Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help.
In this article, Ken Kaar, a solicitor at law firm Thrings, offers advice on whether a farmer can recover unpaid caravan storage fees by selling the caravan.
See also: So you want to… store caravans?
Q I store caravans and am paid six months in advance for this. I have had one van on site for three years, for which only the first year’s payment was made. The owner has disappeared. Can I sell the caravan to clear the arrears?
A The simple answer here is you may sell the caravan to clear the arrears if the contract says you may. In reality, though, these arrangements are often only covered by a very basic written contract or by an entirely informal and unwritten agreement.
You are, in essence, suffering a loss as a result of the caravan owner’s breach of contract. This is true even if the contract is not in writing – a contract still exists even if it is unwritten.
You are suffering the continuing loss of the storage fees which the owner agreed to pay.
Where a party suffers a loss by reason of the other party’s breach of contract the innocent party is entitled, and indeed required, to mitigate its loss.
The party in your position should take any reasonable steps to reduce the loss it is suffering. Selling the caravan may be such a step.
It will be very important to establish ownership of the caravan before any sale.
It is not safe to assume your customer, the person who paid the storage charges, actually owns the caravan.
It may well, in fact, be owned by a lending institution or another private individual with whom you have had no dealings.
You should take all possible steps to establish the identity of the owner and to contact that person warning them of your intentions.
It may well be that the owner is happy for you to proceed to sale.
This would also solve another issue.
The sale of the caravan in circumstances where the owner has disappeared will affect the sale price.
Presumably, somewhere there is a file of paperwork relating to the caravan, the absence of which will vastly reduce its value.
If the caravan is owned by a lending institution, or private ownership cannot clearly be established, a buyer may be difficult to find.
A “bona fide purchaser for value” – a person who buys goods for full market value believing the seller to own them – is generally protected where it subsequently turns out that the seller did not, in fact, own the goods.
A person who buys goods on notice of an ownership issue for a reduced price is not.
If the market value of the caravan vastly outstrips the value of the unpaid storage fees it may be that selling the caravan is not a reasonable step to take.
Equally, you risk putting yourself in a position where you hold a large sum of money belonging to someone else.
Needless to say, you would have to make all reasonable efforts to pay the difference between the sale price and the arrears to the owner.
The closer the market value is to the amount of arrears owing, the more likely it is that sale of the caravan will be considered a reasonable mitigation of loss.
Ultimately, the point may come where you have established ownership and repeatedly demanded outstanding fees and warned the owner of your intentions, all to no avail. You could then consider selling the caravan.
Whether you may hold yourself out as the owner will depend very much on the circumstances and it would be advisable to speak to a solicitor about this.
There is no reason why the legal costs associated with the sale should not be retained from the proceeds.
Establishing clearly that you do in fact own the caravan, and ideally registering it in your name where possible, will vastly increase the amount for which it can be sold.
This is a complex situation, and it is recommended that you seek specialist independent legal advice.
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