By Scott Zucker
Most self-storage rental agreements are written with the expectation of tenants storing personal property, such as household furnishings in enclosed storage units. Yet, more and more facilities are offering their customers the opportunity of enclosed storage, roof-covered storage or parking-lot storage for cars, motorcycles, recreational vehicles, campers and boats. Unfortunately, where the rental agreements do not consider this type of storage, many of the potential liabilities of car and boat storage are left unrecognized. For those owners that have opened up their premises to vehicles and boats, especially those that allow this type of storage in enclosed spaces, they need to consider either amending their leases or creating addenda to their current leases to address these liabilities and hopefully reduce their occurrence.
Incorporation of Addendum
First, in creating any addendum to a self-storage lease or rental agreement, it is imperative that language be included that incorporates the addendum into the rental agreement that already exists. Such language would be placed on top of the addendum or in some other prominent location and would read: "Tenant agrees to be bound to the terms and conditions of this addendum as well as all terms and conditions of the rental agreement. Tenant understands and agrees that this addendum is incorporated by reference into the tenant's rental agreement."
As compared to the general information needed from a customer who is storing property without title, those tenants who are storing motor vehicles or boats must provide specific information to the facility such as a description of the vehicle/boat to be stored; its year, make, model and color; its license number and any type of vehicle identification number (VIN) or serial number. This information is extremely helpful if, at a later time, the tenant fails to pay rent and a foreclosure and sale is required. The facility must also obtain information concerning any prior security interest or lien claims that apply to that property. The language in the addendum concerning that information would read: Tenant agrees to provide to owner all information of any and all parties holding any security interests or liens on the property stored." The addendum should provide space for the tenant to name those parties and provide their addresses and phone numbers.
Certainly, there is a greater need for insurance on an item such as a car or a boat than what might normally be required for household furnishings. Facility owners should presume that the car or boat to be stored has considerable value and that claims arising from the loss or damage to the tenant's property would be high. Therefore, there needs to be a provision in the addendum specifically discussing the tenant's need for insurance. Additionally, the addendum should provide that the tenant will present to the owner copies of all insurance documents for the motor vehicle or boat. It is strongly recommended that the storage facility not allow a tenant to store a motor vehicle or boat on its premises unless the tenant can provide proof of suitable insurance for the replacement value of the property.
Risk of Loss
Although it is likely to already be contained in the tenant's rental agreement, it does not hurt to add an additional provision to the addendum reminding the tenant that the storage of property is at the tenant's sole risk, and that the owner is not liable for any loss or damage to the property while it is on the premises. As with any personal property stored at self-storage facilities, the storage of motor vehicles and boats does not include any bailment over that property. Therefore, the facility does not assume any responsibility for the care, custody and control of the stored property. The addendum should specifically state: "Tenant understands that owner is not a warehouseman or a garageman, and that nothing in this rental agreement or in the tenant's use of the premises will be construed as constituting a bailment agreement between the owner and tenant."
When dealing with the storage of motor vehicles and boats, it is important to include in an addendum a provision restricting specific actions by the tenant on the premises with regard to the storage of that property. The tenant should agree not to conduct any repairs or renovations on the vehicles or boats. The tenant should agree to keep the vehicles in drivable condition and to keep trailers and other such vehicles road-worthy at all times. The addendum should also include certain rules for tenants to follow when dealing with motor vehicles and boats, especially because of the potential dangers associated with the storage of fuel or oil. The addendum should include the following rules:
- Tenants are not permitted to run motor vehicles or boat engines inside the storage space except when entering or departing the space.
- No portable fuel containers are allowed in the space.
- All fuel tanks must be kept full at all times and must not have any leaks.
- No smoking is allowed in any enclosed storage spaces.
- Interior walls and floors must be protected from oil or spills.
Another provision that should be included in the rental addendum includes the unauthorized storage of vehicles and boats. The agreement should specifically provide that the only vehicle permitted to be parked in the assigned space or enclosed storage unit is the one described in the rental agreement. The tenant should agree that any unauthorized vehicles can be removed by the owner at the tenant's expense and that the owner will not be liable to the tenant for the removal of such unauthorized vehicles.
Although referenced in the rental agreement, a reminder of the owner's termination rights should also be included in the addendum. The owner should have the right to terminate the tenant's use of the space and require the tenant to remove its property within five working days after written notice. If the tenant fails to remove its property as required, the owner should have the right to enter the tenant's space and remove the property without "being deemed guilty in any manner of trespassing or conversion."
Unfortunately, if a tenant does not respond to a termination notice, a facility owner should not simply tow the property from the site. It may ultimately be necessary for an owner to obtain a court order to remove the tenant's property from the premises. Certainly, this termination provision should allow the owner to move the property to another location on the premises in order to rent the space.
Foreclosure and Sale
Finally, the addendum should reiterate the owner's lien rights on the stored property in case of the tenant's default. The addendum should state in bold language that the tenant's property may be sold through public sale following the tenant's failure to pay rent. Unfortunately, just as each state's self-storage laws are unique with respect to the foreclosure and sale of tenant's goods, state laws that apply to the foreclosure and sale of motor vehicles and boats are even more varied. Each state has its own law regarding how property that has title can be sold.
Many states allow titled property to be sold at public auction along with the tenant's other stored personal property. The purchaser of the vehicle can then apply for a transfer of title through the state's department of motor vehicles (or department of natural resources). Other states require that certain information be provided to the court in the county in which the sale is held in order for the court to transfer title to the purchaser. Other states do not allow such sales to occur unless title is first obtained by the storage facility prior to the sale. In such cases where the facilities must first obtain title before the property is sold, the facility commonly obtains it through procedures created for abandoned vehicles. Under this process, the facility makes an application to the department of motor vehicles or department of natural resources that the property has been abandoned and notice is given to the prior owner of the vehicle and all secured parties. Ultimately, if no response is given, the paperwork from the DMV is provided to the court to allow the transfer of title to the storage facility.
It goes without saying that when dealing with the unique issues of storing motor vehicles and boats, additional documentation is necessary. A facility that stores motor vehicles, boats, RVs and motorcycles without a prior agreement as to certain terms and conditions of that storage- type, invites the inevitable question of "What did we agree to?" when property is stolen or damaged, or the tenant becomes delinquent. With an addendum in place that specifically addresses the storage of motor vehicles and boats, facility owners and operators can feel more comfortable that when certain disputes arise, the questions can be answered.
An attorney who specializes in self-storage law, Scott Zucker is with the Atlanta-based law firm of Shapiro Fussell Wedge Smotherman & Martin. He is a regular contributor to Inside Self-Storage magazine and a frequent speaker at the Inside Self-Storage Expos and Trade Fairs. Mr. Zucker may be reached at (404) 870-2200.