Scott Zucker
The following article was reprinted with permission from the Mini-Storage Law Commentary, published by the law firm of Shapiro, Fussell, Wedge, Smotherman & Martin. Marketing your facility is an essential part of operating your self-storage business. Without customers, all you have is a lot of space for rent and, worst of all, no revenue. Every self-storage owner or manager knows the importance of "selling" his services to the public. What many operators do not know are the risks of "overselling" their services and the potential liability that may await them for making promises they can't keep.
If nothing else, the catch phrase "truth in advertising" should govern a facility operator's actions while marketing his facility. Whether it is through Yellow Pages advertising, brochures, signs or just word-of-mouth, telling the truth about your facility will guard you from later claims by your tenants that you misrepresented to them the services to be provided for the rent that was paid. For example, if your facility has video cameras that are on 24 hours but are not monitored, you cannot say you offer "24-hour security." Instead, you can say that you offer "24-hour surveillance." Similarly, if you have managers living on site, you cannot say that you have "24-hour on-site managers." Instead, you can say you have "resident managers." Whatever the example, it is always best that the statement be factual. It is also always better to be more specific in your advertising about what services your facility provides so your customers will not expect more than is provided and be disappointed.
It is equally important in your advertising that you choose descriptive words carefully. Facility operators should never use words such as "guarantee" or "promise" unless it relates to "friendly service." Certainly, a facility owner or manager should never promise or guarantee the safety or security of its tenants' property, and should always avoid using words such as "security" in its advertising.
By simply glancing through the Yellow Pages under "storage," it is common to find statements like "security fences and gates," "security-code access gates," "full security fencing and lighting" or "safe and secure storage." These phrases could connote that the self-storage facility is promising to safeguard its tenants' goods, which is exactly opposite of what a self-storage facility provides. It is much more appropriate to use phrases such as "perimeter fencing," "personalized-code access gates" or "fenced and lighted."
Once again, self-storage is the business of renting space suitable for storage. It is not a warehouse-type business and does not provide for the care, custody or control of its tenants' goods. Yet, if a storage facility represents through its advertising that its tenants' goods will be safe and secure, it risks altering its legal obligations to its tenants to make it responsible for the protection of those goods.
For example, in a case decided in Washington state, a tenant whose property was stolen from a Shurgard facility sued the company for the loss. As part of its case, the tenant argued that Shurgard had falsely advertised the security of the facility. Specifically, the tenant claimed that Shurgard had advertised in its Yellow Pages ad: "We have safe storage all locked up," and in a separate flier, "Shurgard managers live right on site... making sure everything is safe and secure." Last but not least, the tenant argued that the name "Shurgard" was meant to imply a "degree of diligence and security."
Although the court in the Washington case did not find in favor of the tenant on its loss claim, it did not disallow the tenant's claim for false advertising under the state's Consumer Protection Act. Since the case was ultimately settled, the issue of whether there had been false advertising by Shurgard was never resolved. Unfortunately, that leaves the question of what is appropriate storage advertising to later cases. However, the Shurgard case provides a strong warning to other storage operations to avoid overselling in its advertising.
A recent case decided in Michigan provides another example of how advertising can get a self-storage facility into trouble. In this case, a tenant's property was destroyed by a fire at the storage facility. The tenant sued the storage facility for the property loss and argued that the facility's advertising was fraudulent. To support its case, the tenant showed that the facility represented in its Yellow Pages advertising that the storage units were "fire resistant." The tenant claimed that since their property was destroyed by fire, such a representation was fraudulent. In its defense, the storage facility presented testimony of an expert who attested that "fire resistant" did not mean "fire proof." Ultimately, the storage facility was able to prove that the materials used in the construction of the storage facility were actually fire resistant, and that fire resistant was not synonymous with fire proof. Although the storage facility won the case, the fact that the lawsuit arose over the words "fire resistant" and "fireproof" provides another lesson to storage owners to be careful in the words they select for their advertising.
In addition to truthful advertising, it is crucial that facility owners and managers never make false representations to their customers about security issues or whether or not prior incidents have occurred at the facility. A facility manager must be honest in answering these sorts of questions, both with prospective and current tenants. For example, if a potential tenant asks if there has ever been a fire, theft or flood at your facility, the manager must answer honestly. The owner or manager is allowed to say, however, that since the incident occurred, efforts have been made to prevent future occurrences (if, in fact, such efforts have been made).
If a facility operator acts with deceit, the court can choose to invalidate a tenant's lease based upon the fraudulent actions. In a recent case decided in Georgia, a tenant whose property had been stolen sued the facility for the loss. The tenant claimed that the storage facility had committed fraud based upon misrepresentations as to the occurrence of prior break-ins. The tenant argued that had he known prior break-ins had occurred, he would never have rented the space. Although the facility had a very strong lease protecting them from liability for such a loss, the court held that the tenant's lease was void due to the manager's false statement to the tenant that there had never been a theft at the facility, when in fact such thefts had occurred. The court ruled in favor of the tenant for the value of the stolen goods. The most important aspect of this case is that, due to the misrepresentations made to the tenant, the court ignored the otherwise strong provisions of the lease that would have protected that storage facility from the tenant's loss claim.
Most commonly, tenant complaints arise where their property is stolen or damaged. If you have told the truth about the risk of self-storage, have not promised the security of your tenant's goods and have been honest in answering questions posed by your tenants, your defense to claims by tenants that you are responsible for the loss will be strengthened. Certainly, nothing can prevent a tenant from suing a facility for the loss or damage of its goods. However, in order to enhance a facility's defense to such claims, it is becoming increasingly important for a storage facility to be clearer about the services it provides. As shown by recent court decisions, any misrepresentations to tenants can affect a storage facility's rights to defend itself on claims brought by tenants. Marketing is essential to a self-storage facility's success, but if not handled carefully and honestly, it can also be the reason for its failure.
Scott I. Zucker is a partner in the Atlanta law firm of Shapiro, Fussell, Wedge, Smotherman & Martin, LLP. The above article was reprinted from Mini-Storage Law Commentary, a newsletter published by the firm for owners and managers of self-storage facilities. A frequent contributor and Inside Self-Storage Expo speaker, Mr. Zucker specializes in self-storage law and construction litigation. He may be reached at 1360 Peachtree St., Suite 1200, Atlanta, GA 30309; phone (404) 870-2200; e-mail [email protected].