Unpacking Warehouse Liens

Warehouses are massive repositories of risk and are responsible for holding, in many cases, millions of dollars in property. Because of this huge responsibility, warehouses have the right to contractually limit liability for loss or damage, and to issue liens to protect themselves from unpaid storage bills. A common inquiry among NVOCCs, forwarders, and warehousemen alike, is whether or not they have a legitimate lien on the cargo in their possession. The answer depends on the execution of a detailed  series of  steps that have been adopted in every U.S. state through the  Uniform Commercial Code.  This simple outline serves to help unpack these steps so that you can make certain that your warehouse receipt is compliant with Florida Statutes, and you obtain the full lien privileges provided under the law.

A Warehouseman’s Lien is a security interest that gives the warehouse keeper the right to retain possession of the stored property until their rental and/ or warehouse charges are paid in full. The failure to pay for the agreed upon services may allow the lien holder to keep possession of, and indeed sell, the property involved.  Liens are normally very hard to obtain: you only have one if it was either  A) expressly given to you by the cargo owner; or B) given to you by statute. Warehousemen fall into the latter category, and thus, do not have to ask for lien privileges. They do, however, have to have a proper warehouse receipt in order for the lien to be enforceable.  For more limitations on what can be claimed as a lien click here.   The general structure of the receipt must be in accordance with the following (in Florida it is Statute 677.202, but every state has its own numbering systems):

• A warehouse receipt does not need to be in any particular form.
• The following must be included in the warehouse receipt; omission of these parts may lead to loss of lien rights:
  • The location of the warehouse where the goods are stored;
  • The date of issue of the receipt;
  • The consecutive number of the receipt;
  • A statement as to whether the goods received will be delivered to the bearer, to a specified person, or to a specified person on his or her order;
• The rate of storage and handling charges must be expressly stated  with the exception of good stored under a  field warehousing arrangement.
• A description of the goods or of the packages containing them must be stated.
• The signature of the warehouseman (may be made by his or her authorized agent)
• A statement of ownership for goods owned  by the warehouseman either solely,  jointly, or in common with others.
• A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a lien or security interest (Florida Statutes 677.209). If the precise amount of such advances made or liabilities incurred is unknown to the warehouseman or to his agent  at the time of the issue of the receipt, a statement of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient.

It is important to note that if the lien is not “continuing”, meaning that if you release without first collecting your due, then the lien is gone and you are simply an unsecured creditor.  If this is not the case, and you have secured a proper warehouse receipt, you are wholly within your rights to retain the cargo until payment of all storage. A detailed look into the effects of liens and its implications for customers can be found here

If you have any questions about this topic or would like to speak with a member of our experienced legal team, call our office at (800) 583-0250.

In our next discussion of Warehouse Liens, we will discuss Bills of Landing and Business Terms and Conditions.