Given that self-storage facilities regularly serve customers who are in the midst of life-changing events, it shouldn’t be surprising that managers must occasionally deal with situations in which tenants die, get divorced or otherwise disappear. When any of these occur, you’re left to deal with the fallout. Let’s examine each scenario and how you should proceed.
Tenant Death
There have been recent updates to many self-storage statutes that have made it easier to give notice to a tenant in default. In many states, notices can be sent by a verified First-Class letter, and in some instances, by e-mail. There is one exception, however: You cannot presume service on someone you know to be dead. Once we know a tenant is deceased, things change. You need to look for a person who can act on his behalf.
In my career, I’ve seen many operators make the mistake of letting someone into a deceased’s storage unit simply because that person was a family member, had a death certificate or was the person’s power of attorney. They get fooled by an emotional person only to find out later that he wasn’t the proper representative of the estate. You may be surprised to learn that a death certificate only proves the tenant is dead, and the power of attorney dies with the tenant. Neither is an indicator of who should get into the unit. If you allow someone entry and property is removed, you face the risk of a claim from the estate’s representative for untold damages.
In some cases, a person will bring in a will indicating he’s been nominated to be the executor of the estate, and the facility operator relies on that. However, you don’t know if the document presented to you is the last will and testament or whether it was modified by a subsequent will or codicil; therefore, you can’t trust the will alone.
Every state has some form of probate court in place, and these types of situations are why those courts exist. Probate judges determine the right person to handle a deceased person’s estate and act as representative.
There are two types of representatives you’ll find in these matters: an executor/executrix or administrator/administratrix. In a tenant-death situation, you generally want to look for a document issued by a probate court that tells you who is the authorized representative. Most estates call these “Letters of Authority” or “Letters Testamentary.” With proper personal identification and a certified copy of the letter or order in your file, you may begin dealing with this person, including giving access to the unit or serving lien notices, if the unit is in default.
Increasingly, trustees also want access to storage units. This is because many people put their assets into revocable trusts to avoid the probate process after death. This is fine if the rental agreement is executed on behalf of the trust. If the deceased tenant forgot to put the rental agreement into the trust, you’ll want to consult with your attorney before allowing the trustee into the unit, even though all the property in the unit might be trust property.
In summary, when it comes to tenant death, there are two areas of concern: lien sales and unit access. In the case of the former, the key is whether you have knowledge that the tenant is deceased when you try to sell the contents of his unit. If you auction the unit and later discover he was deceased at the time of sale, but you had no way of knowing he died, you have no reason to be concerned. When it comes to unit access, if you allow entry without having documented proof that the person requesting it is the estate’s designated representative, you’re taking an extraordinary risk.
Tenant Divorce
People who rent from you may get divorced during their tenancy. Some operators will put both spouses on the rental agreement as co-occupants. Others will list one spouse as the occupant and the other as having “authorized access.” In my opinion, both are substantial mistakes. You should have only one named occupant per contract so you don’t end up with two tenants fighting to keep the other out or ordering you to cut and replace locks. When you put yourself in that position, you end up the loser. You’ll find yourself subject to a claim from one spouse saying you didn’t follow his or her instructions.
This is also true of authorized access. You may think it’s relatively harmless, but I’ve seen operators receive letters from divorce attorneys stating that because their client is named as having authorized access, the storage operator has a duty to let that spouse into the unit to claim his or her property before it becomes lost or compromised by the other “evil” spouse. These letters come with heavy-handed threats of damages and litigation if you don’t comply.
I’ve also seen attorneys or litigants to divorces provide operators with copies of restraining orders, which very clearly indicate the other spouse may not dispose of, damage, etc., any marital property while the divorce is in motion. They use these orders to convince you that you have an obligation to deny the other spouse access to the unit. You should have these orders reviewed by your attorney, but generally, they don’t apply to you.
In a situation in which both spouses wish to be listed as the tenant, simply explain that only one occupant is allowed per unit, and each spouse may have access by knowing the gate code and receiving a copy of the lock key from the spouse who is renting.
Tenant Disappearance
Customers can also disappear or become substantially disabled during their tenancy, unable to manage their own affairs. One myth worth addressing is that being imprisoned somehow gives a person an excuse for non-performance under a rental agreement. However, being incarcerated doesn’t exempt tenants from their legal obligations, such as fulfilling their self-storage rental agreement.
Does disappearance or substantial disability impede the default? Possibly. If you become aware that a tenant has disappeared, unless there’s a court proceeding to determine the person is missing and presumed dead, you generally aren’t obligated to stop lien-sale or other default procedures.
In situations involving substantial disabilities, while you may not be obligated to change course because someone has been declared legally incompetent, look for the appointment of a guardian. Sometimes, there can be two—one for the person and another for the estate. Ask for guardianship orders, which vary by state and should be reviewed with your attorney, to understand whom you should be dealing with moving forward. Because these situations are infrequent, you need to ensure you understand the changes necessary to proceed appropriately.
Life changes happen everywhere. For a self-storage operator, the most important thing is to be smart and not assume you can proceed straight to default when rent isn’t paid. These situations require additional documentation before proceeding and could put your business at unnecessary risk.
This column is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney.
Jeffrey Greenberger is a partner in the Cincinnati law firm of Greenberger & Brewer LLP. Licensed to practice in Kentucky and Ohio, he focuses primarily on representing the owners and operators of commercial real estate, including self-storage. His website, selfstoragelegal.com, contains legal opinions and insights as well as an article archive. To reach him, call 513.698.9350; e-mail jeff@grbrlaw.com.
