Vehicles: What You Can’t Do with Vehicles in Default

by Richard Marmor, Esq.
AZSA Legal & Legislative Chair

Judging by the inquiries we’re receiving, it appears to be time for a refresher course on what storage operators cannot do with cars and boats found in defaulted spaces.

Seek an Abandoned Vehicle Title

Seeking an abandoned vehicle title (aka a “bonded” title) was very popular in self-storage circles many years ago. That’s where someone posts a bond and applies to a court to issue title to a vehicle found abandoned.

There are multiple problems with that approach, not least of which is the fact that in self-storage’s situation, the vehicle was not abandoned! What you have is a defaulted lease.

Second, it’s against the law! Section 33-1704 – storage’s lien sale statute – provides in part: “If the contents of the leased space include a vehicle, section 28-4839 does not apply” [emphasis added]. For the record, that banned section is the law that provides a process for seeking titles to abandoned vehicles.

Landlord and Tenant Act

A few storage operators contacted their attorneys, who, understanding little about self-storage, mistakenly directed their clients to file a lien under the Arizona Landlord and Tenant act. The problem there is that that act applies only to residential occupancies. (As we all know, one thing you cannot do is reside in a self-storage space.) It’s the wrong law! Were storage operators to follow that law’s strictures and sell vehicles as a result, those operators would be liable to the vehicles’ owners for the value of the vehicles.

Call a Tow Truck

In recent years, a number of states have enacted laws that permit a self-storage operator with a vehicle in a defaulted space to call a licensed tow company to simply come and take the vehicle away.

There are a couple of problems with that approach. First, you can’t do that in Arizona! The states that permit such towing have specific laws on their books that enable that process. No such law exists here.

Second, consider what the towing companies are going to do with those vehicles. They’re either going to find and pressure the vehicles’ owners into paying and recovering the vehicles, or they are going to exercise their towing company lien rights and sell the vehicles. Either way, it is the towing companies and not the storage operators who ultimately get paid.

A Better Way

Arizona has a better way, and it’s the storage operators who not only easily rid themselves of the vehicles, but they also get paid!

In Arizona, self-storage operators can sell motor vehicles and boats left in defaulted spaces pretty much the same way they sell any other contents. The only difference is that they have to check with MVD to see if there is an extra notice or two they may have to mail prior to sale (that, and they have to give a particular piece of paper, a Declaration of Sale, to the vehicles’ buyers so they can record their titles to their purchases).

Best of all, under the Arizona procedure, not only do the storage operators get their spaces back into production, it is the storage operators and not towing companies who get paid, even if it is vehicles’ lienholders who come forward to get the vehicles. That’s even more than the towing companies can get!

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

Richard Marmor has been in the self-storage industry for over 30 years, as a facility owner and consultant. He was the founding president of AZSA and is its lobbyist at the Arizona Legislature, where he authored many of the self-storage industry’s laws. An attorney, Richard also created most of AZSA’s forms; he is a regular speaker at AZSA educational workshops around the state; and his articles appear regularly in the AZSA newsletter and website.