2019 -- S 0599

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LC002104

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO PROPERTY -- DRY DOCK FACILITIES

     

     Introduced By: Senators Felag, McCaffrey, Sosnowski, and Euer

     Date Introduced: March 14, 2019

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 34-46-2, 34-46-3, 34-46-4, 34-46-5 and 34-46-6 of the General

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Laws in Chapter 34-46 entitled "Dry Dock Facilities" are hereby amended to read as follows:

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     34-46-2. Definitions.

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     As used in this chapter, the following words shall have the following meanings unless the

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context clearly indicates otherwise:

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     (1) "Default" means the failure to pay obligations incurred by the storage and/or

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ownership of a vessel.

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     (2) "Dry dock" means any space and/or real property designed and/or used for the

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purpose of renting or leasing storage space for vessels.

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     (3) "Facility" means a marina, boatyard, or marine repair facility that provides, as part of

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its commercial operation, the storage of vessels.

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     (4) "Last known address" means that address provided by the owner in the latest rental

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storage agreement or the address provided by the owner in a subsequent notice of a change of

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address.

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     (5) "Lien holder" means a person holding a security interest.

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     (6) "Operator" means the proprietor, operator, lessor, or sublessor of a dry dock facility,

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his or her agent, or any other person authorized by him or her to manage the facility or to receive

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rent from the owner under a rental agreement.

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     (7) "Owner" means a person, other than a lienholder, having a property interest in or title

 

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to a vessel. The term includes a person entitled to use or have possession of a vessel subject to an

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interest in another person, reserved, or created by agreement and securing payment or

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performance of an obligation, but it does not include a lessee under a lease not intended as

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security.

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     (8) "Personal property" means movable property not affixed to land and includes, but is

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not limited to equipment, goods, furniture, and household items whether affixed to the vessel or

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not.

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     (9) "Rental agreement" means any written agreement or lease that establishes or modifies

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the terms, conditions, rules, or any other provisions concerning the storage of a vessel in a dry

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dock facility.

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     (10) "Vessel" means every description of watercraft used or capable of being used as a

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means of transportation on water and any personal property located thereon and shall include its

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appurtenances, engines, tackle, sails, generators, electronics, gear, bunkers and contents.

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     34-46-3. Lien.

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     (a) Lien created. A facility operator has a lien on a vessel stored or located at that facility

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for storage charges, labor, or other charges and for expenses reasonably incurred in the sale of

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that vessel under the provisions of this chapter including, but not limited to, reasonable attorneys'

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fees and costs.

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     (b) Exclusion. This chapter does not create a lien on a documented vessel subject to a

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preferred ship mortgage or other preferred maritime lien pursuant to 46 U.S.C. § 31301 et seq.

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     34-46-4. Notice of lien.

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     (a) A vessel owner must be notified of the lien created by this chapter before enforcement

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of the lien by a facility operator. The facility operator must provide notice of the lien created by

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this chapter before it may enforce the lien. Notification of the lien created by this chapter is

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satisfied by either of the following:

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     (1) Written storage agreement. A written storage agreement signed by the vessel owner

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that includes a notice of the lien created by this chapter the following language in bold,

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capitalized font: "BEWARE -- THE VESSEL AND ITS CONTENTS MAY BE SOLD AT

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PUBLIC AUCTION FOR FAILURE TO PAY STORAGE CHARGES."; or

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     (2) Written notice of lien. Written notification of the lien sent by the facility operator:

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     (i) To the last known address of the individual or entity identified as the registered

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owner(s) of the vessel; and

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     (ii) To the last known address of the person or entity the facility operator has on record as

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being responsible for the vessel if different from the vessel's registered owner. Notices shall be

 

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provided in the manner described in § 34-46-5(7) to the vessel owner.

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     (b) A facility operator who does not have a written storage agreement that includes a

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notice of the lien created by this chapter may not initiate an enforcement action under § 34-46-5

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until thirty (30) days after the written notice of a lien required by subdivision (a)(2) is delivered to

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the vessel owner delivery of written notice of the lien is effected pursuant to § 34-46-4(a)(2).

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     34-46-5. Enforcement of lien.

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     A facility operator may enforce a lien created by this chapter only if the vessel owner has

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been notified of the lien as required by § 34-46-4 notice requirement set forth in § 34-46-4 is

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satisfied.

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     (1) Sale -- Use of proceeds.

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     (i) If a vessel owner is in default for a period of more than ninety (90) days, a facility

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operator may enforce a lien by selling the stored vessel at a commercially reasonable public sale

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for cash. As used in this section, "commercially reasonable" shall have the same meaning as in

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the Uniform Commercial Code. The proceeds of the sale shall be applied in the following order:

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     (ii) A facility operator may bid at the sale including bidding the amount of its lien.

