This week concludes the Self Storage Mis-Management series. Since it’s a holiday weekend I’ll keep it short and sweet!
DO NOT treat storing cars or vehicles like household goods. There’s a BIG difference.
You need to understand the difference in liability and definitely understand the difference in the lean sale process.
First, the value of vehicles is usually much higher than any other item that might be stored in a unit.
Second, there is usually a certificate establishing someone as the legal owner with the state. You don’t see that with empty boxes and kid’s toys stored in a unit next to the car.
In anticipation of this, make sure your lease or vehicle addendum has a clause that requires the customer provide proof of insurance on the vehicle.
I know, I can hear you thinking:
“But we don’t require customers to have insurance. They can insure their goods if they want. Our lease removes all liability from us.”
Well, if you let them store cars, boats or RV’s and one of them is stolen, you bet your tail they’re going to look at you and want to be compensated. They won’t care what the lease says.
And yes, in a court case you will most likely prevail. But what kind of victory is that? You were sued by an upset customer and won. Great victory. I know because we’ve had these types of victories. That’s why I am writing this series. If you have to go to court to fix something that could have been prevented by the proper process or paperwork, it’s not a win.
Require your tenants to have insurance if they store a vehicle – it protects you and them. If they don’t have insurance or don’t think the vehicle is worth insurance, that sounds like a great customer for your competition. I’m sure they would love the rusting junker disintegrating in their facility.
Finally, know the process for selling a vehicle in your state. The process is different state by state. Check with the Department of Motor Vehicles for the exact process. However, it usually goes something like this (but again check with an attorney and don’t rely on me I am not a Lawyer.) (Lawyers out there…did you see that?)
1. Go the the DMV with the VIN and/or license number and do a search for the registered owner and lean holder of the vehicle. This usually costs a small fee.
2. Send a registered letters about your lean sale to the customer, the lean holder of the vehicle (company or person who has a loan on the vehicle), and the registered owner if that person is different from the customer who owes you the rent.
We have a lot of other stuff in our lease about cars (dripping oil, keeping tires inflated, etc.) but the insurance was something we really had to think through and research. I am convinced it’s the right way to go and want to make you aware of the potential liability so you can check with your attorney and get it covered in your lease BEFORE it becomes a big issue.
To recap the Mis-Management Series: avoid these 5 pitfalls you will have a fun and fulfilling self storage business.
1. Know SCRA.
3. Use the correct change of address form
4. Don’t grant access to a unit to someone who isn’t listed in the contract or named on the contract.
5. Don’t treat vehicle storage like household goods self storage.
Follow these 5 simple rules, and you will Create True Wealth Through Self Storage.
