Self-Storage Legal Threat of 2014: Lack of Clarity in Facility Advertising and Rental Agreements
|Copyright 2014 by Virgo Publishing.|
|By: Jeffrey Greenberger|
|Posted on: 10/24/2013|
This is the time of year when I'm generally asked to write an article on my perspectives for the upcoming months, to reveal the top self-storage legal threats on the horizon, if you will. This year I want to tell you about an alarming trend I've been seeing relating to the lack of accuracy and clarity in facility messaging and rental agreements. Let me give you an example.
I've recently seen an enormous number of claims against self-storage facilities for damage to customers' property, specifically in non-temperature-controlled units. (Many of you refer to these units as "climate-controlled." Please stop!) These claims are for damage to electronics and paper-based items arising from fluctuations in temperature or humidity. The tenant alleges the damage would not have occurred had the unit been temperature-controlled, and he believed the unit he rented to have this feature.
The facts of these claims often show:
Regardless, the tenant says something along the lines of, "The website, Yellow Pages ad, etc., advertises temperature/climate control. It does not say that only part of the facility is temperature-controlled. I thought every unit was a temperature-controlled unit. I put things in the unit that I thought would be safe because of temperature control. Now they are ruined, and I want money." This goes back to the concept of reliance. The tenant relied on the existence of temperature control because the signage, etc., indicated the facility offered this feature.
Clarity in the Rental Agreement
How these claims will be resolved is subject to speculation, but the moral of the story relates to the clarity of your rental documents. Many self-storage operators spend a lot of time, energy and money marketing the benefits of their facilities. I have absolutely no problem with this. But when it comes down to brass tacks—namely, the rental agreement—you need to make sure that if the tenant is not receiving some of the features available at the facility, you clearly define this in the contract.
Fixing this might be as easy as including a check box in the rental agreement indicating the unit is or is not temperature-controlled—a yes/no sort of thing, just to be safe. While the allegations made by tenants seem ridiculous on their face, some of their claims are gaining traction and may result in insurance payouts or settlement. Though I haven't yet seen a lawsuit that has resulted in a judgment on these cases, one is probably not too far behind.
Beyond the simple yes/no questions, consider a rental-agreement provision that explains what you mean by temperature or climate control, that not all units offer the feature and, most important, what exactly you provide when the unit is climate- or temperature-controlled. Your rental agreement needs to define the term. Do you provide heat, air conditioning, swamp cooling or ventilation fans? Is it a combination of these? Do you maintain a specific range of temperature? Do you guarantee a range of humidity, or are you just trying to control humidity through air conditioning and heating?
All of these things must be disclaimed in your rental agreement. The point is the provision (or non-provision) of these services must be clear to the tenant. It is one thing to say you provide these services in general. It is another thing to say to the tenant, "You are or are not in a unit where this service is provided."
Other Areas of Risk
The same can be said for so many services in self-storage. For example, what do you say to disclose the availability of security systems at your facility and its ability to stop crime via features such as access gates, alarm systems, lighting, surveillance cameras, etc.? Do all of your units have the benefit of features or just some? If not all, perhaps it's worthwhile to disclaim security systems; your advertising might lead a consumer to believe every unit is alarmed, for example.
Another risky area that has risen to the forefront is some operators' willingness to bill tenants with a snail-mail invoice. Several wrongful-sale claims have been brought forth using the defense that the tenant never received a paper bill; therefore, the debt was not paid and the tenant's property was sold. If you don't mail a bill to everyone but you are willing to mail to some, you better build some disclaimer language in your rental agreement to clarify.
You may offer other services to some, if not all, of your tenants, and they also need to be clarified in the agreement. Think in terms of 24-hour gate access, permission to store a vehicle, auto-pay and e-mail notifications. Temperature/climate control has simply come to the forefront because of the rather hard-to-believe claims that are now being made; however, it forces us to examine these other issues more closely.
In 2014, re-examine your rental agreement, especially in light of what you say in your advertising or marketing materials. Whether it's on the Web, your facility signage or anywhere else, make sure that if you offer a service or feature, you make the details are ridiculously clear in the agreement, especially if it isn't offered to everyone or there's an additional charge. You need to be able to defend yourself against those who expect to get something for nothing.
This column is for the purpose of providing general legal insight into the Self-Storage field and should not be substituted for the advice of your own attorney.Jeffrey J. Greenberger is a partner with the law firm Katz, Greenberger, & Norton LLP in Cincinnati and is licensed to practice in the states of Ohio and Kentucky. Mr. Greenberger’s practice focuses primarily on representing the owners and operators of commercial real estate, including self-storage owners and operators. His website, www.selfstoragelegal.com , contains legal opinions and insights as well as an article archive. You can send your questions, comments or suggestions for future topics to email@example.com .