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Just Bought a Self-Storage Facility? Why and How to Get the Tenants to Sign a New Lease

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When you buy a self-storage facility, it’s wise to get existing tenants to sign a new rental agreement. It can be tricky, though. Here’s advice from an industry attorney for getting customers to comply and what to do when they won’t.

Reprinted with permission from the author, this article originally appeared in the “Self Storage Legal Monthly Minute.”

When you buy a self-storage facility, there’s a period of transition during which day-to-day operation transfers from one owner to the other. This might mean the facility now has new rules, different fees, added products and services, etc. Whatever else changes, one thing is certain: You should update the rental agreement and get all existing tenants to sign it fresh.

Completing this task can be an interesting challenge, both from an operational perspective and a legal one. In fact, it may be one of the most difficult things you do in your new ownership. But unless you move all tenants to the same contract, so they’re operating under the same terms and conditions as incoming customers, your managers will be left to apply different policies to old vs. new renters, which leaves room for errors and disagreements.

It may not be easy to track down all your tenants and get them to sign a new rental agreement, but the stress should be minimized through the use of email and electronic signatures. Thankfully, you’re no longer obligated to get a wet-ink autograph. Following is some other helpful advice to get customers to comply and what to do if they won’t.

Ask for an Update

A simple, successful approach to getting the signature you require is to tell tenants you need them to update their contact and payment information as well as their emergency contacts. When they reach out with these updates, it can be a perfect time to introduce the new lease and ask for cooperation to “click and accept” it.

Keep in mind that with any contract changes, the tenant should be given notice of specific alterations in the terms and conditions. He should then have at least 30 days (until the start of the next monthly term of his lease) before the changes become effective.

Work Around Non-Compliance

No matter what efforts you make, there will be times when you don’t hear back from some tenants, even though they continue to pay their rent. Some might simply refuse to sign a new agreement, whether due to principle, laziness or some other reason. In these cases, what are your options?

If you can’t get a tenant to sign the new lease, you can always elect to terminate the contract. Alternatively, you can send him a clearly written notice that if he continues to use occupy the rented space beyond a 30-day effective date, he’s bound to the new terms and conditions. If you take this approach, it’s important that the letter is clear about enforcement, and that it includes a copy of the new lease or a summary of the relevant, significant changes.

One of the ways this enforcement provision can be most effective is if the old lease contains language about the landlord’s rights to update the terms and conditions after advance notice. For example, your contract might contain the following:

Changes. All items of this agreement, including, but without limitation, the monthly rental rate, conditions of occupancy and other fees and charges are subject to change at the option of the owner upon thirty (30) days’ prior written notice to the occupant. If so changed, the occupant may terminate this agreement on the effective date of such change by giving the owner ten (10) days’ prior written notice of termination after receiving notice of the change. If the occupant does not give such notice of termination, the change shall become effective on the date stated in the owner’s notice and shall thereafter apply to the occupancy hereunder.

In some circumstances, an enforcement notice may be the only way to address substantive changes to your self-storage rental agreement with tenants who won’t sign a new document. With acquisitions, the hope is customers will be a positive part of the deal, not a frustrating one.

Scott I. Zucker is a founding partner in the Atlanta law firm of Weissmann Zucker Euster Morochnik & Garber P.C. Practicing law since 1987, he represents self-storage owners and managers on legal matters including property development, facility construction, lease preparation, employment policies and tenant-claims defense. To reach him, call 404.364.4626, or email [email protected].

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