Storage agreement: what to do if the depositor does not pay?
Your client is not paying storage fees? Here are the rights of the custodian under Swiss law: from the right of retention to enforcement proceedings.
Furniture storage: what to do if the depositor does not pay?
Removal companies that offer furniture storage services know the problem well: the client entrusts their belongings, perhaps due to a move abroad or a temporary lack of space, and then stops paying. This happens more often than one might think. In such cases, Swiss law provides the custodian with concrete remedies, but one must act correctly so as not to forfeit one's rights.
The legal framework: the deposit contract under the CO
The deposit contract is governed by Art. 472 et seq. CO. The party who delivers movable property for safekeeping (the depositor) is obliged to pay remuneration to the custodian, provided this has been agreed (Art. 472(1) CO). In practice, paid storage is the norm: it is rare for a removal company to offer the service free of charge.
First step: the formal demand for payment
When the depositor fails to pay, the custodian must first send a written demand for payment by registered post, setting a reasonable deadline. This step is indispensable. Omitting it could compromise the custodian's position in any subsequent proceedings. The registered letter also serves as documentary proof that demand was made, a point that may prove decisive before the court.
Right to withhold and right of retention
As long as the remuneration remains outstanding, the custodian may lawfully refuse to return the deposited goods. The legal basis lies in Art. 82 CO, which provides for the defence of non-performance in bilateral contracts.
More powerful still is the right of retention: the custodian may "block" the depositor's movable property as security for the outstanding debt, effectively creating a possessory lien within the meaning of Art. 895(1) CC. This remedy is particularly useful where the value of the stored goods is at least close to the amount owed. If the storage facility contains valuable furniture, works of art, or expensive equipment, the right of retention represents considerable leverage.
Hugo Haab, attorney-at-law, and Roberto Haab, attorney-at-law, of Haab Legal emphasise that the right of retention, however effective, must be exercised correctly. Once asserted, the creditor must commence enforcement proceedings and pursue the realisation of the lien in accordance with Art. 151 et seq. DEBA. It is not permissible to sell the goods directly without complying with the provisions of the DEBA. The sole exception is where the deposit contract expressly provides for the right to sell by private treaty. For this reason, a well-drafted contract from the outset can make all the difference.
Return of goods and limitations on the custodian
If the contract provides for a fixed term, the custodian may not return the goods prematurely, nor may he dispose of them (Art. 476(1) CO). The position is different where no fixed term has been agreed: return may take place at any time, upon notice to the depositor (Art. 476(2) CO).
Return is to be made at the place where the goods were stored (Art. 477 CO). If the depositor fails to collect the goods within a reasonable period, he falls into creditor's default within the meaning of Art. 91 CO. At that point, the custodian may deposit the goods at the depositor's risk and expense, thereby discharging himself from liability.
A clear warning: destroying or disposing of the deposited goods is strongly inadvisable, unless the contract provides for this in express and unequivocal terms. Even then, one should proceed only after several written warnings to the depositor and with the utmost caution.
Recovery of remuneration: enforcement and court proceedings
To recover the unpaid remuneration, the custodian may have recourse to enforcement proceedings and/or court action seeking an order for the depositor to pay. If the debtor files an objection to the payment order, it will be necessary to obtain the removal of that objection through the courts before compulsory execution can proceed. In Ticino practice, Haab Legal regularly assists removal and storage companies in these proceedings, from the demand stage through to the actual recovery of the debt.
Contact us
If your business is faced with a defaulting depositor, Studio Legale e Notarile Haab in Lugano can assist you in the enforcement of your claims. Hugo Haab, attorney-at-law, and Roberto Haab, attorney-at-law, have extensive experience in handling disputes relating to storage and the enforcement of the custodian's rights. Contact us for a consultation.
For a personal consultation: info@haablegal.ch | +41 91 913 30 70
