Decoding Your Storage Unit Contract: Important Clauses & Considerations

Storage Unit Contracts Explained

Storage unit contracts exist to protect customers and storage companies by clarifying the rights and responsibilities of both parties. However, many people simply sign on the dotted line without reading the fine print. This can lead to misunderstandings and disputes down the road. While storage unit contracts in general are not highly negotiable, it doesn’t hurt to be familiar with the language used, so you can ensure your understanding of the provisions . Storage unit contracts require:
The vast majority of storage unit companies are reputable, and most customers have successful experiences. It is important for customers to be adequately informed, however, so that they know what to actually expect once they have signed the contract.

Important Provisions for a Storage Unit Contract

Storage unit contracts are typically broken down into four parts: payment terms, lease duration, termination conditions, and other services or products provided by the storage unit facility. Payment terms will state when your payment for that month of storage is due, will it be due on the first of each month, or perhaps every month on the 15th? The length of the storage unit lease should also be included in the contract. The lease could be for month-to-month basis of rental, or an annual lease, or even a contract that does not have a set end date. Whether or not the storage facility can terminate your contract at any point is something you should understand before you start renting that space. If any outside services are offered by the storage facility, such as the ability to rent a moving truck or the option to purchase locks from the facility, these should be clearly defined in the contract as well.

Contract Payment and Fees

A variety of terms may apply to the sale and payment for the storage unit that is being purchased at your auction. For instance, if you are paying cash, the payment terms should state the amount you will pay and when. You want to be clear on whether the terms require you to pay the entire balance up front or will allow you to make monthly payments. Additionally, make sure the terms give you a date by which you must make the full payment.
Ask yourself the following questions:
How much are you expected to pay per month?
If you miss a monthly payment deadline, what happens?
If you miss several or fail to make the payments at all, what are the consequences?
Let’s look at an example. Consider the following clause:
Buyer agrees to pay Seller a total of $500 in six monthly installments. Until full payment is received, Seller will retain a lien on the personal property stored in the unit. Failure to make payment within three business days of the due date results in penalties outlined in section 7 of this contract.
The clause above describes payment terms: a total price, how long the payments will last, and a "strict" late fee policy that requires payments to be made within three days. This means if the buyer fails to supply the payment on the third business day after the due date the penalties listed in the next section will apply.

Contract Access and Security Information

Some contracts also state that the keys for the unit must not be left with anyone on the property, for security purposes. Under these contracts, if you are not present, no one else is authorized to access your storage unit.
In some cases, owners will allow other parties to access a unit through a special arrangement. For example, the terms of the contract may state that the owner will allow someone who is not a witness named on the lease to enter, provided that person has certain information on hand.
Contracts will frequently discuss security measures on the property. Owners often have strong security systems in place, including fence and gate systems, surveillance cameras, and security guards. You’ll want to pay close attention to any details in this section, as it can have a significant impact on your belongings’ safety.
You also may want to pay particular attention to the owner’s liability for the property left in the space. For example, virtually all storage unit policies limit the owner’s liability for the goods in storage. Most owners disclaim liability for losses due to circumstances or events beyond their control.
Consider: are there enumerated risks for which the owner will not be liable? Even more importantly, which risks fall into those enumerated exceptions? If you have valuable property in storage, you may wish to pay for additional indemnification.

Contract Liability and Insurance Provisions

The first area of liability to consider is the unit itself. Most agreements disclaim any liability on behalf of the facility. To this end, many facilities, particularly those developed as infill locations in densely populated areas, have a clause to the effect that the owner has no liability for loss or damage to personal property for any cause whatsoever. This includes the provision of "off street parking" (which requires landlords to keep the area clear of snow, ice and debris) and just about everything else. Surprisingly large portions of many contracts are devoted to disclaiming any liability whatsoever. The common law would somewhat modify this by the application of the common law principle of negligence and something along the lines of the last paragraph where insurers could be required to pay for damages. The leaseholders’ efforts to reclaim these monies would then be undertaken without any responsibility for the landlord to insure for its negligence. Many states now provide for a "Renters Insurance" program that can be tied to the storage unit agreement at a reasonable price that can be paid by credit card or divided over the term of the lease. Some states have even made it obligatory in the event that the leaseholder does not subscribe to the others. In most states, the "Renters Insurance" requirement in the storage unit contract is specifically excluded from the insurance code as a requirement that insurers provide coverage to storage units. The facility owner may be entitled to apply the premium charges based upon the number of months the unit was rented during the month. This is a hot topic for debate in many insurance regulatory forums with insurers taking the position that they must obtain approval from their governing boards because of the conflict between the high coverage and low premium. Both insurers and storage facility owners are gambling on the same level versus higher priced but lower overall exposure or loss ratio. It is my experience that in a store with a roll-up door and access hours from 8:00 am to 8:00 pm and good security morning and night storage unit losses are small and infrequent. Theft of goods purchased at the Wal-Mart across the street are frequent and the store will be happy to provide surveillance footage to show the activity of its customers. Storage unit managers are familiar with the routine of their customers and suspicious activity should raise an alarm. There is also considerable case law on the right of entry into a rented unit with prior notice and access being at will.

