By Jeffrey Greenberger
Some of you reading this article are already in the business of offering outdoor or covered vehicle and boat storage. Others are considering it. If you are using, or plan to use, a self-storage lease with no modifications to accomodate this service, you are taking a risk. I hope this article will encourage you to consider some additional provisions in your existing lease. These suggestions will help protect you against the problems that tend to occur with vehicle and boat storage.
What Can Happen
A client of mine recently had the following dilemma: A person stored an RV at his facility. The renter stated she was a friend of the family that owned the RV and claimed the owners were too ill to store the vehicle themselves. My client completed the rental agreement with the owners' names and the name of the person storing 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's actual owners. Thus, everyone in this story had some type of contractual claim to the RV in storage. There were, in essence, three lessees.
The couple who owned the vehicle divorced, and the woman who stored the vehicle for them wound up dating the ex- husband owner. The ex-wife and the woman 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 from the premises. Since the friend who stored the vehicle was now dating the ex-husband owner, she also had some claim via title to the RV.
Outdoor vehicle/boat storage is particularly complicated because there are titles involved, yet your rental agreement may not be with the titled owner. The self-storage manager is stuck trying to figure out which claimant has right to the vehicle. In this situation, given that both parties made rental payments, the facility could not change the code on either party's request. We resolved the situation by ordering the vehicle off the property. The facility then offered to allow either party to enter into a new rental agreement after the RV was removed.
Fortunately, the situation was corrected, but it could have gotten much more complicated. It just goes to show that you can get into trouble by not paying attention to outdoor-storage issues in advance. I have always preferred my clients not allow more than one person to sign the lease, and the name of the lessee and the name on the vehicle title are the same. This will help avoid scenarios like the one described above.
It is difficult to define outdoor storage spaces, especially when the area where you permit such storage is not paved and striped. It is even more difficult to prevent a tenant from parking in the wrong spot or "crossing the line" between spaces. It is, therefore, important to have some sort of language in your lease that describes the space rented, but not so closely you would be in violation 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 identification purposes only. There shall be no adjustment in the rent payable hereunder and the agreement shall remain in full force and effect if the premises actually contains more or less square feet than set forth herein or if the premises is not 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 and state; and the vehicle's VIN or other identification number. You should also obtain a copy of the vehicle or boat registration. Institute a policy, stated clearly on your rental agreement, that if the person listed on the registration is not the person signing the agreement, the lessee must submit a notarized statement, signed by the owner, indicating it is acceptable to store the vehicle/boat in the owner's name. This is important for several reasons: First you want to make certain you are not storing a stolen vehicle. Second, without such a statement, you can run into difficulties if there are ever problems between the titled owner of the vehicle and your tenant.
The next consideration is what to do with vehicles in the event Mother Nature or an emergency presents a reason to move a vehicle. While our buildings may be able to withstand excessive heat, drought, or heavy rain or snow, there are issues involving climatic conditions when storing vehicles or boats out-of-doors. If you do not provide in your lease the right for you to move or remove 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 the event you need to move stored vehicles. Emergency moves as well as those related to routine facility maintenance (painting carports, repaving, etc.) must be provided for in your lease. Consider a provision that contains the following:
A Lessor specifically reserves the right to move or remove the stored vehicle from the leased space at any time, and without notice to Lessee in the event of an emergency. For the purpose of this section, "emergency" shall be defined as any event which jeopardizes the health, safety and/or well-being of the self- storage facility or any of the buildings or land appurtenant to the buildings or any property or chattel stored at the self-storage facility. The Lessor shall exercise reasonable caution in removing the vehicle(s) and will endeavor to notify Lessee of the new location of the vehicle or return the vehicle to the Lessee's space after the maintenance or emergency has concluded. Reasonable notice shall be provided to Lessee before Lessor removes the vehicle for any non-emergency purpose.
All self-storage owners should be concerned about hazardous waste. RV and boat storage present a special problem because they contain hazardous waste just waiting to spill or explode onto the property in the form of gasoline, lubricants, battery acid, tires, sanitary-toilet chemicals, etc. Given the volume of liquids and lubricants stored in an RV, a leak or spill could create a serious environmental hazard on your property. To make matters worse, some tenants try to store extra gas, chemicals, tires, etc., in their stored vehicles.
Without certain limiting language in your lease, you could create an event of default under your mortgage by failing to prevent hazardous waste from being brought in and used on your property. Failure to properly limit the amount of hazardous waste could also cause you to waive certain coverage in your insurance policy. It is appropriate to check with your insurance agent or read your policy to determine whether storing vehicles with any amount of gas and oil in the tanks or operating parts is permissible. If not, it is necessary to find a policy that does permit this use. In the meantime, you should have rules and regulations limiting the amount of gas and oil that can be stored in the leased space and requiring a drip pan be placed under each vehicle. Consider adding the following language to your lease:
Lessee covenants and agrees to use and occupy the leased space solely for the purpose of storage of the vehicle identified herein, and specifically agrees that Lessee shall not use the premises for the storage of any gasoline or other fuel, oil, grease or other lubricant, tires or batteries, or any other accessories except for such gas, oil, grease, or other lubricant as may be contained in the operating parts of the vehicle stored at the facility, and in no 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 before storing the vehicle at the leased space and, if appropriate, the stored vehicle shall be properly winterized prior to the month of ______ each year. Lessee shall at all times maintain a drip pan under all tanks and operating parts of the stored vehicle sufficient to retain all fluids maintained in the stored vehicle.
Finally, assuming you have a default clause in your lease, make certain one of the remedies under that clause permits you to terminate the gate-access code of the stored vehicle. For example, if the tenant removes his vehicle for the weekend and has not paid his rent, you can prohibit him from returning the vehicle until rent is brought current. Further, if the state in which your facility is located permits removal of the vehicle by towing to an impoundment lot as a remedy to default, give yourself that right in your lease and post whatever necessary signage is required in your state. Once you have the vehicle towed off the property, you can also turn off the gate code and prohibit re-entry. In some states, you can consider the tenant a trespasser if he tries to re-enter the facility. Consider the following language:
In the event of a default, once the vehicle is removed by the request of Lessor or is voluntarily removed by Lessee, then Lessee shall lose any status as licencee to enter the self-storage facility or the leased space and may be considered trespassing on the land in which the facility is located.
The most important moments in the relationship between self-storage manager and tenant are the initial meeting and the moment when the rental agreement is presented and signed. These constitute, for lack of a better term, a "honeymoon" period. The tenant should be willing to provide you the information you need and sign the documents necessary to protect you in the event of a problem or default, and rent himself a space. If you wait until after the rental to ask for a copy of the vehicle title or the VIN, there is no reason for the tenant to surrender this information. Therefore, make certain you have all of the information you need and the rental agreement is fully and correctly completed and signed by the titled owner of the vehicle being stored in the very beginning.
Jeffrey Greenberger practices with the law firm of Katz Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including self-storage. Mr. Greenberger is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine and the tradeshows it sponsors. For more information, Mr. Greenberger can be contacted at Katz Greenberger & Norton LLP, 105 E. Fourth St., Suite 400, Cincinnati, OH 45202, or by calling 513.721.5151.