Boaters Lien Law

Division 3, Chapter 2, Article 4 of the California Harbors and Navigation Code deals with the boaters lien law. Section 500 provides that the name of this article is the “Boaters Lien Law”.

Section 501 provides definitions for the following terms: “department,” “mail,” “services,” “storage,” and “vessel.”

Section 501.3 states that the time a notice or statement is given or sent, unless otherwise expressly provided, means the time a written notice to a person is deposited in the United States mails; or the time any other written notice is personally delivered to the recipient.

Section 501.5 requires the possessory vessel lien procedures described by this article supersede any local ordinance and provide the exclusive means of enforcing these liens.

Section 502 says that every person has a lien dependent upon possession of the vessel for the compensation to which he or she is legally entitled for services rendered to or storage of any vessel subject to registration with the Department of Motor Vehicles. The lien arises at the time a written statement of lien is sent to the registered owner of the vessel which specifies the charges for services or storage rendered and states that the vessel is subject to sale pursuant to the California Boater’s Lien Law.

In addition, there are rules for claims for storage charges. The legal owner may, upon declining consent, remove the vessel from the lien claimant only upon satisfying the lien of the lien claimant. Any lien arising under this section is extinguished, and no lien sale is conducted unless, 60 days after the lien arises, the lienholder does either of two specified actions.

Section 503 requires a lienholder to apply to the department for the issuance of an authorization to conduct a lien sale pursuant to the provisions of this section for any vessel with a value determined to be over $1,500. A fee is charged by the department and may be recovered by the lienholder if a lien sale is conducted or if the vessel is redeemed. The application is executed under penalty of perjury and must include at least three specified pieces of information.

Upon receipt of an application, the department is required to, within 15 days, complete four specified actions. In addition, the notice required must include at least six specified statements. If the department receives the declaration of opposition in the time provided, the department must notify the lienholder within 16 days of the receipt of the declaration of opposition that a lien sale cannot be conducted unless the lienholder files an action in court within 60 days of the notice.

Service of legal process on the declarant, with return receipt requested signed by the declarant or an authorized agent of the declarant at the address shown on the declaration of opposition, is effective. Return of a declaration of opposition constitutes consent by the declarant to service of legal process for the desired court hearing upon him or her in the foregoing manner.

Upon receipt of authorization to conduct the lien sale, the lienholder must do at least two specified items. Upon receipt of the notice, the department must mark its records and notify any person having a proprietary interest in the vessel that there is a pending lien sale and that title will not be transferred until the lien is satisfied or released.

Section 504 provides for vessels with a value determined to be $1,500 or less, the department must promptly furnish the lienholder with the names and addresses of the registered and legal owners of record. The lienholder must, immediately upon receipt of the names and addresses, send by mail, with return receipt requested, with several required items.

All notices must be signed under penalty of perjury and include at least four specified items of information and statements. If the department receives the completed declaration of opposition within the time provided, the department must notify the lienholder within 16 days that a lien sale shall not be conducted unless the lienholder files an action in court within 20 days of the notice and judgment is subsequently entered in favor of the lienholder or the declarant subsequently releases his or her interest in the vessel.

Section 505 allows a registered or legal owner of a vessel to release any interest in the vessel after the lien has arisen. The release must be dated when signed and a copy be given at the time the release is signed to the person releasing the interest. The release has to contain five specified pieces information in simple, nontechnical language.

Section 505.5 states that, whenever the lien upon any vessel is lost by reason of the loss of possession through trick, fraud, or device, the repossession of the vessel by the former lienholder claimant revives the lien, but a lien so revived is subordinate to any right, title, or interest of a person under a sale, transfer, encumbrance, lien, or other interest acquired or secured in good faith and for value between the time of the loss of possession and the time of repossession.

In addition, it is a misdemeanor for a person to obtain possession of a vessel or any part of the vessel subject to a lien pursuant to the provisions of this chapter by trick, fraud, or device. It is a misdemeanor for a person claiming a lien on a vessel to knowingly violate this article.

Section 506 prohibits any lien sale from being undertaken unless the vessel has been available for inspection at a location easily accessible to the public for at least one hour before the sale and is at the place of sale at the time and date specified on the notice of sale. Sealed bids shall not be accepted. The lienholder must conduct the sale in a commercially reasonable manner.

Section 506.5 provides that, within 10 days after the sale of any vessel, the legal or registered owner may redeem the vessel upon the payment of the amount of the lien, all costs and expenses of the lien, together with interest on that sum at the legal rate from the due date thereof until the repayment. If the vessel is not redeemed, all lien sale documents required by the department to effect transfer of title are then completed and delivered to the buyer.

Section 507 specifies that, at the time a lienholder applies to the department to conduct a sale, the lienholder must submit with the application a declaration by a licensed yacht and ship broker of the fair market value of the described vessel at a specific date within 30 days of that submission. The opinion need not be based upon a marine survey, but must be based on a physical inspection of the vessel.

Section 507.5 specifies how the proceeds of a vessel lien sale are to be disposed of. There are three specified procedures.

Section 508 states that a lien provided for in this article for repairs, labor, supplies, or materials for, or for storage or safekeeping of, a vessel may be assigned by written instrument accompanied by delivery of possession of the vessel subject to the lien, and the assignee may exercise the rights of a lienholder as provided in this article.

Section 508.5 requires all forms required pursuant to this article to be prescribed by the department. Language used in the notices and declarations must be simple and nontechnical.

Section 509 prohibits any lien from attaching to any personal property in or on the vessel except that which is carried on the vessel for lifesaving, safety, mooring, and operating purposes. Personal property not subject to lien is be given to the registered owner or the owner’s authorized agent upon demand.