While storage-to-go may be a great business opportunity, it is not self-storage. The providers of this service take possession of and transport customer's goods. The customer has limited access to his container and generally cannot access the property without the assistance of the business operator. The relationship between the storage-to-go operator and his customer is most likely a bailment rather than the landlord/tenant relationship that governs self-storage.
Research Before You Start
Storage operators should research the business carefully before providing this new service. If you treat your storage-to-go customers as traditional self-storage tenants, you could be making a grave error. There are a number of legal issues that should be considered in preparation for such a venture.
The one mistake you do not want to make is thinking you can take a self-storage rental agreement and use it for the portable-storage business. A self-storage rental agreement assumes the facility operator is renting real estate. The portable-storage operator rents personal property-- the container--and agrees to store the container in a warehouse or other suitable place. Legally, these are very different businesses and require different types of contracts.
Don't assume you can use your state self-storage lien law in the portable-storage business either. This is possible in California and Florida because the lien laws were amended to include this new business. In other states, it is unlikely self-storage lien laws will apply because, like a self-storage rental agreement, these laws assume self-storage is a rental of real estate, not personal property. Before venturing into the storage-to-go business, consider the following:
- Is the transportation of goods a regulated business in your state? Trucking was once a highly regulated business. It is less so today. Some states have completely deregulated this business; others regulate certain aspects of it. One area that is often regulated is the transportation of household items. Check the laws regulating trucking in your state.
- Storage-to-go is most likely a form of bailment. This means the storage-to-go operator, unlike the self-storage operator, takes possession of the property, and the customer cannot access it without the aid of the storage-to-go service provider. You will need a different type of contract if you enter this business. Your self-storage rental agreement is not the right type of contract for this business.
- Do you have the right insurance? Storage-to-go has exposures that are not present in a traditional self-storage business. You need more than just coverage on your vehicles. You need to have coverage on your customer's property while it is being transported. You should check with your agent as to whether your current policy covers stored tenant property while on the premises.
Most liability policies exclude coverage on the property of others in your care, custody or control. A bailee by definition has care, custody and control over the property he stores. Be certain your insurance carrier will continue to insure your facility if you enter this new business. The specialty insurers provide customer-goods legal-liability coverage that provides defense and indemnity of customer claims of property loss or damage even if it is in your care, custody or control.
Storage-to-go may be a great business. The financial commitment of the industry's largest companies certainly suggests this. However, we advise you do your legal homework before jumping into these uncharted waters.
From the SSA Rental Agreement Handbook, Copyright © 2000. All rights reserved. Self Storage Association Inc., 6506 Loisdale Road Springfield, VA 22150.