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October 17, 2008

6 Min Read
Six Things to Disclose to Tenants About Your Self-Storage Rental Agreement

Every self-storage operator must provide well-written rental agreements for tenants to read and understand when renting units. It is not the manager’s duty to explain each provision within these agreements, nor is it necessary for renters to initial important provisions (except where it is required by law). Best practices will prompt any conscientious self-storage manager to inform tenants of rental rates, due dates and modes of payment. As an additional customer service and a means in which to avoid future lawsuits, it is also in the owner/operator’s best interest to practice disclosing six important provisions.

1. Insurance

State required or not, explain to tenants that you don’t provide insurance to cover stored goods (unless, of course, you do) and strongly recommend, if not require, they insure their own belongings. In many claims, occupants think an operator maintained some amount of insurance on the stored goods.

I discourage making any reference to homeowner’s insurance covering stored property, because many policies require a separate rider for property stored out of the house. Generally, homeowner’s policies carry higher deductibles and more stringent exclusions than a self-storage contents policy. As a good business person, tell renters to buy self-storage insurance. They should not skimp, hedge their bets or rely on a storage owner to do it for them.

2. Credit Card Information

Explain why it is critical to have tenants’ credit card information on file. Credit cards should look like a requirement of the rental agreement—namely as a means to protect customers from unnecessary fees. Let the tenant know you could be saving him from agitation and late payments if a card is provided or if an auto-debit from a bank account is arranged.

How do you do this? Look the occupant in the eye and say, “Suppose you have to run out of town and you forget to pay your rent. What if you are gone longer than expected? Suddenly, your $75 monthly bill earns a late fee, possibly an over-lock or other charge, going up another $20. But, if we have a credit card number to charge, you will avoid the extra fees and hassle.”

Don’t be afraid to ask for a credit card—for your protection and the tenant’s. It’s one of the best things to do to make the self-storage relationship go smoothly.

3. Termination

Your rental agreement likely discusses termination procedures, i.e., how many days notice is required, and that the unit must be swept and locks removed. You also probably want the occupant to stop by the office to “check out” and provide a forwarding address. Whatever your requirements, discuss them with tenants upon signing the lease.

While the requirements to terminate may be in your rental agreement, posted at the front gate and the office, or even on stickers on your doors, put it into their heads right from the beginning. If you don’t, occupants are going to feign complete ignorance. You can bang your head against the wall and say, “Didn’t you see the sign at the gate? Didn’t you read the sticker on your unit? Didn’t you see move-out notice forms on every building and the mailbox at the gate to make it easy for you?” It won’t matter.

Tell people what you want from the beginning and show them how to do it. You won’t be encouraging early termination, but you will be building proper expectations and avoiding a dispute at the end of the term if an occupant fails to vacate or give proper notice.

4. Checkups

Let the occupant know it is his duty to check on his property once in a while. Many rental agreements have the “legal language” that says an occupant has inspected the unit and finds it to be suitable. What you need to tell renters is this, “Come by once in a while and check on your property, just to make sure it is OK.”

It’s not necessary to provide a laundry list of all the things that can go wrong in self-storage, such as roof leaks, infestations, mold, leakage from other units, etc., but it’s always better to catch problems sooner than later. Let tenants know it’s to their personal advantage to make this a practice.

Hopefully, a pleasant byproduct of this policy is that the occupant will continue to bring more property out to the self-storage unit and eventually need a larger or additional space. Occupants that are overseas in the military or are leaving town and storing their property in the unit represent a different problem; suggest they have a friend or family member check in occasionally.

5. Gate Procedures

Gate or door failure is almost always a result of user error. People do not intuitively know how to push the buttons to make a gate open. You can put directions on a sign but, better still, teach them how to use it when they first rent from you.

Also, let people know from the get-go if you charge for false alarms or to open the gate after hours. Inform them of exit procedures. I see a lot of unhappy occupants who fail to understand that after 9 p.m. they will be charged a manager “response fee” to open up the gate manually after hours.

Finally, let tenants know other gate nuances. For example, some gates only allow one coded entry per visit, disallowing another entry until they exit. This prohibits a husband and wife, for example, from visiting the site in separate vehicles at the same time.

6. Security Disclose

If your facility is full of fake cameras, or if you have only one gate code and anyone who has ever rented at the site knows the code, it’s your duty to disclose this information to tenants. People make their self-storage decisions based on how secure they feel. But, security systems are fallible. If your system is not backed up by a generator or if your camera system always goes out in a thunderstorm, you do not want people relying on a false sense of security.

These items are something you may generically disclose in your rental agreement, but highlight them when discussing the rental agreement. That “reliance” could come back and be grounds for a lawsuit.

When discussing rental agreements with occupants, the most important point is to say the same thing to everyone as much as humanly possible. The six items above are sound rental agreement disclosures but they also represent sound advice every self-storage occupant should have upon entering into a business relationship with your facility. Renters can read it for themselves in the rental agreement, but explaining these points to them are the cornerstone to creating good self-storage owner-occupant relations.

This column is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney.

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 [email protected].

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