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Self-Storage Business Disruption: Legal Advice for Dealing With Tenant Death, Divorce and Disappearance

Self-Storage Legal Advice for Tenant Death, Divorce and Disappearance
Many customers seek self-storage when they have a disruption in their lives. Once they become one of our renters, there are three situations that can seriously impact our business: The tenant dies, gets divorced or disappears. The following guidance will help you work through the legal aspects of each.

Self-storage operators are as busy as ever. With all that’s going on in the market, it’s easy to forget that your tenants are everyday people going through everyday life experiences. Unfortunately, it isn’t uncommon to find out that a tenant has passed away, is divorcing their spouse or has just disappeared. These real-life tragedies can pose issues for your business. The following guidance will help you work through the legal aspects of these three common scenarios.

The Deceased Tenant

Sadly, it isn’t unusual for self-storage tenants to pass away. This is often discovered when the rent hasn’t been paid and late or lien notices are sent to the renter’s last known address. Relatives and friends may come forward seeking to access the unit and retrieve the deceased’s property.

There are a few ways things can play out under these circumstances. Based on the facts, you have certain options to help the tenant’s loved ones.

They have the facility access code and key to the unit lock. When the person who wants to enter the tenant’s unit doesn’t need any action from the self-storage manager, they can either continue to pay the rent and keep the space or move out and terminate the rental agreement. The only exception to this course of action would be when a person comes forward with probate court documents designating them as the tenant’s estate administrator or executor. In this case, that person is your new tenant by operator of law.

They don’t have the access code or key. In this scenario, the facility manager can’t allow anyone to access to the unit. During this time, a family member or friend must continue to pay rent on the deceased tenant’s unit to avoid foreclosure. But to gain access, they must provide a copy of the death certificate and a copy of a court order stating they’ve been appointed as the administrator or executor of the tenant’s estate. This process can sometimes be quick or take up to 60 days.

Once the person in question provides these documents, they can access the unit. They can then decide if they wish to continue renting the space in the name of the tenant’s estate or terminate the rental agreement and remove the items.

Small estate options. If the deceased tenant had a small estate value as defined by state law, the family may be able to obtain and prepare a Small Estate Affidavit. This sworn document is signed by a family member and states that the amount of the estate is so low that it isn’t going to be probated through the courts. Once the family member provides the affidavit along with a copy of the death certificate, they can be allowed to access the unit.

The language of the document must provide, under oath, that there are no competing claims being made by others concerning the property, and the party signing the affidavit indemnifies the storage facility should a competing claim arise. Some states that use this document also require that it to be filed with the court and an order be issued to verify the facts.

Another method of resolution for small estates is the filing of a Summary Administration (as an alternative to a court appointment). Though this process is handled through the probate courts, the timeline is shortened since the value of the estate is small.

The decision of which method to use is often based on the value of the estate. In some states, if the value is $10,000 or less, an affidavit can be used, with the Summary Administration applied if the value is more.

No response from family or friends. If you learn of a tenant’s death by alternate means—not through notification from a known person—and the unit is delinquent, call the emergency contacts listed in the rental agreement. It’s also recommended to contact the local probate court to find out if the tenant’s estate has been probated and an executor named. If there’s an executor, you can contact them to determine what to do with the space.

Ultimately, if you’re unsuccessful in contacting those listed on the rental agreement or any relatives or friends willing to resolve the tenant’s default, send a Certified Letter to the tenant’s last known address and eventually proceed with a lien foreclosure. Depending on the state where your self-storage facility is located, there may be a waiting period to allow the estate to be probated before the sale can occur.

Notice of competing claims to the stored property. There may be instances when your facility receives calls or visits from multiple family members, each making a claim to the deceased tenant’s unit contents. In this case, it’s important to overlock the unit and instruct all parties to go to the probate court and submit their claims there. This is with the understanding that the court will issue a determination as to a rightful heir and proper party to take possession of the property. Until that time, you can continue to charge rent, and it’s expected that those making a claim will pay it to avoid the enforcement of the lien.

The debt of the estate. Just because a self-storage tenant dies, their obligations to creditors do not end. Someone must pay the rent on the unit or it’ll eventually go into foreclosure. If you know a renter has died, it makes sense to do what you can with phone calls, letters and even a visit to the local probate court to see if anyone has stepped forward to take over the estate, especially before proceeding with a sale.

If someone is attempting to resolve the matter, delay any enforcement of lien rights, since the estate process can sometimes take weeks to complete. Document all efforts taken to contact family members, emergencies contacts, probate court and others.

Tenant Divorce

Self-storage seems to be a place where property subject to a divorce commonly ends up. If one spouse rents a unit to store belongings from the marriage, what right to access does the other spouse have?

Typically, a facility operator doesn’t care who has a right to the property in a particular unit. So long as the rent is paid and the party entering has the proper access code and key to the lock, you wouldn’t ordinarily inquire about the right of access. Nevertheless, divorce often places you in the middle when there’s a dispute. In such cases, it’s always best to defer judgment to the courts.

When two parties are divorcing, they automatically subject themselves to the jurisdiction of the court to handle the dissolution of the marriage and the separation of the parties’ assets. That includes property that may be stored at a self-storage facility. Accordingly, you must follow all instructions issued by a court concerning the turnover of property from one spouse to another.

However, not all court orders are written with clear instructions. Therefore, you shouldn’t seek to interpret any court decisions that may not apply to your storage facility. Any questions should be directed to the counsel for the respective spouses. There can be significant liability to your business for favoring one party over another, even if that party is the paying tenant.

Tenant Disappearance

Sometimes you’ll have a self-storage tenant who stops showing up and doesn’t respond to letters, calls or emails. While this may be worrisome, it’s important to remember that their obligation to pay rent doesn’t stop, and it’s their sole responsibility to provide updated contact information.

Assuming you haven’t been notified or learned that the tenant has passed away, make multiple attempts to contact them through letters, phone calls, emails and even postings on their storage unit. Also, communicate with any emergency contacts listed in the rental agreement. Again, documenting all efforts to get in touch with the tenant and emergency contacts is critical. If you’re unable to reach anyone, you may proceed with a lien according to your state law.

While the majority of your self-storage tenants will simply move out when they no longer need their unit, there will be times when the above three scenarios happen. By understanding your legal obligations, you can be prepared to handle them.

Ashley Oblinger is an attorney with the Atlanta law firm of Weissmann Zucker Euster Morochnik & Garber, P.C., where he specializes in business and self-storage law, advising operators nationwide on all legal matters, including lease preparation, lien enforcement, tenant issues, tenant-claims defense, and employment policies. To reach them, call 404.760.7434 or email [email protected].

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