pa036298

Act No. 362

Public Acts of 1998

Approved by the Governor

October 20, 1998

Filed with the Secretary of State

October 20, 1998

EFFECTIVE DATE: October 20, 1998

STATE OF MICHIGAN

89TH LEGISLATURE

REGULAR SESSION OF 1998

Introduced by Reps. Callahan, Kukuk and Hale

ENROLLED HOUSE BILL No. 4983

AN ACT to provide for certain liens on certain marine property repair, service, or storage in marinas, boatyards, and marine repair facilities; to provide for the sale of certain property subject to a lien; to provide for the liability of certain persons; to provide for powers and duties of certain state departments; and to provide for the enforcement of this act.

The People of the State of Michigan enact:

Sec. 1. This act shall be known and may be cited as the "Michigan marina and boatyard storage lien act".

Sec. 2. As used in this act:

(a) "Boat" and "vessel" mean boat and vessel as those words are defined in sections 80101 and 80104 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.80101 and 324.80104.

(b) "Default" means the failure to pay obligations incurred for labor, materials, supplies, or the storage of a boat, boat motor, or boat trailer.

(c) "Facility" means a marina, boatyard, boat or yacht club, or marine repair facility that provides, as part of its commercial operation, for the storage or repair of boats, boat motors, boat cradles, or boat trailers.

(d) "Fair market value" means the value of the property as determined by the current issue of a nationally recognized used vessel guide at the time of the notice to the property owner and any lienholder under section 5(5)(a).

(e) "Lienholder" or "lienholder of record" means a person who claims an interest in or lien on the property pursuant to a financing statement, title, registration, or other marine documentation filed with the secretary of state, a register of deeds, or other public filing.

(f) "Person" means an individual, association, partnership, limited liability company, corporation, boat or yacht club, governmental entity, or other legal entity.

(g) "Property" means a boat, boat motor, boat cradle, or boat trailer in storage at a facility.

Sec. 3. (1) A facility owner has a possessory lien on property stored at that facility for storage, rent, labor, materials, supplies, and other charges and for expenses reasonably incurred in the sale of that property under this act. Except as provided in subsection (8), a lien on property under this section takes priority over any prior lien on the property unless the prior lienholder pays to the facility owner the amount of the lien attributable to storage, labor, materials, supplies, or other charges reasonably incurred in the sale of that property under this act or the following applicable amount, except as otherwise provided in this section, whichever is less:

(a) For a vessel that is not more than 27 feet long, $5,000.00 or 20% of the fair market value, whichever is less.

(b) For a vessel that is more than 27 feet but not more than 40 feet long, $30,000.00.

(d) For a vessel that is more than 60 feet long, $90,000.00.

(2) The amount calculated under subsection (1) shall be increased by a like amount if the expenditure for labor and materials was for both primary power engines of a vessel equipped with 2 engines. However, this subsection does not apply to auxiliary propulsion or trolling engines.

(3) The amount calculated under subsection (1) shall be reduced by 1/2 if more than half of the expenditure for labor and materials was attributable only to the repair or replacement of 1 of the following:

(a) Navigational electronics.

(b) Auxiliary power generators.

(4) The amount calculated under subsection (1) shall be reduced by 3/4 if more than half of the expenditure for labor and materials was attributable only to 1 of the following:

(a) The repair or replacement of a cabin interior.

(b) Painting.

(d) Any combination of subdivisions (a) to (c).

(5) A payment made to a facility owner under this section shall be added to the amount of the lien of the prior lienholder who made the payment and shall be subtracted from the amount of the facility owner's lien.

(6) The facility owner's lien under this act is the only lien that a facility owner has on a vessel, unless the facility owner is also the prior lienholder.

(7) This act does not create a lien on a documented vessel subject to a preferred ship mortgage or other preferred maritime lien pursuant to chapter 313 of subtitle III of title 46 of the United States Code, 46 U.S.C. 31301 to 31343. A facility owner is required to obtain an abstract of title from the United States coast guard for a vessel that is documented as that term is defined in chapter 301 of subtitle III of title 46 of the United States Code, 46 U.S.C. 30101.

