Self-storage owners face legal uncertainties

Just because it's seemingly lawful doesn't mean it will stand up in court. A recent report in Inside Self-Storage sums up the challenge: "Legal quandaries are among the biggest headache producers for owners and managers of self-storage facilities. Some operators simply aren't familiar with industry and state legislation; others don't understand it. Even when they are and do, the laws can change, and you can't always predict how they'll be interpreted by customers, judges and juries."

The "letter" of the law can sit atop quicksand, subject to shifting (and sinking) as interpretations evolve and precedents stack up. By way of example, rental agreements that affix a maximum value of possessions being stored aren't immune from court challenges. So, even if a tenant has signed an agreement stating a maximum dollar threshold of items to be stored, tenants have gone to court to circumvent these contractual provisions. While they may or may not win, self-storage operators are forced to spend money and time defending themselves.

Then, there's legal common sense in cases involving "best practices." While there may not be a specific legal prohibition against facility owners or employees possessing abandoned unit property, it's generally not a good idea. According to Inside Self-Storage, "A wrongful-sale or disposal lawsuit is possible with any former tenant at any time, and the last allegation a defense attorney wants to face is that some or all of the property ended up in the hands of facility staff."

Laws may be straightforward, but the way they're enforced can add layer upon layer of complications. Divorces, illegal substances, financial issues and more can muddy the self-storage legal waters, so stay alert and don't take anything for granted.

Following are a few steps self-storage operators can take to protect their interests:

1. Find a legal beagle. Consult a legitimate legal authority with "dogged determination" to find pertinent legal information and provide experienced analysis of what it could mean to you. Make sure your advisor's expertise and experience matches up to your needs. If, for example, a particular attorney already has been involved in a court case relevant to your issue, that may be a good choice (or a terrible one, depending on the outcome and how well the attorney presented the case). Don't sacrifice good advice in an effort to save a buck. The cost of one lawsuit (or even the threat of one that requires substantive legal response) will rapidly overtake the cost of getting some solid counsel.

As part of this process, review existing contracts to see if/how they should be altered to reflect changing regulation and/or close potential loopholes.

2. Research the self-storage association in your state to see what information, links and resources are provided. If you're not already familiar with one in your state, just conduct an online search for "[STATE NAME] self-storage association." Regardless of how basic the association site is, there should be some useful information. If nothing else, the site should identify current hot-button legal issues and provide some insights about where/how to uncover more information. Florida's website, for example, includes information about pending legislation, lien laws and government representatives and resources.

3. Google globally for updates in different states. Get informed about what's happening legislatively in self-storage across the country. Some states already have reformed lien requirements, for instance, while others are just now considering measures. Experiences, legal challenges, and court opinions in states where laws have been in place for awhile may provide valuable insight about what's coming in other states. Again, just because a measure becomes law doesn't mean there won't be gray area challenges and interpretations that can affect practical applications. Operators can adhere to what they believe is the letter of a new law, only to wind up in court defending allegations from a tenant.

Article Categories