The Legal Implications of 'FREE' in Self-Storage

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Free or Not

The problem may be more apparent in other “free” items. Free shelving with the signature on an agreement or an extended term is not really free; it is actually built into the price you charge someone who rents a unit with shelving. Better yet, what about a free lock? Do you give locks away to anyone who walks into your office, or only those who sign a rental agreement? If you only give to new tenants, then is the lock really free?

The same is true with free truck-use at move-in. Is it really free? It may not be if a person has to sign a lease to use the truck.

Further, many self-storage operators charge insurance premiums and/or other usage charges. Also, many impose hour limitations, usage or mileage limitations on the truck. If that is the case, I do not believe that the truck is always provided “without, or not subject to, a charge or payment,” i.e., free. If I keep the truck for three hours and I was only supposed to keep it for two, I owe a fee, which means it’s no longer “free.” If I have to pay for insurance then I am not getting a truck without a charge or payment either.

You get the drift. If you are not really giving it away, if something is tied into or requires consideration of something else in order to obtain the “free” item, then that item is not free. I caution you about this because self-storage could be a target after the attorneys general finish up with cell phones.

Knowing competition in the industry is stiffening and some facilities may be suffering because of a downward economy, there is a lot more “creative” marketing and concessions being considered. I strongly caution self-storage operators to ponder concessions carefully and avoid the word “free” at all costs.

In fact, it may be better to offer the second month for $1, rather than free. While the dollar is not going to make that much difference to your bottom line, you are avoiding the idea that you are “giving away” the second month for no consideration. To the contrary, the occupant has to pay rent for the first month.

The same goes for truck use: How about $1 for use of truck for two hours if you sign a minimum one-month rental agreement? I know it does not flow off the tongue quite like “free truck with move-in” but it may save your hide from litigation.

As always, I am just warning you to be careful. It may only be a matter of time for private attorneys, who see the cell phone case, to start thinking about using the same strategy with self-storage facilities. Please consider banning “free” from your self-storage vocabulary to steer clear of costly legal battles ahead.

Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati. He primarily represents owners and operators of commercial real estate, including self-storage. He is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. His website, www.selfstoragelegal.com, contains his legal opinions and insights into the self-storage industry, as well as an article archive. For more information, call 513.721.5151; e-mail jjg@kgnlaw.com.

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