SB 331

                SPONSOR:
                Sen. Buckson & Rep. Spiegelman
                Sens. Hocker, Wilson
        DELAWARE STATE SENATE
        153rd GENERAL ASSEMBLY
        SENATE BILL NO. 331
        AN ACT TO AMEND TITLE 25 OF THE DELAWARE CODE RELATING TO GARAGEKEEPER'S LIENS.
        BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
        Section 1. Amend § 3903, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
        § 3903. Sale to satisfy liens.
        (a)
        If a
        A
         lienholder under § 3901 or § 3902 of this title
         may proceed to sell the property, or as much of the property as necessary, to satisfy the lien, reasonable attorney’s fees, and costs of a sale conducted under § 3905 of this title, if all of the following conditions apply:
        (1) The lienholder
        is not paid the amount due, and for which the lien is
        given
        given,
         within 30 days after the
        same or any part thereof became due, then the lienholder may proceed to sell the property, or so much thereof as may be necessary, to satisfy the lien and costs of sale pursuant to § 3905 of this title if:
        amount or any part of the amount became due.
        (2) The sale is authorized in any of the following ways:
        (1)
        a.
         An authorization to conduct a lien sale has been issued
        pursuant to
        under
         this
        section;
        section.
        (2)
        b.
         A judgment has been entered in favor of the lienholder on the claim which gives rise to the
        lien; or
        lien.
        (3)
        c.
         The owners and any secured parties of record or known lienholders of the property have signed, after the lien has arisen, a release of any interest in the property in the form prescribed by § 3904 of this title.
        (b) A lienholder may apply to a Justice of the Peace Court
        in the county in which the lienholder’s business establishment is situated
        that has jurisdiction under § 3909 of this title
         for the issuance of
        any
        an
         authorization to conduct a lien sale under § 3905 of this title.
        In the event that the lienholder’s business establishment is located in more than 1 county, the Justice of the Peace Court in the county where the property is, or most recently was, located shall have exclusive original jurisdiction.
         The application
        shall
        must
         be executed under penalty of perjury and
        shall
        must
         include all of the following:
        (3) A statement of the amount of the lien and facts concerning the claim
        which
        that
         gives rise to the lien. If compensation for storage is claimed, the per diem rate of storage
        shall
        must
         be shown.
        (4) The date,
        time
        time,
         and place that the property will be sold if the authorization to conduct a lien sale is issued.
        (5) A statement that the lienholder has no information or belief that there is a valid defense to the claim
        which
        that
         gives rise to the lien.
        (c) Upon receipt of an application
        which is made pursuant to
        made under
         subsection (b) of this section, the justice of the peace shall send a notice and a copy of the application by certified mail or registered mail, return receipt requested, to the owners,
         any
        secured parties of
        record and
        record,
         any known
        lienholders
        lienholders,
         and any other persons whose names and addresses are listed in the application. If the identity of the last registered owner or secured party cannot be determined with reasonable certainty,
         the notice provided under
        § 3905 of this title
        shall have
        has
         the same effect as notice sent by certified or registered mail. The notice
        shall
        must
         include all of the following:
        (1) A statement that an
        application has been made with the
        justice of the peace
        Justice of the Peace Court
         for the issuance of an authorization to conduct a lien sale.
        (2) A statement that the
         person has a legal right to a hearing in court; if a hearing in court is desired, the enclosed declaration under penalty of perjury must be signed and returned
        and if
        and; if
        the declaration is signed and returned, the lienholder will be allowed to sell the vehicle only if the lienholder obtains a judgment in court or
        obtains
         a release from the owners and any known lienholders.
        (4) A statement of the
        date,
        time
        time,
         and place that the property will be sold if the authorization to conduct a lien sale is issued.
        (5) A statement that the
        justice of the peace will issue the authorization to conduct a lien sale unless the person signs and returns, within 20 days after the date on which the notice was mailed, the enclosed declaration stating that the person desires to contest the claim
        which
        that
         gives rise to the lien.
        (6) A statement that the
        person
        shall be
        is
         liable for
        costs
        costs, including reasonable attorney’s fees,
         if a judgment is entered in favor of the lienholder on the claim
        which
        that
         gives rise to the lien.
        (7) A declaration
        which
        the person
         may
        be executed by the person
        execute
         under penalty of
        perjury
        perjury,
         stating that the person desires to contest the claim
        which
        that
         gives rise to the lien and
        that the person
         has a valid defense to the
        claim
        claim;
         and the person shall furnish names and addresses where official notice
        may be received of
        any person or persons
        of the hearing date can be given to any persons,
         including the
        declarant
        declarant,
         known to claim an interest in the
        property of the hearing date.
        property.
        (d)
        (1)
         If the justice of the peace receives a declaration described in paragraph
        (3) of subsection (c)
        (c)(3)
         of this section
        which
        that
         is mailed within 20 days after the date upon which the notice described in subsection (c) of this section is mailed, the justice of the peace shall notify the lienholder and owners and any other persons listed in the application or declaration of the hearing date unless the owners of the
        property
        property, any secured partiers of record,
         and any known
        lienholder or
         lienholders have signed, after the lien has arisen, a release of any interest in the property in the form prescribed by § 3904 of this title.
        In any other case,
        (2) If the justice of the peace does not receive a declaration as provided by paragraph (c)(3) of this section,
         the justice of the peace shall issue an authorization to conduct a lien sale.
