Jun 082015
 

Reprinted with permission from Inside Self-Storage, the leader in industry insight and education. Originally published on October 17, 2014.

It’s a good idea to review your self-storage rental agreement every once in a while to ensure it includes certain must-have provisions to protect your business. It’s equally important to ensure it excludes language that doesn’t belong in the contract. Let’s start with what shouldn’t be in your rental agreement, and then we’ll look at essentials to include.

Rental Agreement No-Nos

If your rental agreement states that you do or offer things at your self-storage facility that you actually don’t, remove mention of those items. For example, some rental agreements state that if a tenant prepays his rent for several months and the operator raises the rent during that time, the new rate applies in such a way that the prepaid rent will be used up sooner than the length of the prepaid term. Most operators tell me, however, they don’t actually do that; they consider the tenant’s rate locked for the length of the term. Therefore, they should remove that language from their rental agreement.

Second, make sure the provisions in your rental agreement make sense. I recently read an agreement that stated, “This Rental agreement between Owner and Occupant is for the purpose of not renting a Self-Service Storage Unit…” If I were a judge, I’m not sure what I would or could do with the rental agreement after a sentence like that. Make sure you review for those rogue clauses.

Finally, make sure your rental agreement isn’t repetitive, especially if it allows for conflicts. I’ve read contracts that state the late fee is imposed on three different dates. When I ask the owner if he imposes three late fees, he says “no” and wants to know why I asked. The simple solution is to refer to a late fee only once in the rental agreement. The best way to avoid ambiguity is to steer clear of repetitive and potentially contradictory terms.

As a side note: Don’t use your facility rules and regulations for the purpose of repeating that which is in your rental agreement. This sets you up for potentially confusing, conflicting and ambiguous results.

Rental Agreement Must-Haves

Of course, there are many “must haves” for every self-storage rental agreement. Following is a brief summary of the most important provisions.

1. First and foremost, your rental agreement should include all statutory-required provisions or language. This varies by state, but most statutes have some sort of language requirements. For example, Georgia has about two pages of language that must appear in the rental agreement. In California, you must provide space for the tenant to list an alternate contact. The statute actually says the operator’s lien rights don’t apply if he fails to provide this space in the rental agreement. You can’t ignore these conditions. Failure to comply with your state statute is an unnecessary risk.

2. Make sure your rental agreement asks the required question about military service. This is governed by the Service Members’ Civil Relief Act.

3. If you allow people to store vehicles in units, the rental agreement should include triggering language to recognize the possibility of a vehicle being stored. If a vehicle is to be stored, get the additional information you need.

4. Your rental agreement should include a provision that advises the tenant whether the unit is temperature-controlled. I’ve seen some lawsuits from tenants who claim to have been confused by the facility signage, advertising, etc., and “did not realize” their unit was not temperature-controlled.

5. Your rental agreement should properly address the rental term, term length and termination so they’re obvious to the tenant. Specifically, it should identify when the rental agreement starts and when rent is due. It should also clarify if the anniversary date and rental due date are different. If they are, it should explain how you get from the start date to the first full due date.

6. Address how the tenant should pay the rent. Simply saying rent is due by a certain date leaves too much to chance. If you have rules about the acceptance of credit cards, checks, cash, partial payments, etc., commit these rules to writing in the rental agreement.

7. If you accept credit card or ACH payments, the rental agreement should include language that allows you to do so.

8. Clearly disclose all fees you may charge above and beyond rent. While you may not know the exact amount of every fee, the rental agreement should still state the fees for which the tenant is responsible. For example, let’s say the tenant is responsible for any advertising costs resulting from a lien sale of his unit. You advertise several default units at once and spread the total cost of advertising among them. That’s fine. In the agreement, simply state is as the “pro rata” actual share of the advertising costs.

  3 Responses to “Must-Have Provisions for Your Self-Storage Rental Agreement”

  1. The Servicemembers Civil Relief Act provides protections for active duty personnel. If there is a default, one of the first steps would be to obtain a military affidavit to demonstrate whether the renter enjoys those protections or not. The verification process is easy if you have the tenant’s social security number, but many operators are worried about collecting and storing social security numbers of tenants. If that is the case, at the beginning of the tenancy, collect as much alternate information as you can about addresses, phone numbers, relatives’ contact information in the event of emergency (preferably two); because this information helps in conducting the military verification.

  2. I just became a Manager of a self storage facility less than a year ago. I have a tenant that has been in this facility since 2008. She is in the Sitelink system.. She is extremely behind in her rent and I want to put her unit up for auction. The problem is, her original lease has been lost. With her long history here, and there is much documentation, do I need the lease in order to proceed with the auction. In
    I need an answer. Thank you.

  3. This is quite important stuff to take note of if you are running a business. And I think that as a potential business opportunity for my moving business, it’s a good thing that I’m reading about these clauses here so I can also advise my customers when it comes to complementary services.

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