Inside Self-Storage Magazine 10/2001: Special Lease Considerations for Boat and RV Storage

Special Lease Considerations for Boat and RV Storage

By Jeffrey Greenberger

Some of you reading this article are already in the business of offeringoutdoor or covered vehicle and boat storage. Others are considering it. If youare using, or plan to use, a self-storage lease with no modifications toaccomodate this service, you are taking a risk. I hope this article willencourage you to consider some additional provisions in your existing lease.These suggestions will help protect you against the problems that tend to occurwith vehicle and boat storage.

What Can Happen

A client of mine recently had the following dilemma: A person stored an RV athis facility. The renter stated she was a friend of the family that owned the RVand claimed the owners were too ill to store the vehicle themselves. My clientcompleted the rental agreement with the owners' names and the name of the personstoring the vehicle, but the friend was the only person who signed the lease.She made several rent payments; however, other payments were made by the RV'sactual owners. Thus, everyone in this story had some type of contractual claimto the RV in storage. There were, in essence, three lessees.

The couple who owned the vehicle divorced, and the woman who stored thevehicle for them wound up dating the ex- husband owner. The ex-wife and thewoman who originally signed the rental agreement both made claim to the vehicle.Both wanted the gate code changed to exclude the other from removing the RV fromthe premises. Since the friend who stored the vehicle was now dating theex-husband owner, she also had some claim via title to the RV.

Outdoor vehicle/boat storage is particularly complicated because there aretitles involved, yet your rental agreement may not be with the titled owner. Theself-storage manager is stuck trying to figure out which claimant has right tothe vehicle. In this situation, given that both parties made rental payments,the facility could not change the code on either party's request. We resolvedthe situation by ordering the vehicle off the property. The facility thenoffered to allow either party to enter into a new rental agreement after the RVwas removed.

Fortunately, the situation was corrected, but it could have gotten much morecomplicated. It just goes to show that you can get into trouble by not payingattention to outdoor-storage issues in advance. I have always preferred myclients not allow more than one person to sign the lease, and the name of thelessee and the name on the vehicle title are the same. This will help avoidscenarios like the one described above.

Lease Considerations

Itis difficult to define outdoor storage spaces, especially when the area whereyou permit such storage is not paved and striped. It is even more difficult toprevent a tenant from parking in the wrong spot or "crossing the line"between spaces. It is, therefore, important to have some sort of language inyour lease that describes the space rented, but not so closely you would be inviolation of the lease if another tenant accidently parked in part of it.Consider using the following language in your lease:

The foregoing description of the premises/space is for identificationpurposes only. There shall be no adjustment in the rent payable hereunder andthe agreement shall remain in full force and effect if the premises actuallycontains more or less square feet than set forth herein or if the premises isnot the same one as identified.

In case you need to locate the owner in the event of an emergency or default,consider obtaining the following information on your rental agreement: the year,color, make and model of the vehicle or boat; the license-plate number andstate; and the vehicle's VIN or other identification number. You should alsoobtain a copy of the vehicle or boat registration. Institute a policy, statedclearly on your rental agreement, that if the person listed on the registrationis not the person signing the agreement, the lessee must submit a notarizedstatement, signed by the owner, indicating it is acceptable to store thevehicle/boat in the owner's name. This is important for several reasons: Firstyou want to make certain you are not storing a stolen vehicle. Second, withoutsuch a statement, you can run into difficulties if there are ever problemsbetween the titled owner of the vehicle and your tenant.

The next consideration is what to do with vehicles in the event Mother Natureor an emergency presents a reason to move a vehicle. While our buildings may beable to withstand excessive heat, drought, or heavy rain or snow, there areissues involving climatic conditions when storing vehicles or boatsout-of-doors. If you do not provide in your lease the right for you to move orremove outside-storage vehicles when necessary, you could be creating a problem.This will come in the form of a claim for conversion or breach of lease in theevent you need to move stored vehicles. Emergency moves as well as those relatedto routine facility maintenance (painting carports, repaving, etc.) must beprovided for in your lease. Consider a provision that contains the following:

A Lessor specifically reserves the right to move or remove the storedvehicle from the leased space at any time, and without notice to Lessee in theevent of an emergency. For the purpose of this section, "emergency"shall be defined as any event which jeopardizes the health, safety and/orwell-being of the self- storage facility or any of the buildings or landappurtenant to the buildings or any property or chattel stored at theself-storage facility. The Lessor shall exercise reasonable caution in removingthe vehicle(s) and will endeavor to notify Lessee of the new location of thevehicle or return the vehicle to the Lessee's space after the maintenance oremergency has concluded. Reasonable notice shall be provided to Lessee beforeLessor removes the vehicle for any non-emergency purpose.

