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Death, Divorce and Disappearance: Tenant Events That Affect Your Self-Storage Business

By Jeffrey Greenberger Comments
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Given that self-storage facilities regularly serve customers who are in the midst of life-changing events, it shouldn’t be surprising that managers must occasionally deal with situations in which tenants die, get divorced or otherwise disappear. When any of these occur, you’re left to deal with the fallout. Let’s examine each scenario and how you should proceed.

Tenant Death

There have been recent updates to many self-storage statutes that have made it easier to give notice to a tenant in default. In many states, notices can be sent by a verified First-Class letter, and in some instances, by e-mail. There is one exception, however: You cannot presume service on someone you know to be dead. Once we know a tenant is deceased, things change. You need to look for a person who can act on his behalf.

In my career, I’ve seen many operators make the mistake of letting someone into a deceased’s storage unit simply because that person was a family member, had a death certificate or was the person’s power of attorney. They get fooled by an emotional person only to find out later that he wasn’t the proper representative of the estate. You may be surprised to learn that a death certificate only proves the tenant is dead, and the power of attorney dies with the tenant. Neither is an indicator of who should get into the unit. If you allow someone entry and property is removed, you face the risk of a claim from the estate’s representative for untold damages.

In some cases, a person will bring in a will indicating he’s been nominated to be the executor of the estate, and the facility operator relies on that. However, you don’t know if the document presented to you is the last will and testament or whether it was modified by a subsequent will or codicil; therefore, you can’t trust the will alone.

Every state has some form of probate court in place, and these types of situations are why those courts exist. Probate judges determine the right person to handle a deceased person’s estate and act as representative.

There are two types of representatives you’ll find in these matters: an executor/executrix or administrator/administratrix. In a tenant-death situation, you generally want to look for a document issued by a probate court that tells you who is the authorized representative. Most estates call these “Letters of Authority” or “Letters Testamentary.” With proper personal identification and a certified copy of the letter or order in your file, you may begin dealing with this person, including giving access to the unit or serving lien notices, if the unit is in default.

Increasingly, trustees also want access to storage units. This is because many people put their assets into revocable trusts to avoid the probate process after death. This is fine if the rental agreement is executed on behalf of the trust. If the deceased tenant forgot to put the rental agreement into the trust, you’ll want to consult with your attorney before allowing the trustee into the unit, even though all the property in the unit might be trust property.

In summary, when it comes to tenant death, there are two areas of concern: lien sales and unit access. In the case of the former, the key is whether you have knowledge that the tenant is deceased when you try to sell the contents of his unit. If you auction the unit and later discover he was deceased at the time of sale, but you had no way of knowing he died, you have no reason to be concerned. When it comes to unit access, if you allow entry without having documented proof that the person requesting it is the estate’s designated representative, you’re taking an extraordinary risk.

Tenant Divorce

People who rent from you may get divorced during their tenancy. Some operators will put both spouses on the rental agreement as co-occupants. Others will list one spouse as the occupant and the other as having “authorized access.” In my opinion, both are substantial mistakes. You should have only one named occupant per contract so you don’t end up with two tenants fighting to keep the other out or ordering you to cut and replace locks. When you put yourself in that position, you end up the loser. You’ll find yourself subject to a claim from one spouse saying you didn’t follow his or her instructions.

This is also true of authorized access. You may think it’s relatively harmless, but I’ve seen operators receive letters from divorce attorneys stating that because their client is named as having authorized access, the storage operator has a duty to let that spouse into the unit to claim his or her property before it becomes lost or compromised by the other “evil” spouse. These letters come with heavy-handed threats of damages and litigation if you don’t comply.

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