§ 34-46-5. Enforcement of lien. A facility operator may enforce a lien created by this chapter only if the vessel owner has been notified of the lien as required by § 34-46-4.

(1) Sale -- Use of proceeds.

(i) If a vessel owner is in default for a period of more than ninety (90) days, a facility operator may enforce a lien by selling the stored vessel at a commercially reasonable public sale for cash. As used in this section, "commercially reasonable" shall have the same meaning as in the Uniform Commercial Code. The proceeds of the sale shall be applied in the following order:

(A) To the reasonable expenses of the sale incurred by the facility 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 held by 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 of the foregoing, the surplus must be paid by the facility operator to the vessel owner.

(ii) If proceeds of the sale are not sufficient to satisfy the vessel owner's outstanding obligations to the facility operator or any lienholder of record, the vessel owner remains liable to the facility operator and/or lienholder for the deficiency.

(2) Advertisement -- Notice of default. Before conducting a sale under this section, the facility operator shall:

(i) Personally serve a notice of default on the vessel owner if the vessel owner is a Rhode Island resident. If the vessel owner is not a Rhode Island resident, notice shall be in accordance with subdivision (7). The facility operator shall provide a copy of the notice to each lienholder of record. The notice must include:

(A) A statement that the vessel is subject to a lien held by the facility operator;

(B) A statement of the facility operator's claim indicating the charges due on the date of the notice, the amount of any additional charges that will or may become due before the date of sale, and the date those additional charges will become due;

(C) A demand for payment of the charges due within a specified time not less than forty (40) days after the date the notice is delivered to the vessel owner;

(D) A statement that unless the claim is paid within the time stated the vessel will be sold, specifying the time and place of the sale; and

(E) The name, street address, and telephone number of the facility operator, or the facility operator's designated agent, whom the vessel owner may contact to respond to the notice;

(ii) After the expiration of the forty (40) day period set forth in subdivision (2)(i)(C), the facility operator shall publish an advertisement of the sale once a week for two (2) consecutive weeks in a newspaper of general circulation in the area where the sale is to be held and of general circulation in the state. The advertisement must include a general description of the vessel, the name of the vessel owner, and the date, time and place of the sale. The date of the sale must be more than fifteen (15) days after the date the first advertisement of the sale is published.

(3) Location of sale. A sale under this chapter must be held at the facility or at the nearest suitable location.

(4) Purchasers. A purchaser of a vessel sold at a sale pursuant to this chapter takes the vessel free and clear of any rights of persons against whom the lien was valid and all other lienholders of record.

(5) Facility operator liability. If the facility operator complies with the provisions of this chapter, the facility operator's liability is as follows:

(i) To a lienholder of record, the facility operator's liability is limited to payment from the net proceeds received from the sale of the vessel pursuant to § 34-46-5; and

(ii) To the vessel owner, the facility operator's liability is limited to the net proceeds received from the sale of the vessel after payment in full of all lienholders of record pursuant to this section.

(6) Denying access to storage facility. A facility operator may deny a vessel owner who has been notified under § 34-46-4 access to the storage facility, except that the vessel owner is entitled to access to the facility during normal business hours for the purpose of satisfying the lien or viewing and verifying the condition of the vessel.

(7) Notices. Except as otherwise provided in subdivision (2)(i), all notices required by this chapter must be sent by registered or certified mail, return receipt requested. Notices sent to a facility operator must be sent to the facility operator's business address or to the address of the facility operator's designated representative. Notices to a vessel owner must be sent to the vessel owner at the vessel owner's last known address. Notices to a lienholder of record must be sent to the address of the lienholder as provided in the public filings that serve to perfect the lienholder's interest in the vessel. Notices are considered delivered on the date the return receipt is signed or, if the notice is undeliverable, the date the post office last attempts to deliver the notice.

History of Section. (P.L. 1994, ch. 162, § 3.)