October 1, 2004

6 Min Read
The Danger of Creating a Bailment

The Risks of Boat, RV and Vehicle Storage

By Jeffrey Greenberger

Ten years ago, people who wanted tostore vehicles at self-storage facilities found themselves relegated to a grassyor muddy lot along the back fence or had to place their vehicles in a standardstorage unit. These days, however, vehicle storage is big business, withbuildings constructed solely for the purpose of storing large RVs, boats,antique cars and more.

Over the years, self-storage owners have expanded theiroperations to make them more attractive to customers. Those who store boats andRVs now offer all sorts of services, including vehicle maintenance, repair andrestoration; oil changes; chemical-toilet cleaning and washing; and boatlaunching and retrieving. Some offer to gas up vehicles as well as stock themwith food and beverages. But while offering these customer conveniences may seemsmart, they change the nature of your relationship with customers.

The Danger of Creating a Bailment

Providing additional services for RVs and boats through yourstorage operation can put you in a valet-type arrangement, making you a baileeof stored vehicles. Having a bailment means you have control over what happensto an item while it is in your care. In a typical selfstorage arrangement,operators seek to avoid bailmentsthat is, they rent space and, for allintents and purposes, what happens to what is stored there is the business ofthe occupant only.

This sort of freedom can also be the case in RV, boat andvehicle storage if you simply let tenants park and lock. However, if youhave additional control, i.e., you hold the keys or park or rack vehicles fortenants, you have a greater degree of responsibility for the care, custody andcontrol of stored vehicles.

Typically, the duty you assume is that of ordinary care. It issimilar to that of a valet at a restaurant or shopping center, for example. People expect a valet to carefully park their cars somewherereasonably safe and return them in the same condition in which they left them.Otherwise, they expect him to be responsible for his own negligence. Obviously,if the valet willfully damaged a car, he would be liable. Conversely, he wouldgenerally not be liable for extraordinary or unexpected events, such as a carbeing stolen from its safe parking space. In short, as a bailee, you aresolely liable for ordinary and foreseeable damage.

Lets say you keep keys so you can park vehicles or havethem pulled up, warmed up or cooled off for tenants when they arrive at yourfacility. During storage and delivery, you have an ordinary duty to take allcaution and avoid damaging the vehicle. Normal damage that occurs on your watchis your responsibility.

Similarly, if you gas up the vehicle, you are liable if youuse the wrong type of gasoline. If you undertake to have repairs or restorationmade to the vehicle, you are responsible if they are not made properly. In a far more extreme case, if you stock a vehiclesrefrigerator with food or beverages for a customer, and someone takes ill or hasan allergic reaction, you could possibly be held accountable.

Fear of Finger-Pointing

In general, you are liable for any damages or dissatisfactiona customer has with the services you provide. Sometimes, however, you become thevictim of things that arent your fault, as in the case of a vehicle owner whoblames you for damage he inflicted himself. For example, a tenant backs his RVinto a tree or a bollard, causing $10,000 in damage to the vehicle. He thenpulls the RV into his space and parks it. You have a key because of services youprovide, so you have a bailment. The owner comes into your office a week laterand asks how his vehicle got damaged, attempting to hold you accountable for hisblunder.

In this case, there are several simple steps you can take tominimize your liability exposure. First, you must have the appropriateinsurance, in adequate amounts, to cover you for losses arising from yourbailment. Remember, RVs and boats can cost upward of $500,000. Having regularself-storage insurance is not enough, since that policy presumes you are notassuming care, custody or control of tenants property.

Second, having digital video cameras that record the comingsand goings around your vehicle-storage area is critical. If you can show proof avehicle was damaged prior to being parked in your spaceor have the incidentin question on filma tenant will be less likely to succeed in his claim thatyou caused the damage (or theft or vandalism or whatever it is causing thedispute).

Third, make sure the rent you charge is commensurate with thevalue of services you provide so you can afford the liability you accept. Do nottake on a bailment gratuitously. If you are going to provide a gas service inwhich one of your employees drives vehicles to a gas station to fill them upfor tenants, make sure your charge reflects all of the additional costs ofinsurance and liability.

If your employee is hit by a drunk driver on the way to thegas station, his injuries (in most states) will count against your workers-compensation rating, and the damage to the tenants vehicle will apply to yourinsurance. If the driver who hit your employee is insured, you may make arecovery; but you must price your services to recognize the risks.

Fourth, form separate entities to perform certain types ofservices. That is, while you store a vehicle as ABC Self-Storage,subcontract the repair or moving functions to ABC Transportation Co., aseparately owned LLC or corporation responsible for the moving of vehicles. Thatway, if there is a catastrophic loss or you are not adequately insured, you maystill be able to protect your investment in the facility.

Releases of Liability

People often ask whether they can have tenants sign a releaseof liability to absolve them of responsibility in the event of a vehicle-storageincident. Generally, these releases are ineffective in the case of abailment. If they worked, every valet-parking service in the world wouldhave you sign a two-page release before they took your car. The case law usuallyholds you cannot be released from this type of liability because you areundertaking the bailment for a charge. If you assume the bailment, you areliable for the ordinary and normal consequences if damage occurs.

While you may include releases in your self-storage contracts(and I still recommend doing so), do not rely on a release as your soleprotection. Remember that while all of your services represent a benefitto your tenants and make wonderful marketing statements, you must be aware ofthe liability you assume and be ready for it in advance.

This article is for the purpose of providing general legalinsight into the self-storage field and should not be substituted for theadvice of your own attorney.

Jeffrey Greenberger practices with the law firm of Katz,Greenberger & Norton LLP in Cincinnati, which primarily represents ownersand operators of commercial real estate, including self-storage. Mr. Greenbergeris licensed to practice in the states of Ohio and Kentucky, and is the legalcounsel for the Ohio Self Storage Owners Society and the Kentucky Self StorageAssociation. He is a regular contributor to

InsideSelf-Storage magazine and the tradeshows it sponsors.For more information, call 513.721.5151.

Subscribe to Our Weekly Newsletter
ISS is the most comprehensive source for self-storage news, feature stories, videos and more.

You May Also Like