(8) The lien created for storage under this act without a written storage agreement that includes a notice of lien shall not take priority over the lien of a prior lienholder for storage incurred before 30 days after the notice of lien required by section 4(1)(b) is delivered to the prior lienholder. After that 30-day period, the lien shall include all storage charges incurred, including, but not limited to, those incurred during the 30-day period.

(9) The lienholder shall arrange to remove the property from the facility upon the termination of a lien under this act unless the lienholder and the facility owner enter into a new storage agreement.

Sec. 4. (1) A facility owner shall notify a property owner and all prior lienholders of the lien created in this act before enforcing the lien. A property owner is notified if either of the following has occurred:

(a) The property owner has signed a written storage agreement that includes a notice of the lien created in this act.

(b) The facility owner has mailed written notification of the lien to the property owner and all prior lienholders.

(2) A facility owner who does not have a written storage agreement that includes a notice of the lien created under this act on a vessel originally left at the facility only for repairs, labor, or materials installation on a repair order shall not do either of the following:

(a) File a lien for storage fees on the vessel before 30 days after the notice of intent to commence storage fees was filed with the prior lienholder.

(b) Initiate an enforcement action under section 5 until 30 days after the written notice of a lien required by subsection (1)(b) is delivered to the property owner and all prior lienholders.

Sec. 5. (1) A facility owner shall enforce a lien created in this act only if the facility owner has notified the property owner and all prior lienholders of the lien as required by section 4.

(2) If a property owner is in default for a period of more than 180 days, the facility owner may enforce the lien by selling the repaired or stored property at a commercially reasonable public sale. As used in this section, "commercially reasonable" means that term as defined in the uniform commercial code, 1962 PA 174, MCL 440.1101 to 440.11102. The proceeds of the sale pursuant to this section shall be applied in the following order:

(a) To the reasonable expenses of the sale incurred by the facility owner including, to the extent not prohibited by law, reasonable attorney fees and legal expenses.

(b) To satisfy the lien created in this act to the extent that it has priority over all other liens.

(d) To the extent that the proceeds of sale exceed the sum of the items described in subdivisions (a) to (c), the surplus shall be paid by the facility owner to the property owner.

(3) If, after satisfying the reasonable expenses of the sale and the lien under subsection (2), there is a dispute concerning the priority of record lienholders under subsection (2), the facility owner may hold the proceeds of the sale until the dispute is settled by the written agreement of the parties or until an order or final judgment is issued by a court of competent jurisdiction relative to the dispute. The facility owner may pay the proceeds of sale to a court with subject matter jurisdiction. After a facility owner pays the proceeds to a court as described in this subsection, the facility owner shall be relieved of all further obligation concerning those proceeds.

(4) If proceeds of the sale pursuant to this section are not sufficient to satisfy the property owner's outstanding obligations to the facility owner or any lienholder of record, the property owner remains liable to the facility owner or lienholder for the deficiency.

(5) Before conducting a sale under this section, and within a reasonable time after default has continued for more than 180 days, the facility owner shall do both of the following:

(a) Mail a notice of default to the property owner and the secretary of state. The secretary of state shall notify the facility owner and provide him or her with the name of the registered owner of the property and a list of all lienholders. The facility owner shall provide a copy of the notice of default to each lienholder of record listed on the title, registration, or other marine documentation. The notice of default shall include all of the following:

(i) A statement that the property is subject to a lien held by the facility owner.

(ii) A statement of the facility owner's claim indicating the charges due on the date of the notice, the amount of any additional charges that will become due before the date of sale, and the date those additional charges will become due.

(iii) A demand for payment of the charges due within a specified time not less than 30 days after the date the notice is delivered to the property owner and all lienholders of record.

(iv) A statement that the property will be sold if the claim is not paid within the time period stated in the notice. The statement shall include the time and location of the sale.

(v) The name, street address, and telephone number of the facility owner, or the facility owner's designated agent, whom the property owner may contact to respond to the notice.

