Running a self-storage business comes with challenges like every business. One of the main areas of concern is the rental agreement and the protection it offers both business owner and renter. In the unfortunate event that a renter defaults on his or her payments, the rental agreement should offer protection to the owner who now needs to clean out the space and find a new tenant.
If you’re not using a rental agreement, you need to change this today. Don’t let another day pass without one. The reasons that you need a rental agreement include:
- it clearly defines the start and end dates of the lease
- it outlines tenant responsibilities
- it outlines owner responsibilities
- it clearly defines the payment schedule, related fees and late payment assessments
- it protects the rights of owner and tenant
Rental agreements can be signed in person, sent via mail or signed electronically. Electronically makes storage and location easier. Additionally, if you send it via mail you run the risk of not getting it back. Ideally, the rental agreement should be executed on the day of rental and covered in detail with the tenant.
What should be included in a self-storage rental agreement?
- Rental
- Length of contract
- Termination & tenant conduct
- Security
- Insurance
- Lien Sale
Rental
This section describes what is being offered to the tenant and what is required in exchange. Explain the terms of what you offer clearly and what is permitted to be stored at the facility. You can exclude items from storage on your premises and this should be noted clearly in this section.
Length of contract
Specify the length of contract whether month-to-month or for a longer term. This section should also include the agreed upon rent for the term. Make sure to include what happens at the end of the term and that rate adjustments are possible once the contract expires.
Termination & tenant conduct
Clearly defined rules of the use of your facility should be outlined in this section. Specify what situations would be cause for early termination of the contract and expectations for the tenant when on the premises. Think of worst case scenarios and address them here.
Security
Detail your security on site to provide the customer with necessary information. Be clear about responsibility for private property stored on site and that you are not responsible for break-ins, damage and even property destruction. Customer use of your facility does not mean that you are guaranteeing their belongings are safe.
Insurance
We’ve discussed the importance of renter’s insurance in blogs before. You can read more here and here. Encourage your renters to obtain private renter’s insurance to cover the replacement of whatever is being stored at your facility. It’s absolutely necessary and you can even request proof of insurance prior to renting.
Lien Sale
This section should provide information on the lien sale process in the event of the renter defaulting on payment. Explain the grace period for catching up on rent and how they can save their property from the lien sale prior to an auction.
We highly encourage you to have an attorney draft a thorough, but not excessively lengthy rental agreement. Legal wording is important to insure that the business is protected for the service provided. You can read more about the legal side of lease agreements in a great article here by Storage Pug.
Weaver Realty is a great resource for individuals in the self-storage business. We have decades of experience that we love to pass on to clients as they grow their business portfolio. Call us today at 904-733-0039 to work with our team of self-storage experts.