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     (iii) The proceeds of the sale shall be applied in the following order:

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     (A) To the reasonable expenses of the sale incurred by the facility operator including, but

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not limited to, reasonable attorneys' fees, legal expenses and expenses of advertisement;

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     (B) To the satisfaction of the lien created by this chapter;

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     (C) To the satisfaction of all other liens on the vessel held by all lienholders of record to

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be paid in the order of priority; and

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     (D) To the extent that the proceeds of sale exceed the sum of the foregoing, the surplus

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must be paid by the facility operator to the vessel owner. Where the surplus is not collected

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within thirty (30) days of the sale, the facility operator shall provide the funds to the Rhode Island

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department of environmental management which department shall deposit the same for use by its

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office of legal counsel.

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     (ii)(iv) If proceeds of the sale are not sufficient to satisfy the vessel owner's outstanding

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obligations to the facility operator or any lienholder of record, the vessel owner remains liable to

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the facility operator and/or lienholder for the deficiency.

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

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facility operator shall:

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     (i) Personally serve a notice of default on the vessel owner if the vessel owner is a Rhode

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Island resident. If the vessel owner is not a Rhode Island resident, notice shall be in accordance

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with subdivision (7). The facility operator shall provide a copy of the notice to each lienholder of

 

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record. The notice must include: Serve:

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     (A) A notice of default on the person or entity identified as the registered owner of the

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vessel; and

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     (B) Serve a notice of default on the person or entity the facility operator has on record as

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being responsible for the vessel if different than the vessel's registered owner. Service shall be

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made in accordance with § 34-46-5(7). The facility operator shall also provide a copy of the

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notice of default to each lienholder of record. In addition, the facility operator shall affix a copy

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of the notice of default on the outside of the vessel in a manner where it can be reasonably seen.

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     The notice of default must include:

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

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     (B)(II) A statement of the facility operator's claim indicating the charges due on the date

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of the notice, the amount of any additional charges that will or may become due before the date of

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sale, and the date those additional charges will become due;

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     (C)(III) A demand for payment of the charges due within a specified time not less than

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forty (40) fourteen (14) days after the date the last notice of default required hereunder is

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delivered to the vessel owner;

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     (D)(IV) A statement that unless the claim charges are is paid within the time stated the

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vessel will be sold, specifying the time and place of the sale; and

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     (E)(V) The name, street address, and telephone number of the facility operator, or the

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facility operator's designated agent, whom the vessel owner or the person or entity the facility

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operator has on record as being responsible for the vessel may contact to respond to the notice;

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     (ii) After the expiration of the forty (40) fourteen (14) day period set forth in subdivision

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(2)(i)(C) subsection (2)(i)(III) of this section, the facility operator shall publish an advertisement

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of the sale once a week for two (2) consecutive weeks in a newspaper of general circulation in the

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area where the sale is to be held and of general circulation in the state. In lieu of print publication,

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one of the two (2) advertisements may be published online by said newspaper provided the online

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advertisement is visible for no fewer than three (3) days. The advertisement must include a

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general description of the vessel, the name of the vessel owner (if known), and the person or

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entity the facility operator has on record as being responsible for the vessel and the date, time and

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place of the sale. The date of the sale must be more than fifteen (15) days after the date the first

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advertisement of the sale is published. In addition, the facility operator shall affix a copy of the

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advertisement on the outside of the vessel in a manner where it can be reasonably seen.

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

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nearest suitable location.

 

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     (4) Purchasers. A purchaser of a vessel sold at a sale pursuant to this chapter takes the

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vessel free and clear of any rights of persons against whom the lien was valid and all other

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lienholders of record. The purchaser shall remove the vessel from the facility within ten (10) days

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of the sale on condition that the facility operator provides the purchaser with a sworn statement of

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having accomplished the requirements set forth in this chapter. The purchaser may not resell or

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transfer the vessel until such time as a duplicate title or registration for the vessel has been

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obtained.

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     (5) Facility operator liability. If the facility operator complies with the provisions of this

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chapter, the facility operator's liability is as follows:

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     (i) To a lienholder of record, the facility operator's liability is limited to payment from the

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net proceeds received from the sale of the vessel pursuant to § 34-46-5; and

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     (ii) To the vessel owner, the facility operator's liability is limited to the net proceeds

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received from the sale of the vessel after payment in full of all lienholders of record pursuant to

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this section.

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     (6) Denying access to storage facility. A facility operator may deny a vessel owner who

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has been notified under § 34-46-4 access to the storage facility, except that the vessel owner or

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responsible party is entitled to access to the facility during normal business hours for the purpose

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of satisfying the lien or viewing and verifying the condition of the vessel. A facility operator may

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require as a condition to access the vessel that the vessel owner or responsible party sign a release

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releasing the facility operator from claims arising in connection with verifying the vessel's

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condition.

