Storage and Repair Costs When Attempting to Gain Possession of Collateral

By Amanda R. Yurechko, Esq.

Does a creditor have to pay storage or repair costs to obtain a piece of property in Ohio?  The answer is governed by what type of property at issue and under what type of interest the creditor is seeking recovery.

In general, an artisan’s lien is created by O.R.C 1333.41 covering all repair and materials provided to an item of personal property at the request of the owner.  This lien is valid so long as the artisan remains in possession of the personal property.  However, the lien is subject to any prior recorded security interest.  The artisan is required to follow very specific steps in order to enforce this lien by selling the property and may not attempt to enforce the lien until a year has passed without the owner attempting to recover the property or filing litigation over the property.   

This section specifically excludes motor vehicles.  If the property the creditor is seeking to repossess is not a motor vehicle and therefore governed by this section, the creditor will need to determine whether a valid artisan’s lien was created, whether the artisan is still in possession of the property and whether the creditor maintains a perfected security interest in that property.  If the perfected security interest pre-dates the artisan lien, the perfected security interest will win, and the creditor will not be required to pay the storage or repair costs. 

A creditor’s interest in the property created by way of a levy on the property makes the creditor a “lien creditor” as defined by O.R.C. 1309.317.  O.R.C. 1331.41 is silent as to the priority of a lien creditor’s lien versus an artisan’s lien.   The statute does seem to create the artisan’s lien at the time of non-payment, therefore before the levy which finds the property in the artisan’s hands.  Likely, the creditor attempting to recover the property through a levy will have to pay the repair and storage fees. 

If the property is a motor vehicle, other rules apply.  In contrast to the artisan’s lien on general property, a creditor with a lien on the title of a vehicle will not have to pay repair and storage charges to recover the vehicle.(1)   However, if the vehicle is leased, the creditor will have to pay the repair and storage charges under ORC §1310.34.    

In general, when the state and local government is storing a vehicle, the creditor is going to have to pay the storage costs incurred in connection with that vehicle, regardless of its lien noted on the title.  For example, where the motor vehicle was seized during an arrest, O.R.C. §4511.195 requires payment of all expenses incurred with the vehicle’s removal and storage.  Likewise, if the car was impounded under O.R.C. §4513.61, the creditor will have to pay to gain possession of the property. 

Other types of property such as airplanes and boats are going to be subject to additional and varying statutes.  The answer, therefore, is that there is no one set answer to whether a creditor will have to pay storage and repair costs when trying to gain possession of a piece of property.  Each type of property will have to be viewed individually in reference to the applicable statute to determine whether a lien was created against the property that may trump the interest the creditor has in the property. 

If you have any questions on this matter, please contact Ms. Amanda R. Yurechko, Esq. Amanda is an associate in Consumer & Commercial Collections, focused on the Governmental Collections, Healthcare, Commercial Collections and Commercial Business Groups at Weltman, Weinberg & Reis Co., LPA. She can be reached at 216.685.1060 and ayurechko@weltman.com.

(1) See Commonwealth Loan Co. v. Berry, 2 Ohio St.2d 169, 207 N.E.2d 545; Snyder v. Ryan (1965) 2 Ohio St.2d 171, 207 N.E.2d 547.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s