You don't need a legal license to know you don't want to get sued.
But the laws surrounding self storage vary state by state, making it harder to know how to protect your business. What we can do today, though, is look at the most common legal pitfalls and overlaps in self storage laws. There are three cases that nearly all 50 states address. Let's use them as a starting point.
We talked to legal expert Scott Zucker of Weissmann Zucker Euster + Oblinger, P.C. to discuss some of the most common legal mistakes made in self storage and how to avoid them.
When a tenant falls behind on their rent, you may have a policy in your rental agreement stating that a late fee will be charged. Holding tenants accountable for late payment is common, but there are some legal regulations around late fees.
This is a case where federal law has not stepped in, but state laws have. Most states have safe harbors (legal protections) for 'reasonable' late fees in self storage. A reasonable late fee is often $20 per month or 20% of the total rent, whichever is greater.
However, there are some states that have passed legislation setting ground rules for late fees.
If you live in one of these eight states (Arizona, California, Maine, Missouri, Maryland, Ohio, North Carolina, and West Virginia), then you should look at your state laws before adding a late fee onto a tenant's bill.
For example, in California, you cannot assess a late fee until 10 days after the payment was due. The amount of the late fee also depends on the amount that the tenant is paying in monthly rent.
Evicting a tenant is never an easy task. It costs time, energy, and sometimes money.
When we talk about evictions, we're talking about legally forcing the tenant to move their belongings out due to non-payment, lease violation, or dangerous behavior.
Evicting a tenant is not the same thing as enforcing a lien. When you enforce a lien, you are taking possession of the tenant's property, typically auctioning their belongings or disposing of them. A lien may occur if the tenant has not vacated the storage unit after receiving an eviction notice.
While we always want to avoid evictions and liens, sometimes it's necessary.
In your rental agreement, the grounds for eviction should be clearly stated. Those reasons may include:
You can personalize your rental agreement and add even more reasons for eviction. It's entirely up to you, as long as these additions fall within legal bounds.
In most cases, you can't immediately enforce a lien and toss a tenant's belongings the second they miss a payment.
The majority of states require a 60-day grace period where you notify your tenant that they have fallen behind on their bill and encourage them to pay it before you have to move forward with the lien process. In a small handful of states, that period is even longer - up to 90 days.
Some states require less time, such as Illinois. In Illinois, you can begin the eviction process just one day after default. However, you are required to provide a 5-day notice before moving forward with the eviction, after which the tenant has 14 days to pay their dues or face lien enforcement.
In nearly every state, you're required to send a notice to the tenant via verified mail or electronic mail that lien enforcement will take place if they don't pay their dues. Double-check your state's laws, though. Not all states consider email a valid form of notification for this step.
While most evictions and auctions are considered justified when a tenant defaults on payments, violates their lease, or abandons their unit - there is one exception to watch out for: SCRA, which we'll dive into below.
Selling or auctioning a tenant's unit is the last stage of the eviction process if a tenant doesn't vacate.
Auctions typically occur when the tenant has made it clear they don't intend to pay any of their dues or return to their unit. You should always double-check that these requirements have been met before moving forward with the auction or sell of a unit.
Keeping a clear record of your attempts to contact and work with the tenant helps cover you in the long run, too.
Scott Zucker spoke on this issue in our 2024 Legal Live Storage Workshop, stating that it's common for storage operators to mistakenly sell a tenant's unit.
"I've had plenty of operators mistakenly sell units," Zucker said.
"It was not intentional. There was confusion with transcription of the numbers, there were misapplied payments, and people's property was sold."
With the help of sale and disposal insurance, the damage of this mistake can be minimized, but it doesn't wipe away all consequences.
This mistake is made even when done to an active-duty military member.
This is one of the few cases in which the federal government has shaped this law instead of the states. Under SCRA (Servicemembers Civil Relief Act), storage operators are prohibited from enforcing a lien on a military member who has been deployed.
For various reasons, the military member may not be able to pay their bill when deployed. If you encounter this situation, you cannot evict the tenant without a court order.
How do you know if a tenant is an active military member?
One of the easiest ways to find out is by adding this question to your rental agreement. You can ask tenants to check yes or no if they are an active military member, or you can find out on the USA.gov website, requesting a record through SCRA, or through paid services.
Violating SCRA can warrant significant penalties, including hundreds of thousands of dollars in damages and fines.
One storage facility in San Diego violated SCRA in 2015, selling a U.S. Navy member's stored items after they failed to pay rent while deployed. This storage facility did not obtain the proper court orders before selling the items, and they ended up paying $170,000 in damages for it.
So while it may take you some time and research to learn about your state lien laws, it could save you thousands of dollars in the long run.
We've covered three common self-storage-related laws, but that's just foundational knowledge.
There are state and federal laws that don't target the self storage industry specifically - but still apply. Laws about false advertising, price transparency, and zoning all apply to our industry even if they don't name it specifically.
When you run your self storage business, it's important to remember that you are responsible for the legality of your facility's operations. It's up to you to be knowledgeable and have the right tools you need to run your business according to best practices. If you need help, you can always contact your local self storage association for resources - or hire legal counsel with storage experience.
Here are some other helpful blogs to check out!
At StoragePug, we build self storage websites that make it easy for new customers to find you and easy for them to rent from you.
