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The Essential Elements of a Self-Storage Lease Agreement

By Murphy Klasing Comments

I’m the first lawyer in my family. My father and grandfather were entrepreneurs and, like many from their generation, they believed a handshake was all you needed to make deal. “A man's word is his bond,” they would say. If only it were that simple. They would look at a contract, shake their heads in frustration and wonder why so much formality was necessary. “It's those [darn] lawyers,” they would say. Today, the lease agreement is the life-blood of the landlord/tenant relationship, and a spit-in-your-palm handshake doesn’t cut it.

I recently drafted a lease agreement for a self-storage owner. The only criteria he gave me was to limit it to one page. Although I understand the desire to make a contract logical and simple, there are essential parts to a self-storage rental agreement that protect the owner from opportunistic plaintiffs. Here’s an overview.

The Look

A contract is simply an offer from one party and an acceptance from another. It can be drafted on a napkin. It can even be oral (although each party’s memory may be different if and when a dispute arises).

In the self-storage industry, the contract isn’t just the legal agreement between you and the consumer, it’s also a marketing tool. For this reason, the first essential part of your contract is the aesthetics. It should be concise and printed in a readable font on as few pages as possible. It should display your company logo and contact information.

Draft it so it’s less burdensome for you and the customer to understand. A reader-friendly, simple-language, to-the-point contract that’s fair and succinct makes the customer feel he’s getting a fair deal. A 10-page, 6-point-font diatribe that rivals the “Book of Leviticus” won’t make him comfortable. Take the time to read it over with the tenant and make sure he comprehends it.

The Terms

The next and most obvious necessities are the actual terms of the agreement. Of course, the monthly rental amount, payment due date and any late fees that might be assessed are important, but there are many more elements that must be considered:

  • Term: Month to month is the most logical term. Neither party wants to be locked into an extended term for this type of lease.
  • Purpose of unit: The purpose is the self-storage of personal, non-perishable property. Define in logical terms what can and can’t be stored in your facility. Feel free to limit the value of the items stored. Have your customer agree that the total value of all stored items will not exceed $5,000, or whatever amount makes you comfortable. State that tenants are not to store documents, photographs, heirlooms, artwork, deeds, receipts for items in the unit, items of emotional value and anything else you don’t want stored at your property. For example, an urn containing Aunt Nancy's ashes should probably be excluded.
  • Rate changes: Include a provision that allows you, upon 30 days written notice, to increase the rent at your discretion so you can keep up with market rates.
  • Alternate contact information: If you collect it, plan on using it before sending the unit to auction. If you sell a unit before attempting to call the alternate, the jury will wonder why you bothered to request the information in the first place.
  • Termination: If you have a tenant who’s causing problems, you want the option to end the agreement, even if he isn’t in default. Include a clause that allows you to terminate within whatever notice window your state requires.
  • No oral representations: Every lease should state that “this agreement contains the entire agreement between the parties,” and “no oral statements or promises from any employee or agent of XYZ Storage that conflict with this agreement have any binding effect” (or something along those lines).
  • Lien fees: If you’re going to charge them, they should be clear (when, how much, etc.).
  • Posted rules: If you post any rules at the facility, include a phrase in your lease that says, “All rules posted at the property are hereby included as material terms of this agreement.”
  • Notice: Add a sentence that allows all notices—rate changes, late or lien notices, etc.—to be sent to the last physical or e-mail address provided by the tenant.

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