Legal Basics of Vehicle Storage

Joseph D. Joiner Comments
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So, you’re looking at that vacant lot adjacent to your facility and thinking, “Boy, we could sure add to the bottom line if I were to put some vehicle storage over there. It should be a piece of cake—just park ‘em, and rake in the dough!” Not so fast. Cars, RVs, boats and the like require a unique sort of storage—not weird or complicated, just different, if you know what I mean. Before you dive in, you’ll need to know some basics. Ask yourself the following:

1. How do I move them?

Vehicles are big, and you want to be able to move them with ease when necessary. This means two things: You need a provision in your rental agreement that allows you to do that; and you must insist every vehicle be functioning and that you have a key. Does that make you a bailee? Nope, not if your rental agreement says you’re not.

2. What if they get damaged?

Glad you asked. You must be certain all vehicles are insured. This is a little different from the insurance requirement you have for ordinary property storage, as most vehicles must have liability insurance as required by law. Damage most often occurs while a vehicle is being moved; if you’re the one doing the moving, you want to be covered.

3. Who owns the things?

Vehicles and boats have titles; and on those titles are the names of the owners as well as lenders that have a secured interest in the asset. You want your rental agreement to state that all of these folks are considered agents of the person signing the contract so you can deal with them directly if necessary. For example, lenders like to repossess their property when they must, and other owners might want to take their vehicles for a spin once in a while.

4. What are they worth?

Remember, you’re not dealing with household goods—vehicles are worth some serious bucks. The last time I checked, the median value of a motor home (you know, that thing rock bands tour in) was more than $250,000. Customers who own these toys may not want to sign your standard release of liability. However, with spaces being in pretty big demand (these things don’t easily fit in driveways) and rents approaching $500 per month, you have incentive to be flexible. Call your own insurance carrier for assistance. On the other hand, if a vehicle isn’t worth very much, you might become a handy disposal yard. Use careful judgment regarding what can park at your facility.

5. Are they legit?

Vehicles should be licensed and registered with the state motor-vehicle agency. If they aren’t, it’s a red flag. You should have a provision in your rental agreement stating that the license and registration must be up-to-date.

6. What’s in them?

Vehicles are like mobile storage units. Owners keep all sorts of things inside—clothing, sports equipment, even food. Vehicles also house (big!) fuel and propane tanks, holding tanks, water tanks, etc. Some include satellite dishes, television sets and other adult “toys” such as ATVs and jet skis. You need to think about what limit of value you wish to place on these things. Here’s where you can probably disclaim liability, but your agreement must be clear and specific about vehicle contents.

7. What do I do if I have to conduct a lien sale?

Under your state’s self-storage statute, you can put a lien on a vehicle, but there will probably be important restrictions of which you must be aware. For instance, it’s normal for liens on the vehicle title to take precedence over your claim. There will also typically be a procedure imposed by the state motor-vehicle agency for notifying owners and other claimants, which will overlay your self-storage lien procedures.

The good news is, since vehicles are generally worth big bucks, someone will probably pay your lien or at least keep rent current if some legal sorting is necessary. That’s why you need copies of the title, registration and insurance documents in your customer file—so you can get in touch with others who have interest in the asset.

8. What if the customer likes to hang out with his vehicle?

Even folks with lots of money can get tossed out of their house and be tempted to stay at your facility for awhile. Here’s a real no-no. Your agreement should state that there can be no hanging out, no maintenance performed and certainly no overnight stays.

9. Is there anything else I should know?

Not really, except competition is growing rapidly in this market. You probably won’t be able to get away with only a vacant lot for very long. More covered and indoor facilities are being built, and many companies are providing ancillary services such as minor maintenance and vehicle cleaning. As you can imagine, there are a lot of retail products that can be sold as well. (By the way, your vehicle storage should be at least as secure as—if not more secure than—your regular facility.)

In short, the differences between vehicle storage and your standard operation are numerous and increasing. The good news is there’s a chunk of profit to be had. It’s just, you know, different .

Joseph D. Joiner has been providing legal advice to self-storage operators for more than 25 years. A real estate and business lawyer who specializes in litigation and transactional work, he practices in California and New Mexico. He and D. Carlos Kaslow are co-authors of the “Rental Agreement Handbook,” sold through the Self Storage Association. He is also is a partner with Kaslow and Scott Zucker in the Self Storage Legal Network, a subscription consulting service for SSA members. For more information, visit www.selfstorage.org.

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