SSA Blog

As busy as the self storage industry has been over the last five to seven years, not much has been written or discussed recently about the language of loan covenants for buying or building self storage facilities.

Separate and apart from the Court’s earlier holding in AT&T Mobility v. Concepcion (2011) that businesses could include arbitration provisions with class action waivers in their consumer contracts, the Supreme Court added to their support for arbitration provisions with class action waivers as part of their recent holding in the cases of Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil, Inc., decided May 21, 2018.

The Third Circuit of the United States Court of Appeals issued its decision in late April in the case of Spade v. Select Comfort Corp. This case arose from class actions pending in New Jersey that were based on the state’s Truth in Consumer Contract, Warranty and Notice Act (otherwise coined the “TCCWNA law”).

Although credit reporting has been in use for sixty years, it has not yet been fully applied in the self storage industry, except in limited circumstances where post sale collection deficiencies have been sent to collection agencies who try to post the debt with the credit reporting agencies.

A lot of attention has been generated recently regarding what “late fees” may be charged by self storage operators to their tenants based on state law requirements.

Certainly, the self storage industry has benefited from adding computers and the internet to their business operations over the last twenty years. The ability to store and transmit data about self storage tenants, the ease of managing financial transactions and the use of social media to engage greater marketing have certainly affected how facility operators conduct their business and have enhanced their bottom line profitability.

First it was Mayor DeBlazio supporting no self storage development in the Industrial Business Zones in New York. Next came the moratorium in Florida prohibiting self storage development along Highway 41.

Over twenty states currently include a limited lines insurance program that specifically allows self storage operators to obtain an insurance license to sell tenant insurance (for loss or damage to stored goods) directly to their customers and to be entitled to receive a commission for the sale.

Even though self storage facilities are constantly working to increase their occupancies, sometimes a self storage operator must make the decision to terminate the lease of a paying tenant. It may be that the tenant is using the rented space in violation of the rental agreement’s use provision or maybe the tenant is belligerent to the managers.

You know a topic is relevant when “60 Minutes” runs a story on the topic. Their program titled “Drive-By Lawsuits” that aired in early December explained how the Americans with Disabilities Act has resulted in hundreds if not thousands of lawsuits where individuals have filed complaints against businesses not as actual customers, but based solely on a drive-by of the property or worse yet, by viewing the property on Google Maps and basing a claim on what is seen only from the computer screen.