor is under court order to pay child support, or combined child support and spousal support to a support collection unit and further, such obligor has accumulated arrears (currently four months). This is a fairly easy proposition in the case of motor vehicles as satisfactory filing by a party to whom the funds are owed needs to only file certain documents with the Department of Motor Vehicles. The obligor is then put on notice and given 35 days in which to challenge the validity of said "superior lien" pursuant to a mistake of fact (not the merits) and then the commissioner of the Department of Motor Vehicles will make a determination as to whether or not to file the lien against the automobile or other vehicles.

Untitled Property
The more problematic issues arise regarding other "untitled property," i.e., personal effects and contents of mini-storage facility space. This is not a localized problem, but the federal government has enacted legislation that requires any state to give "full faith and credit" to liens which arise in any other state provided the other state complies with various enacted procedures. Peculiarly enough, rules may not require any judicial notice or hearing prior to the enforcement of such a lien.

As a practical matter, there could be a superior lien to the contents of a mini-storage unit without knowledge and consent of the self-storage facility owner and despite an agreement to the contrary. Most states have failed to meet the October 1997 deadline and according to the New York Law Journal of October 7, 1997, "…17 (states are) not even close to compliance and facing massive fines…" Once the state enacts the statute to enforce these federal guidelines, then procedures must be put in place by way of regulations as to the usual methods in which the enforcement procedures are going to operate.

A number of possible scenarios are conceivable once states enact the regulatory scheme to comply with the federal law. Here are just a few examples. If, for example, enforcement of the mini-storage lien has already taken place and title has already transferred to a "bona fide purchaser" and a sheriff or marshal shows up during the auction process and attempts to take possession of the obligor's goods, this would undoubtedly be a situation in which the DSS (Department of Social Services) representative is not timely in enforcement the lien, therefore the facility would maintain its superior status.

In the next situation, the lien enforcement process has not gone quite as far and the proper notice of sale is forwarded to the customer. Upon learning of the notice of sale, a representative then challenges the superior lien by holding a proceeding to challenge the validity of the lien. In this instance, undoubtedly there may have to be a hearing as to who is the rightful party to have the proceeds of the sale-the DSS or the facility owner. Because the facility only started the process, did not reach the point where it transferred title, and was still responsible to have some degree of control over the customer's goods, the facility may, at this point, figuratively place the belongings with the court and have the court determine who is the rightful owner of the goods-the property owner after the sale or the party seeking to enforce it non-paid support obligations. This legal device is known as interpleader. The law products lien holders by permitting them to figuratively deposit goods or monies with a court of competent jurisdiction and then ask the court to fix the rights of the various parties who claim interest in the goods.

Under some circumstances, the law will also grant reasonable attorney fees to the depositor (known as stakeholder) and make a judicial determination as to who is the rightful owner of the goods, as well as fixing a lien amount. The benefit to this process is that the facility operator has a judge's decision as to what to do with the stored goods, as well as knowing the amount of the mini-storage facility's lien.

The last scenario is where a sheriff/marshal or magistrate, etc., serves an Order of Attachment of Warrant of Seizure against the facility while the goods are still in the unit and the lien enforcement process has not yet commenced (i.e., the lock has yet to be cut). This is precisely the situation where the new regulations will undoubtedly be tested.

The First Challenge
Most lien laws state that the self-storage facility lien is superior to any other lien or security interest. Further, that the lien attaches as of the date the property is placed into the facility. There is substantial conflicting law that holds for the proposition that property executions for child support have priority over any other judicial process. The result is not clear. Regulations virtually in every jurisdiction have not been finalized, nor enacted into law. However, this certainly is the first challenge to the superior status facility operators have enjoyed over any other lien for customers' good.

The information above was as of the writing of this article. By the time this goes to print, the regulations may have been enacted. All facility operators should maintain close contact with their state or national association, as soon as the process affects their facility, or they wish to know more about other facilities' dealings with these processes.

Kenneth M. Piken, ESQ, is a practicing attorney and senior partner in the New York based law firm of Kenneth Piken & Associates. Mr. Piken was General Counsel for the New York Self Storage Association for over 15 years, has lectured throughout the country, and has written numerous self-storage-related articles for major trade publications.

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