Self-Storage Lease Agreements
Self-storage rental contracts should include a few key elements. Here’s a list of what these are.
Why are Self-Storage Leasing Agreements Important?
A self-storage rental agreement or leasing contract is a legally binding document between the landlord of the facility and the tenant renting the space. The lease agreement includes details about the obligations and responsibilities each party has. Before drafting a lease agreement, it’s essential to ensure that the terms outlined adhere to local, state, and federal laws. Therefore, it is best to consult an attorney to compose or review a lease agreement before signing.
The Elements of anSelf-Storage Leasing Contract Must Include:
Leasing period. The lease agreement should clearly state the lease term, monthly rental amount, and the payment due date. Storage properties are usually rented on a month-to-month basis, as the need for space is typically tied to life events. While some people rent space for a longer period of time, it’s best to not get locked into an extended lease term.
Rate changes provision. To be able to keep up with market rates, a lease agreement must give space for a provision that allows rent increases. This usually requires the landlord to give a 30-day notice, before the new rental rate becomes effective.
Termination clause. In case a tenant doesn’t adhere to the leasing rules and policies, the leasing term should include a clause that allows the termination of a contract within a notice window determined by the state where your facility is located.
Definition of storable items. Self-storage units are usually rented out to store non-perishable items that are not irreplaceable in case of damage or theft. These include personal items with emotional value or legal documents. The lease term should also clearly ban any items deemed hazardous.
Limitation of Liability. In connection to the previous point, the contract should include liability provisions to protect the landlord in case any of the stored items are damaged.
Storage security and insurance. While most facilities include security features, this does not mean that the landlord has to take responsibility for stolen or damaged items stored at the facility. To avoid any confusion, this should be clearly stated in an agreement. Tenants should make sure that their valuables are insured before signing a lease agreement.
Related Questions
What are the key components of a self-storage lease agreement?
The key components of a self-storage lease agreement include the names of the tenants, limits on occupancy, term of the tenancy, rent amount and stipulations, deposit and fee amount, length of tenancy, repair and maintenance requirements, and the house rules. House rules might include things like stating that the tenants are responsible for keeping the lawn cut, policies on pets, smoking, etc. It is important to ensure that the rental contract is in line with the housing laws, so it is recommended to work with an attorney to draft the contract, or at least look it over.
For more information, please see 5 Tips for New Landlords and 4 Ways Self Storage Is Recession Resistant.
What are the legal implications of a self-storage lease agreement?
Self-storage lease agreements are governed by the laws of the state in which the facility is located. Generally, the lease agreement will include the tenant's rights and responsibilities, the landlord's rights and responsibilities, the rental rate, the length of the lease, and any other terms and conditions that the landlord and tenant agree to. It is important to read and understand the lease agreement before signing it, as it will be legally binding.
In some states, self-storage lease agreements may be subject to additional laws and regulations. For example, in California, self-storage lease agreements must include certain disclosures, such as the tenant's right to a refund of any unused portion of the rent, and the tenant's right to receive a written notice of any increase in the rent. Additionally, the lease agreement must include a statement that the tenant has the right to receive a copy of the lease agreement upon request.
For more information on the legal implications of self-storage lease agreements, please consult an attorney in your state. You can also find more information on self-storage financing on our website.
What are the common terms and conditions of a self-storage lease agreement?
Self-storage leases generally have a few common terms and conditions. These include the names of the tenants, limits on occupancy, term of the tenancy, rent amount and stipulations, deposit and fee amount, length of tenancy, repair and maintenance requirements, and the house rules. House rules might include things like stating that the tenants are responsible for keeping the lawn cut, policies on pets, smoking, etc. It is important to make sure the rental contract is in line with the housing laws, so it is recommended to work with an attorney to draft the contract or at least look it over. Additionally, self-storage leases tend to be no longer than three months, with more and more just operating on a month-to-month basis. This allows for flexibility to adjust rents to reflect increasing operating costs and wider market conditions. For more information, please visit Commercial Real Estate Loans and Commercial Real Estate Glossary.
What are the differences between a self-storage lease agreement and a traditional lease agreement?
Self-storage leases generally have shorter terms than traditional leases. Self-storage leases are usually no longer than three months, while traditional leases tend to range between three and seven years. This flexibility offers an amazing opportunity to adjust rents to reflect increasing operating costs and wider market conditions. However, this does add some risk to your rent rolls.
What are the benefits of signing a self-storage lease agreement?
Self-storage lease agreements offer a number of benefits for both tenants and landlords. For tenants, they provide flexibility in terms of rental length, allowing them to vacate their unit with little notice. This flexibility also allows landlords to adjust rents to reflect increasing operating costs and wider market conditions. Self-storage leases also tend to be shorter than industrial warehouse leases, which generally range between three and seven years. Self-storage leases are usually no longer than three months, and many are even month-to-month.
Self-storage is also a recession-resistant investment, meaning that it will not be dramatically impacted by economic downturns or market fluctuations. Even during tough economic times, people still need to store their belongings. In fact, demand for self-storage space actually increases during recessions as people downsize homes or move to cheaper locations. This makes self storage a reliable asset class and an attractive option for investors who are looking to safeguard their investments over the long term.
What are the risks associated with signing a self-storage lease agreement?
Self-storage leases generally have shorter terms than other commercial real estate leases, which can be a double-edged sword. On one hand, shorter lease terms mean that a tenant can vacate their unit with little notice, impacting your bottom line. On the other hand, this flexibility offers an amazing opportunity to adjust rents to reflect increasing operating costs and wider market conditions.
Other risks associated with signing a self-storage lease agreement include:
- The tenant may not be able to pay the rent, resulting in a loss of income.
- The tenant may not be able to keep up with the maintenance of the unit, resulting in additional costs for repairs.
- The tenant may not be able to keep up with the insurance requirements, resulting in additional costs for coverage.
- The tenant may not be able to keep up with the security requirements, resulting in additional costs for security.
It's important to do your research on the local market conditions before signing a self-storage lease agreement. By doing your research on the local market conditions, you can get a better understanding of whether or not signing a particular lease agreement would make sense.