        (e)
        In any
        At a
         hearing, the lienholder may have the amount of the indebtedness and right to sale determined and the person requesting the hearing may present and have determined any defenses, setoffs, counterclaims,
        cross-claims
        cross-claims,
         or third-party actions.
        (f) Any
        fees shall be
        fees, including reasonable attorney’s fees, are
         recoverable as a cost by the lienholder if a sale is conducted.
        (g) The form of the applications,
        notices
        notices,
         and declarations described in this section
        shall be
        are
         prescribed by the justice of the peace. The language used in the applications,
        notices
        notices,
         and declarations should be simple and nontechnical.
        Section 2. Amend § 3905, Title 25 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
        § 3905. Notice of sale; disposition of proceeds.
        (a)
        Prior to any such sale
        Before a sale of property to satisfy a lien,
         the lienholder shall give at least 15 days’ notice of the sale by handbills posted in 5 or more public places and by advertising in a newspaper published
        and/or circulated
        or circulated, or both,
         in the county in which the sale is to be held.
        (b)
        (1)
         The proceeds of the sale
        shall
        must
         be applied to the discharge of the
        lien and
        lien,
         the cost of keeping and selling the
        property. The
        property, and reasonable attorney’s fees.
        (2) No later than 10 days from the date of sale, the
         balance, if any, of the proceeds of the sale
        shall be deposited not later than 10 days from the date of the sale with the court
        must be deposited with the Court
         to be applied by the
        court
        Court
         to the payment of any lien
         on
        or security interest
        to which the property may be subject
        in the property,
         in the order of their
        priority, with any remaining proceeds to be
        priority.
        (3) If any sale proceeds remain after all other claims are paid under paragraphs (b)(1) and (b)(2) of this section and before the owner of the property is paid under paragraph (b)(4) of this section, the Court may pay any judgment creditors who apply to attach the excess sales proceeds within 30 days of the sale, in the order that the Court receives the applications.
        (4) Any sale proceeds remaining after claims are paid under paragraphs (b)(1) through (b)(3) of this section are
         paid to the owner
        or owners
         of the property
        sold but, in case such
        sold. But if the
         owner
        or owners
         cannot be found,
        such balance shall
        the balance of the proceeds must
         be turned over to the State Treasurer
        not
        no
         later than 60 days from the date of the
        sale who
        sale. The State Treasurer
         shall create a special fund
        thereof and who shall pay
        for the remaining proceeds and do 1 of the following:
        a. Pay
         to the owner the moneys left if a claim is made within 1 year of the
        sale, or deposit
        sale.
        b. Deposit
         the moneys in the General Fund if no claim is made within 1 year of the sale.
        (c) In every lien sale authorized under this chapter, it
        shall be
        is
         the duty of the lienholder to complete and file with the Court a disposition of proceeds form, as designated by the Court, within 10 days from the date of the sale.
        No
        The Division of Motor Vehicles may not issue a
         transfer of or new certificate of title to the vehicle sold or
         a
        salvage certificate
        shall be issued by the Department of Motor Vehicles
         without proof of the filing of
        said
        the
         disposition of proceeds form with the Court within the required time period. A copy of the disposition of proceeds form sealed with the Court’s seal
        shall constitute
        is
         sufficient proof of filing.
        SYNOPSIS
        This Act allows a lienholder that has a lien under § 3901 of Title 25, often called a garagekeeper’s lien, to recover reasonable attorney’s fees from the proceeds of a sale to satisfy a garagekeeper’s lien. If the lienholder is not paid within 30 days after the lien is created, the lienholder may apply to a Justice of the Peace Court to sell the property. Under § 3903 and § 3905 of Title 25, the lienholder may recover the costs of the sale and the lien amount. Applying for authorization to sell property to satisfy a garagekeeper’s lien is a detailed process and many lienholders need to hire an attorney to help. But a court will not grant attorney’s fees without express statutory authority. This Act amends § 3903 and § 3905 to expressly allow a lienholder to recover attorney’s fees from the proceeds of a sale to satisfy a garagekeeper’s lien.
        This Act also allows excess proceeds from a garagekeeper’s lien sale to be used to satisfy other outstanding judgments against the owner of the property sold. Currently, under § 3905 of Title 25, sale proceeds are first used to pay the garagekeeper’s lien and costs related to the lien sale. Any extra proceeds are  deposited with the Court and used to pay other liens on or security interests in the property sold. If there are still proceeds remaining, the Court must give the excess proceeds to the property owner or, if the property owner cannot be found, to the State Treasurer who holds the proceeds for the property owner to claim within 1 year. If the property owner does not claim the excess proceeds within 1 year, the excess proceeds are placed in the General Fund. Generally, money held in custody of the law may not be attached to satisfy an outstanding judgment. But in several cases, including Lowe v. Hulliger, 86 A.2d 749 (Del. Super. Ct. 1952), Delaware Courts have recognized an exception to this rule. Money left over that is due to a defendant or debtor after all legal obligations are paid may be attached to satisfy another judgment against the defendant or debtor. This Act codifies the exception for garagekeeper’s lien sale proceeds by allowing the Court to pay judgment creditors who apply within 30 days of the sale to attach any excess sale proceeds remaining after all other costs, liens, and security interests have been paid and before the excess sale proceeds are paid to the property owner.
        This Act also makes technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual.
        Author: Senator Buckson