It's Not Just About Pricing:

Understanding Tenant Complaints

There seems to be a ripple of shock coming from the self storage community in response to the complaint filed by the City of New York against Extra Space Storage. Much of the discussion has been about the allegations of unfair pricing, but the heart of the claims made in the complaint essentially deal with the condition of the storage units and complaints of rats and rodent infestation, water intrusion, and allegations of mold and mildew in the spaces. 

In defense of Extra Space, there are anecdotal allegations of rats and rodents in some of the priciest penthouses in New York. It is not a surprise that self storage operators, notwithstanding their best efforts, would suffer some of the same issues. But this complaint renders a focus on an important issue in the self storage industry. Separate from the duty of good faith and ordinary care that operators have for their tenants in any city where a self storage facility is located, what is the duty of the tenant to regularly inspect and maintain their own rented storage unit?

It appears that many of the complaints outlined in the Extra Space complaint arise from tenants that stored their goods for long periods. The question may be, how many times between moving in and moving out did the tenant return to their unit to check if there were any signs of infestation, water intrusion, or signs of mold or mildew? Since self storage contracts shift the risk of loss and damage onto the tenants as the party that assumes care, custody, and control of their rented space, shouldn't we also ask whether the tenant has been regularly inspecting their units to meet that contractual obligation?

Certainly, this contractual shift of liability is clear in self storage rental agreements, which are non-bailment contracts. But maybe it’s time for the rental agreements to be even more specific as to the tenant’s burden to inspect and timely notify the operator if a problem is discovered. Certainly, if an operator is notified of a problem there are two basic alternatives that can occur. The first is that the tenant has mitigated its loss by raising the problem and having the landlord fix it. The other is that the tenant moves out, fully within the rights of the tenant under their month-to-month self storage arrangement, also mitigating its risk of further loss. A sample inspection provision might read as follows:

Responsibility to Inspect Space:

Occupant shall periodically inspect the Space and the personal property stored in the Space and take whatever steps necessary to protect its stored property while in the Space (without making alterations to the Space). Occupant shall keep the Space in good order and repair and shall immediately notify Owner of any defects, dangerous conditions, noxious odors, or other conditions which may negatively affect stored property in the Space or elsewhere at the Facility. Occupant shall be responsible for taking all necessary and reasonable action to prevent, eradicate, or otherwise control the presence or infestation of pests, rodents, and/or vermin within the Space and any such actions taken by Occupant must be approved by Owner in advance.

Certainly, there are situations where a tenant cannot mitigate loss based on timing alone. In those situations, tenants can protect their risk by having insurance coverage on their stored goods. Just like in a home or apartment, there is no guarantee that property in a rented space will not be lost or damaged. Tenant insurance (via a homeowner’s or renter’s coverage program) can provide a solution to that inherent risk. Additionally, most self storage operators alternatively offer other tenant insurance offerings or protection/ warranty programs at their facilities as well. All of these programs offer an approach to manage risk mitigation for stored property because, again, no one can guarantee the safety and security for stored property in a rented self storage facility, regardless of location, quality of construction, or location.  

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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. 

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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.