LEGAL SECRETS

What You Need To Know

There are a few simple “secrets” to being a successful self-storage operator. The first is that everything you ever wanted to know about running your facility is already provided in your state’s lien law. If you take the time to read it carefully, you’ll see that the state law explains what a self-storage operator is and who a tenant is. It explains the language that needs to be included in the rental agreement, what you may be able to charge your tenant if they pay late, and what you can do with the tenant’s property if they fail to pay at all. Most statutes include explanations as to the responsibility for care, custody, and control of the stored property and even the right to limit the type and value of the property that can be stored.

A lot of these state laws were created in the 1980s, and many have been updated and tweaked over the last 40 years in recognition of the rapidly changing self-storage environment. These changes have included:

• Shifting from certified mail to email for notices
• Using online auction sales rather than live lien auctions
• Using the internet for lien sale publications rather than print mediums
• Creating a statutory safe harbor for the imposition of late fees on delinquent tenants (typically $20.00 a month or 20% of the rental rate, whichever is greater)

More recently, there has been another shift in self-storage legislation giving self-storage operators the right to enforce unsigned rental agreements after advance notice to uncooperative tenants, as well as the right for self-storage operators to enforce their termination rights against tenants whose actions trigger “non-monetary” defaults under their rental agreements. All of these updates are meant to enhance the operation of self-storage facilities not only for the betterment of facility owners, but for their tenants who utilize the service of self-storage space rentals.

The second “secret” for operators who want to protect themselves from legal liability is that they must not only comply with their state lien law when operating their facilities, but they must incorporate the lien law within their rental agreements and business forms. Regularly reviewing and updating a facility rental agreement is one of the strongest steps an operator can take to protect their business operations. Not only are operators updating their documents to meet their statutory obligations, but they are updating their documents to add language to enhance and support industry best practices. Updated rental agreements will now include:

• Clear consent language for the use of e-mail and texting
• Important clarifications as to what can and cannot be stored in the rented units
• Protections for storage operators arising from poor tenant conduct at facilities

The last “secret” is simply for operators to stay informed. One of the best ways to do that is for operators to participate in their state self-storage associations and to join the national organization that lobbies and supports those states. The best owners, operators, and managers in the self-storage business are the ones that take the time and effort to stay up to date on the laws, technologies, and best practices that have helped to create dramatic prosperity in this real estate sector. Those operators that participate in their state organizations also learn from other operators and, together, help the industry thrive.

Okay, so these aren’t really secrets. But not everyone knows them. Now you do. So, stay informed, update your documents, and share your knowledge.

More Self-Storage Legal Issues

We Are Proudly Sponsored By:

About Us

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. 

Shop Now

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.