(b) After the expiration of the 30-day period set forth in subdivision (a)(iii), publish an advertisement of the sale once a week for 2 consecutive weeks in a newspaper of general circulation in the area where the sale is to be held. The advertisement shall include a general description of the property, the name of the property owner, and the time and location of the sale. The date of the sale shall be not less than 15 days after the date the first advertisement of the sale is published.

(6) At any time prior to the sale of property under this act, any lienholder may cure the default by paying the amount of the lien to the facility owner, which amount shall be added to the lien of the lienholder.

(7) A sale under this act shall be held at the facility or at another reasonable location.

(8) A person who purchases property sold at a commercially reasonable sale pursuant to this act takes the property free and clear of the rights of the property owner and all lienholders of record.

(9) A facility owner who complies with this act is liable as follows:

(a) The facility owner's liability to a lienholder of record is limited to the net proceeds received from the sale of the property.

(b) The facility owner's liability to the property owner is limited to the net proceeds received from the sale of the property after payment in full of all lienholders of record.

(10) A property owner or lienholder who suffers damages because of a facility owner's failure to comply with this act may bring an action in a court of competent jurisdiction for his or her actual damages or $250.00, whichever is greater.

(11) A facility owner is limited to 1 lien under state law against a vessel for the storage, labor, materials, or supplies for the vessel. A facility owner who asserts a lien against a vessel under another statute or the common law shall not also assert a lien under this act for the same storage, labor, materials, or supplies, or other charges or expenses related to the vessel.

(12) A facility owner may deny a property owner who has been notified under subsection (5) access to the storage facility, except that the property owner is entitled to access to the facility during normal business hours for the purpose of satisfying the lien or viewing and verifying the condition of the property.

(13) Except as otherwise provided in this act, all notices required by this act shall be mailed by registered or certified mail, return receipt requested. Notices to a facility owner shall be mailed to the owner's business address or to the address of the owner's designated representative. Notices to a property owner shall be mailed to the property owner at the property owner's last known address as listed on the title, registration, or other marine documentation or as provided in the most recent agreement concerning storage, labor, materials, or supplies entered into between the facility owner and the property owner. Notices to a lienholder of record shall be sent to the address of the lienholder as listed on the title, registration, or other marine documentation in the public filings that serve to perfect the lienholder's interest in the property. Notices are considered delivered on the date the recipient of the notice signs the return receipt or, if the notice is undeliverable, the date the post office last attempts to deliver the notice.

(14) The facility owner may bid all or a portion of his or her claim at the auction sale of the property.

Sec. 6. The secretary of state shall issue a new title or registration to the purchaser of property at a sale conducted pursuant to section 5.

Sec. 7. If a documented vessel is sold pursuant to this act, the facility owner shall satisfy the United States coast guard requirements for passage of title by operation of state law under 46 C.F.R. 67.91 that include providing all of the following:

(a) A copy of this act.

(b) An affidavit from the facility owner setting forth the grounds for selling the property and the steps taken to comply with this act.

(d) A bill of sale in recordable form from the facility owner as agent for the property owner.

Sec. 8. A lien under this act shall terminate and a facility owner shall immediately cease enforcement of actions brought under this act if either of the following occurs:

(a) The property owner pays the facility owner the full amount necessary to satisfy the lien or other amount that is accepted by a facility owner as payment in full. At any time before the conclusion of a sale conducted under this act, the property owner may redeem the property by paying the full amount necessary to satisfy the lien or other amount that is accepted by a facility owner as payment in full.

(b) A person other than the facility owner who has a lien on the property pays the facility owner the full amount necessary to satisfy the facility owner's lien or other amount that is accepted by a facility owner as payment in full. Upon payment by a lienholder of record, the facility owner shall hold the property for the benefit of and at the direction of that lienholder and shall not deliver possession of the property to the property owner. Unless the facility owner and the lienholder enter into a new storage agreement, the lienholder shall arrange removal of the property from the facility.

Sec. 9. If a provision of this act is inconsistent with a provision of 1915 PA 312, MCL 570.301 to 570.309, then the provision of this act shall govern.

This act is ordered to take immediate effect.

Clerk of the House of Representatives.

Secretary of the Senate.

Approved

Governor.