It may sometimes feel as though managing a self-storage facility is like watching a daytime soap opera. Every customer has a story that’s led him to your property. Storage needs are often born from life-changing events, and tenant drama can spill into your business once the lease is signed.
The three customer-related plot twists you most often have to deal with are tenant death, divorce and disappearance. Each scenario poses challenges and legal consequences if incorrectly handled. Let’s examine all three to understand what you should do in instances like these.
Tenant Death
Unfortunately, it’s not uncommon for a self-storage operator to learn a tenant has passed away. Often, this is discovered when the rent hasn’t been paid and late or lien notices are sent to the tenant’s last-known address.
When a death occurs, relatives and friends may come forward to retrieve property from the deceased’s unit. There are a few scenarios that can play out under these circumstances. Depending on the facts, you have options for how to respond.
If you’ve learned of the tenant’s death by some means other than a family member, try to reach the emergency contacts listed on the rental agreement. I also recommend you contact the local probate court to see if the tenant’s estate has been probated and an executor named. If there’s an executor, you can contact him to determine what to do with the unit.
If you’re unsuccessful in reaching those listed on the rental agreement or any relatives or friends willing to resolve the tenant’s default, you may then send a Certified letter to the tenant’s last-known address and proceed with the foreclosure process. Depending on where your facility is located, there may be a waiting period to allow the estate to be probated before the lien sale can occur.
If a family member appears onsite with the access code and keys to the unit (meaning no action is needed from you for him to enter the space), he can access the unit and remove contents. This is analogous to any rental property. A family member or friend with access rights doesn’t immediately lose them when the tenant dies. However, it’s important to clarify that this permitted access only applies when the manager isn’t involved in providing gate-code access or cutting the lock. If a person doesn’t have authorized access, you can’t allow him to enter.
During this time, a family member must continue to pay rent on the deceased tenant’s unit to avoid foreclosure. To gain access, he’ll have to provide you with a copy of the death certificate and a court order stating he’s been appointed administrator or executor of the estate. This process can be quick or sometimes take up to 60 days. Once the family member provides you with these documents, he can access the unit. Then he can decide whether to continue renting in the name of the tenant’s estate or terminate the rental agreement and removing the contents.
If the deceased tenant had a small estate value ($15,000 to $150,000, depending on the state), the family may be able to obtain and prepare a small estate affidavit or process the estate through a summary administration. A small estate affidavit is a sworn document signed by the family member that states the amount of the deceased’s estate is so low it isn’t going to be probated through the court. Once you have this document, you can give the person access to the unit.
You need to keep in mind a few basic issues. Most important, just because a tenant dies doesn’t mean his obligations to creditors cease. Someone must pay rent on the storage unit or it’ll eventually go into foreclosure. But, once you learn a tenant has died, it makes sense to do whatever you can through phone calls, letters and even personal visits to the local probate court to see if anyone has stepped forward to take over the estate. This is especially true before proceeding with a sale. Lastly, if a resolution is being attempted, you should delay any enforcement of your lien rights since the estate process can sometimes take weeks to complete.
Tenant Divorce
Self-storage seems to be a place where property subject to a divorce commonly ends up. If one spouse rents a unit to store property from the marriage, does the other spouse have a right to access it?
Typically, a storage operator doesn’t care who has the right to the property in a unit, so long as the rent is current and the party entering has the proper access code and key to the lock. However, divorce often puts managers in the middle, especially when the tenant disputes the non-tenant spouse’s right to gain access. In these cases, it’s always best to defer judgment to the courts.
When two parties divorce, they automatically subject themselves to the jurisdiction of the court to handle the dissolution of the marriage and the separation of assets. This includes property that may be stored at a self-storage facility. Accordingly, you must follow all instructions issued by a court concerning the turnover of property from one spouse to another. However, not all court orders are written with clear instructions. Therefore, you shouldn’t seek to interpret any court decisions that may or may not apply to your facility. Any questions should be directed to the counsel representing the respective spouses or the storage business.
In other words, don’t get involved in the dispute. One way to avoid this risk is to ensure you have only one designated tenant on the lease, not co-tenants. If you allow co-tenants, you won’t be able to avoid being caught between the two since each has tenancy rights and rights of access.
Tenant Disappearance
Disappearance occurs when a tenant who has been present, communicating and paying the rent suddenly stops and is no longer heard or seen. You may never know the reason why. It could be due to death, incarceration, incapacitation or a conscious decision to forego the stored goods, perhaps due to an inability to pay rent.
Typically, when a disappearance occurs, the unit will go into lien status and eventually sold. However, in some circumstances, the tenant will remove some unit contents prior to disappearing, abandoning the rest and leaving no lock on the space. If this happens, instead of the unit going to lien, it may be considered abandoned. An example of a lease abandonment provision is as follows:
Abandonment: this Agreement shall automatically terminate if the Occupant abandons the Space. The Occupant shall be deemed to have abandoned the Space if the Occupant has removed the contents of the Space and/or has removed the locking device from the Space. Rent prepaid for any period in which the Occupant moves out early shall not be refunded. Abandonment shall allow the Owner to remove all contents of the Space for disposal. Occupant hereby waives and releases any claims or actions against Owner for disposal of personal property resulting from Occupant’s abandonment. Occupant shall be responsible for paying all costs incurred by Owner in disposing of such property.
Keep in mind that determining if a unit has been abandoned can be a guessing game. Sometimes it’s better to rely on the lien law to dispose of the contents. Depending on your state statute, you should seek to contact the tenant before proceeding with a sale. During this time, you may discover the reason for his disappearance. It’s always up to the facility operator, based on the facts presented, whether it’s prudent to proceed with the lien.
Whether death, divorce or disappearance has occurred, it’s important to recognize that each presents challenges and obligations. Understanding how to handle each properly, in accordance with your state law, will mitigate risk to the business and keep the tenant plot lines at your facility predictable, instead of manifesting into a soap opera.
Scott Zucker is a partner in the law firm Weissmann Zucker Euster Morochnik & Garber P.C. in Atlanta, which specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. He’s a frequent speaker at self-storage industry events, author of “Legal Topics in Self Storage: A Sourcebook for Owners and Managers,” first and second editions, and a partner in the Self Storage Legal Network, a subscription-based legal service for storage owners and managers. He’s also the deputy general counsel for the Self Storage Association. For more information, e-mail [email protected]; visit www.wzlegal.com.
