Abandoned Vehicles

By Richard Marmor
AZSA Legal and Legislative Committee Chair

Let’s get something straight up front: When someone fails to pay their rent on a space containing a vehicle, that is NOT an abandoned vehicle. That vehicle is the subject of a defaulted contract, the lease, a very different legal situation.

Years ago, in our pre-you-can-finally-sell-cars days, it was nearly impossible to sell a car when the tenant defaulted. Some operators skirted the problem by treating the vehicle as abandoned, and used the state’s abandoned vehicle statute, A.R.S. §28-4869, to apply for a title to the car so they could then sell it. Fortunately for us all, no clever attorney was handed such a case in order to sue such an operator. If he had, he would have seen through the subterfuge and our whole lien process would likely have been stood on its head.

At the same time, the Arizona Motor Vehicle Division (MVD) was aware of what was going on and they didn’t like it. In another stroke of good luck, MVD had enough bigger problems on its plate that it never got around to doing anything about storage’s abuse of the abandoned vehicle process.

In 2001, AZSA sat down with the good folks at the Department of Transportation and we worked out a process by which storage operators could finally sell cars found in defaulted units, and in 2002 we successfully got that process passed into law. You undoubtedly know it well by now. As part of that negotiation, the Department had a demand: no more sales using the abandoned vehicle statute! We agreed; after all, the new procedure was going to be easier than that anyway. So this line was added to the law: “If the contents of the leased space include a vehicle, section 28-4869 does not apply.”

As many of you know well, it has taken years for MVD to figure out how to live under the new law. Some of us still encounter MVD problems when foreclosing on cars. Most of those problems can be traced to what are known as “Policy Memos,” procedural guidelines issued by the Department to its field offices directing how they are to handle various situations. The memos they issued about self-storage were seriously flawed right from the start. It has been a constant battle over the years trying to get them to correct their own procedures to bring them in line with the law.

With its usual flair for not quite getting it right, the Department cited the prohibition against our use of the abandoned vehicle statute in its policy memo as: “The abandoned vehicle provisions . . . do not apply to vehicles left in self-storage facilities.”

So what happens if you come in one morning and find an unidentified car sitting on your property? Time goes by and no one returns to claim it. Clearly, that’s a true abandoned vehicle. Or how about the operator who took over a facility and found several vehicles stored there with no leases, no identification and no rent payments coming in? Those are arguably abandoned vehicles, too. As written, MVD policy prevented those operators from doing anything about it.

Relief at last. Policy Memo 10.6.9 governs the MVD handling of our foreclosures. (The latest one is dated April 25, 2011. Make a note of the memo number and the date. If you ever have problems at MVD, tell then to look at that memo.) We were finally successful in getting the Department to correct the abandoned vehicle instruction in the memo. It now reads, “The abandoned vehicle provisions . . . do not apply to vehicles left in self-storage facilities under a written contract for storage.” In other words, there are circumstances beyond a lease default – like my examples – in which the abandoned vehicle statute now can be applied at a self-storage facility.

If you have the misfortune of having to pursue an abandoned title to a vehicle, you can read about the process on-line at http://goo.gl/OKyTo

[This article deals with a law related subject at a general level and is not intended for you to rely on. You should consult a lawyer before making a final decision in a situation involving any legal issues.]

Richard Marmor, Esq. is a self-storage consultant, facility owner and former facility operator in the Phoenix area. He is also the founding President and current member of the Board of Directors of the Arizona Self-Storage Association, serving as Chair of the Legal and Legislative Committee.

Source: Behind Closed Doors, AZSA Newsletter Archives