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     (7) Notices. Except as otherwise provided in subdivision (2)(i), all All notices required by

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this chapter must be sent by registered or certified mail, return receipt requested may be served

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personally using a process server or served by registered or certified mail, return receipt requested

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or served via a recognized commercial courier with proof of signed-for delivery. Notices sent to a

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facility operator must be sent to the facility operator's business address or to the address of the

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facility operator's designated representative. Notices to a vessel owner or the person or entity the

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facility operator has on record as being responsible for the vessel must be sent to the vessel owner

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at the vessel owner's person's or entity's last known address. Notices to a lienholder of record

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must be sent to the address of the lienholder as provided in the public filings that serve to perfect

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the lienholder's interest in the vessel. Notices Except as otherwise provided by this chapter,

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notices are considered delivered on the date the return receipt is signed or, if the notice is

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undeliverable, the date the post office last attempts to deliver the notice personal service is made,

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or on the date notice is deposited with the postal service or received by the commercial courier.

 

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     34-46-6. Cessation of enforcement actions.

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     A facility operator shall cease enforcement actions immediately upon any of the

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following:

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     (1) Payment by owner. The vessel owner pays the facility operator the full amount

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necessary to satisfy the amount of the lien on the date payment is tendered and removes the vessel

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from the facility. At any time before the conclusion of a sale conducted under this chapter, the

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vessel owner may redeem the vessel by paying the full amount necessary to satisfy the lien of the

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lien on the date payment is tendered and removing the vessel from the facility;

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     (2) Payment by other lienholders. A person other than the facility operator who has a lien

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on the vessel pays the facility operator the full amount necessary to satisfy the lien held by the

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facility operator. Upon payment by a lienholder of record, the facility operator shall hold the

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vessel for the benefit of and at the direction of that lienholder and may not deliver possession of

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the vessel to the vessel owner. Unless the facility operator and the lienholder enter into a new

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storage agreement, the lienholder shall arrange removal of the vessel from the facility forthwith.

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Absent a new storage agreement with the lienholder, where the lienholder fails to remove the

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vessel from the facility within fourteen (14) days of its payment, the facility operator, without

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prejudice to any other remedy, may assess and collect storage charges from the lienholder at three

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(3) times its published rate; or

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     (3) Initiation of Civil Action. An owner of a vessel or one claiming ownership rights in

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the vessel files in a court of competent jurisdiction and serves on the facility operator, not less

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than ten (10) days before the scheduled date of sale, a complaint against the facility operator

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relating to the obligations incurred by the storage of the vessel or any claims related to the vessel

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and in such complaint objects to the enforcement of the lien and sets forth the legal reasons why

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the lien should not be enforced. The enforcement action shall not resume until either the civil

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action is resolved or the court enters an order permitting the enforcement action to proceed.

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     SECTION 2. Section 34-46-7 of the General Laws in Chapter 34-46 entitled "Dry Dock

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Facilities" is hereby repealed.

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     34-46-7. Rental agreements -- Notice of this chapter.

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     All rental agreements which are subject to this chapter shall contain clear and

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conspicuous language as follows: "BEWARE -- THE VESSEL AND ITS CONTENTS MAY BE

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SOLD AT PUBLIC AUCTION FOR FAILURE TO PAY STORAGE CHARGES."

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     SECTION 3. Chapter 34-46 of the General Laws entitled "Dry Dock Facilities" is hereby

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amended by adding thereto the following section:

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     34-46-8. Issuance of title cessation of enforcement actions.

 

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     (a) Where by a sworn statement, the facility operator establishes having accomplished the

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requirements set forth in this chapter, the Rhode Island department of environmental management

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shall issue a new title to the facility operator or to the entity or person who purchased the vessel at

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the sale as identified by the facility operator. Title shall be promptly issued no later than ten (10)

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days from receipt of a written request. The written request may be made by either the facility

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operator or the purchaser.

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     (b) No claim, cause of action or lawsuit shall lie against any officer or employee of the

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Rhode Island department of environmental management, any person holding or acquiring a lien

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or security interest in this vessel, and any successor in interest of said purchaser or person on

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account of any defect in or undisclosed claim upon the right, title and interest of the person

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acquiring title in the vessel pursuant to this chapter.

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     SECTION 4. This act shall take effect upon passage.

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LC002104

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY -- DRY DOCK FACILITIES

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     This act would amend the lien and notice procedures for facility operators of dry dock

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facilities.

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     This act would take effect upon passage.

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LC002104

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