Are Self-Storage Operators Responsible For Disclosing Flood Risks To Prospective Tenants?

The concern over flooding at self-storage properties continues to grow, especially as climate issues and over-development have impacted flood zones in certain areas. This is not a new issue, but the number of states that have added statutory requirements for landlords renting properties is on the rise, heightening awareness of this issue in the self-storage industry. 

Until recently, there was only one state law that specifically included self-storage rentals and flood plain disclosures. The Iowa Self-Storage Act states: “The operator shall disclose in the rental agreement whether the self-service storage facility is located in a 'special flood hazard area' as defined by FEMA” (Iowa Code Section 578A.10).

Other states have, of course, addressed this issue in the past, but the definitional terms have been argued to exclude non-residential, commercial leases like those that are found in self-storage. California Code, for example, limits disclosures to “lease or rental agreements for residential property," as does New York law. Georgia, too, has a flood plain disclosure requirement, but the statute only references “residential occupancy.” The Texas disclosure law, as well as Oregon’s, apply only to a “dwelling." 

Since every self-storage state statute specifically disallows residential use of a self-storage unit, many of these states' disclosure laws would not apply to self-storage. Currently, there is no federal requirement for commercial landlords to disclose information about a property’s flood risk, or previous flood damage, to a prospective tenant. 

This year, New Jersey changed its “Truth-in-Renting Act,” requiring that landlords located in New Jersey provide tenants with a flood risk notice that addresses the location of the property pursuant to FEMA flood maps and discloses the flooding history of the property. The Flood Disclosure Law requires that landlords provide this notice prior to having a tenant sign a lease or lease renewal. 

Under the statute, the Notice must contain the following disclosures:

1. Is any or all of the rental property located wholly or partially in the Special Flood Hazard Area (“100-year/1% Annual Chance Flood Plain”) according to FEMA’s current flood insurance rate maps for the leased premises area? 
2. Is any or all of the rental property located wholly or partially in a Moderate Risk Flood Hazard Area (“500-year/0.2% Annual Chance Flood Plain”) according to FEMA’s current flood insurance rate maps for the leased premises area? 
3. Has the rental premises, or any portion of the parking areas of the real property containing the rental premises, subject to the lease ever experienced any flood damage, water seepage, or pooled water due to a natural flood event?

Under the New Jersey law, the landlord’s failure to disclose subjects the landlord to liability if there is a flood event that results in damage to the tenant’s personal property. 

States that address statutory obligations can give guidance to owners and management companies in other states that operate self-storage facilities. It may be advantageous to address flood disclosure in your leases even in states that do not require it. Such transparency can potentially shift the risk of loss back to the tenant if the tenant elects to lease the rented space after such a disclosure. As more and more states consider this issue, it is important for operators in all states to do the same, especially if their properties are in 100- or 500-year flood plains or if their facilities have experienced past flooding events. 

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Scott Zucker is a partner in the law firm of Weissmann Zucker Euster + Katz P.C. in Atlanta, GA. Scott specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. For more visit www.wzlegal.com. 

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This newsletter is for the purpose of providing general legal insight into the self-storage industry. It should not be substituted for the legal advice of your own attorney.