All self-storage owners should be concerned about hazardous waste. RV andboat storage present a special problem because they contain hazardous waste justwaiting to spill or explode onto the property in the form of gasoline,lubricants, battery acid, tires, sanitary-toilet chemicals, etc. Given thevolume of liquids and lubricants stored in an RV, a leak or spill could create aserious environmental hazard on your property. To make matters worse, sometenants try to store extra gas, chemicals, tires, etc., in their storedvehicles.

Without certain limiting language in your lease, you could create an event ofdefault under your mortgage by failing to prevent hazardous waste from beingbrought in and used on your property. Failure to properly limit the amount ofhazardous waste could also cause you to waive certain coverage in your insurancepolicy. It is appropriate to check with your insurance agent or read your policyto determine whether storing vehicles with any amount of gas and oil in thetanks or operating parts is permissible. If not, it is necessary to find apolicy that does permit this use. In the meantime, you should have rules andregulations limiting the amount of gas and oil that can be stored in the leasedspace and requiring a drip pan be placed under each vehicle. Consider adding thefollowing language to your lease:

Lessee covenants and agrees to use and occupy the leased space solely forthe purpose of storage of the vehicle identified herein, and specifically agreesthat Lessee shall not use the premises for the storage of any gasoline or otherfuel, oil, grease or other lubricant, tires or batteries, or any otheraccessories except for such gas, oil, grease, or other lubricant as may becontained in the operating parts of the vehicle stored at the facility, and inno case may the stored vehicle contain more than one-quarter of a tank of fuel.All sanitary toilets and collection tanks shall be appropriately drained beforestoring the vehicle at the leased space and, if appropriate, the stored vehicleshall be properly winterized prior to the month of ______ each year. Lesseeshall at all times maintain a drip pan under all tanks and operating parts ofthe stored vehicle sufficient to retain all fluids maintained in the storedvehicle.

Finally, assuming you have a default clause in your lease, make certain oneof the remedies under that clause permits you to terminate the gate-access codeof the stored vehicle. For example, if the tenant removes his vehicle for theweekend and has not paid his rent, you can prohibit him from returning thevehicle until rent is brought current. Further, if the state in which yourfacility is located permits removal of the vehicle by towing to an impoundmentlot as a remedy to default, give yourself that right in your lease and postwhatever necessary signage is required in your state. Once you have the vehicletowed off the property, you can also turn off the gate code and prohibitre-entry. In some states, you can consider the tenant a trespasser if he triesto re-enter the facility. Consider the following language:

In the event of a default, once the vehicle is removed by the request ofLessor or is voluntarily removed by Lessee, then Lessee shall lose any status aslicencee to enter the self-storage facility or the leased space and may beconsidered trespassing on the land in which the facility is located.

The most important moments in the relationship between self-storage managerand tenant are the initial meeting and the moment when the rental agreement ispresented and signed. These constitute, for lack of a better term, a"honeymoon" period. The tenant should be willing to provide you theinformation you need and sign the documents necessary to protect you in theevent of a problem or default, and rent himself a space. If you wait until afterthe rental to ask for a copy of the vehicle title or the VIN, there is no reasonfor the tenant to surrender this information. Therefore, make certain you haveall of the information you need and the rental agreement is fully and correctlycompleted and signed by the titled owner of the vehicle being stored in the verybeginning.

Jeffrey Greenberger practices with the law firm of Katz Greenberger &Norton LLP in Cincinnati, which primarily represents owners and operators ofcommercial real estate, including self-storage. Mr. Greenberger is licensed topractice in the states of Ohio and Kentucky, and is the legal counsel for theOhio Self Storage Owners Society and the Kentucky Self Storage Association. Heis a regular contributor to Inside Self-Storage magazine and the tradeshows itsponsors. For more information, Mr. Greenberger can be contacted at KatzGreenberger & Norton LLP, 105 E. Fourth St., Suite 400, Cincinnati, OH45202, or by calling 513.721.5151.