§ 34-46-5 - Enforcement of lien.
SECTION 34-46-5
§ 34-46-5 Enforcement of lien. – A facility operator may enforce a lien created by this chapter only if thevessel owner has been notified of the lien as required by § 34-46-4.
(1) Sale – Use of proceeds. (i) If a vessel owneris in default for a period of more than ninety (90) days, a facility operatormay enforce a lien by selling the stored vessel at a commercially reasonablepublic sale for cash. As used in this section, "commercially reasonable" shallhave the same meaning as in the Uniform Commercial Code. The proceeds of thesale shall be applied in the following order:
(A) To the reasonable expenses of the sale incurred by thefacility operator including, but not limited to, reasonable attorneys' fees,legal expenses and expenses of advertisement;
(B) To the satisfaction of the lien created by this chapter;
(C) To the satisfaction of all other liens on the vessel heldby all lienholders of record to be paid in the order of priority; and
(D) To the extent that the proceeds of sale exceed the sum ofthe foregoing, the surplus must be paid by the facility operator to the vesselowner.
(ii) If proceeds of the sale are not sufficient to satisfythe vessel owner's outstanding obligations to the facility operator or anylienholder of record, the vessel owner remains liable to the facility operatorand/or lienholder for the deficiency.
(2) Advertisement – Notice of default. Beforeconducting a sale under this section, the facility operator shall:
(i) Personally serve a notice of default on the vessel ownerif the vessel owner is a Rhode Island resident. If the vessel owner is not aRhode Island resident, notice shall be in accordance with subdivision (7). Thefacility operator shall provide a copy of the notice to each lienholder ofrecord. The notice must include:
(A) A statement that the vessel is subject to a lien held bythe facility operator;
(B) A statement of the facility operator's claim indicatingthe charges due on the date of the notice, the amount of any additional chargesthat will or may become due before the date of sale, and the date thoseadditional charges will become due;
(C) A demand for payment of the charges due within aspecified time not less than forty (40) days after the date the notice isdelivered to the vessel owner;
(D) A statement that unless the claim is paid within the timestated the vessel will be sold, specifying the time and place of the sale; and
(E) The name, street address, and telephone number of thefacility operator, or the facility operator's designated agent, whom the vesselowner may contact to respond to the notice;
(ii) After the expiration of the forty (40) day period setforth in subdivision (2)(i)(C), the facility operator shall publish anadvertisement of the sale once a week for two (2) consecutive weeks in anewspaper of general circulation in the area where the sale is to be held andof general circulation in the state. The advertisement must include a generaldescription of the vessel, the name of the vessel owner, and the date, time andplace of the sale. The date of the sale must be more than fifteen (15) daysafter the date the first advertisement of the sale is published.
(3) Location of sale. A sale under this chapter mustbe held at the facility or at the nearest suitable location.
(4) Purchasers. A purchaser of a vessel sold at a salepursuant to this chapter takes the vessel free and clear of any rights ofpersons against whom the lien was valid and all other lienholders of record.
(5) Facility operator liability. If the facilityoperator complies with the provisions of this chapter, the facility operator'sliability is as follows:
(i) To a lienholder of record, the facility operator'sliability is limited to payment from the net proceeds received from the sale ofthe vessel pursuant to § 34-46-5; and
(ii) To the vessel owner, the facility operator's liabilityis limited to the net proceeds received from the sale of the vessel afterpayment in full of all lienholders of record pursuant to this section.
(6) Denying access to storage facility. A facilityoperator may deny a vessel owner who has been notified under § 34-46-4access to the storage facility, except that the vessel owner is entitled toaccess to the facility during normal business hours for the purpose ofsatisfying the lien or viewing and verifying the condition of the vessel.
(7) Notices. Except as otherwise provided insubdivision (2)(i), all notices required by this chapter must be sent byregistered or certified mail, return receipt requested. Notices sent to afacility operator must be sent to the facility operator's business address orto the address of the facility operator's designated representative. Notices toa vessel owner must be sent to the vessel owner at the vessel owner's lastknown address. Notices to a lienholder of record must be sent to the address ofthe lienholder as provided in the public filings that serve to perfect thelienholder's interest in the vessel. Notices are considered delivered on thedate the return receipt is signed or, if the notice is undeliverable, the datethe post office last attempts to deliver the notice.