Why Are
Limitation of Value Provisions So Important?

A standard “Limitation of Value” provision found in a self-storage rental agreement might read as follows:

Limitation of Value. The Occupant agrees that in no event shall the total value of all property stored in its rental unit be deemed to exceed $5,000 unless the Owner has given permission in writing for the Occupant to store property exceeding such value. The Occupant agrees that the maximum value for any claim or suit by the Occupant including but not limited to any suit which alleges wrongful or improper foreclosure or sale of the contents of a storage unit is $5,000. If such written permission is not obtained, the value of Occupant's property shall be deemed not to exceed $5,000 and may be worth substantially less than $5,000.

The question might be, why is the provision written as a limitation of the total value of the property that can be stored in the unit rather than a limitation on the potential liability of the self-storage operator for renting its unit for storage?

The distinction is important because the law (as clarified in over forty state self-storage lien statutes) supports the right of a self-storage operator to enforce a limitation on the declared value of the property being stored in its rental units. The law generally does not like to support any limits on a landlord’s potential liability for acting as a landlord. 

The reason so many state legislatures support this limitation of value is based on the recognition that the rental of self-storage units is not deemed to be a bailment. In other words, the use of the rented space does not transfer the “care, custody, or control” of the unit to the owner or operator of the facility. The tenant retains the obligation to protect and insure its stored goods placed in its rental unit. Consistently, the facility owner can impose on its customer, the tenant, a maximum value of the stored property placed in its units at its facility.

Distinct from warehousemen who maintain an inventory of the property that may be stored in the rented space, a self-storage operator has no idea what the tenant may be storing in its unit and therefore has no way to control its risk as a landlord without providing for some contractual limitations as to the value of items stored. 

In most states, statutory support can be found within the self-storage lien statute to uphold these contractual value limitations. For example, in Georgia, Code Section 10-4-213, the statute reads: 

If the rental agreement contains a limit on the value of property stored in Occupant’s storage space, the limit shall be deemed to be the maximum value of the property stored in that space.

In Missouri, Chapter 415 Section 405 of the self-storage statute provides:

If the rental agreement contains a limit on the value of property stored in occupant's space, such limit shall be deemed to be the maximum value of the stored property and the maximum liability of the owner for any claim for loss of or damage to stored property.

And in California, the Business and Professional Code Section 21713 statute states:

This chapter shall not be construed to impair or affect the right of the parties to create additional rights, duties, and obligations in and by virtue of the rental agreement, including, but not limited to, the right to limit the value of the property the occupant may store in the storage space. The rights provided by this chapter shall be in addition to all other rights provided by law to a creditor against his or her debtor.

Again, every self-storage rental agreement should contain a reasonably valued limitations provision. The $5,000 amount is an average only. Some facilities use higher amounts, some use lower amounts. But the amount used should be commercially reasonable in order to be enforced by any courts interpreting the provision.

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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.