Termination Rights Explained

Termination rights in storage contracts are usually not unlike termination rights in other contracts. Almost every state other than California allows termination for a breach of contract, some under a notice provision and some by the filing of suit. In addition, some storage contracts provide that either the customer or the facility can terminate the contract on short or no notice. Termination on at will is typically at the end of any term, after which the contract month-to-month if no new term has been set.
If the contract is cancelled by the facility because of non-payment (e.g. the facility sells the customer’s goods at public auction), the contract is deemed to be terminated as of that date of sale. While the facility’s lien rights are typically reserved and outlined in the contract, the contract should refer to that provision in the termination section.
Many storage facilities require a customer to pay a "termination fee" when vacating a space but do not explain the purpose of the fee. Like the security deposit, which is treated as a separate contract , the termination fee is not held out as collateral for the performance of another contract (i.e. the rental contract so it does not seem to be enforceable as a liquidated damages provision. In addition, the language in the termination rights section may also be used to bolster the interpretation of the fee being a fee for service (related to the administration of the vacating of the space) rather than a penalty.
The incentive for a customer to vacate on the last day of the month (e.g. to have a free month, so to speak) is the re-rent of the space to another customer on the 1st day of the new month. If the customer vacates before the 30th, the facility is deprived of re-renting the unit for that month. Because the store’s street address is often given on the termination rights clause, the language lets you know that the fee will be collected, unless and until delivery is proven. In addition, if your state law requires the facility to give the customer back a part of the rent because the space was re-rented or to allow the customer the opportunity to pay rent for an additional month, the clause can let you know whether the statute is preempted.

Contract Negotiation Tips

As with any form agreement, tenants can attempt to negotiate better terms before signing an agreement. Ask your landlord for a discount at the beginning or ask if they will accept a 12 month lease instead of a month to month agreement. Ask the landlord how much notice they require if you need to leave early. In many cases, landlords may accept your requests.
If the contract contains ambiguous terms, ask for clarification. For example, if your contract states "Rent increases are at Landlord’s discretion" ask your landlord if they plan to increase your rent during your term and how much they expect it to rise. Perhaps the previous tenant’s rent was paid through a discounted rate for multiple months or a rate not supplied to new tenants. Clarification of this kind saves time and money.
Additionally, beware of terms which allow for free rent for the first month of a lease. Some landlords use the waiver of the first month rent as an incentive to draw in tenants. However, clicking through on those advertisements will often reveal some large annual fee which quickly surpasses the initial benefit of a free month’s rent. Always read the fine print because you could end up paying more money in the long run.

Legal Aspects and Dispute Resolution Process

On the legal side, what exactly does your signature on that contract mean? Well, it depends. A signed contract or lease is prima facie evidence of mutual assent to its terms, but that rule does not mean that it cannot itself be attacked once the terms are brought into question. The theory is that the person signing had notice of the terms and impliedly accepts them by signing; however, cases on this point are decidedly spotty in their holdings and persuasive authority is often decided on other grounds. Dispute resolution may be handled in a variety of different ways, although litigation is not unusual, especially when the amount in question is substantial. Typically, however, alternative dispute resolution is used and the means of resolving disputes are handled either through a negotiation, settlement, mediation or an AAA arbitration. There is rarely a pooling of resources on the part of multiple potential claimants that include a class action; however, the state and federal courts in the United States have entertained some class action suits, albeit proposals to certify the classes have been denied. The reason for this is that even though criminal and civil penalties may be provided by state and federal statute, laypersons may not know the statutory fine range or even whether criminal fines are levied consistently in the relevant jurisdiction to disqualify one from making a federal claim based upon diversity. Finally, because these agreements generally favor arbitration, the question becomes whether the arbitration clause is enforceable.

Making Informed Decisions

In most cases, an agreement going awry is the product of a misunderstanding (or with homework skills in your contract reading) could have been avoided. This is especially true for storage unit contracts, and while you won’t be folding fitted sheets or racing a buddy to find the box with the pots and pans, you certainly will be taking on the financial and legal responsibility of yet another bill . Simply pay attention to what you are committing to – both monetarily and legally. Read every last word of the contract and don’t be afraid to ask questions. By doing so, you can avoid future legal headaches and costly surprises.