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Ten
years ago, people who wanted to store vehicles at self-storage facilities
found themselves relegated to a grassy or muddy lot along the back
fence or had to place their vehicles in a standard storage unit.
These days, however, vehicle storage is big business, with buildings
constructed solely for the purpose of storing large RVs, boats,
antique cars and more.
Over
the years, self-storage owners have expanded their operations to
make them more attractive to customers. Those who store boats and
RVs now offer all sorts of services, including vehicle maintenance,
repair and restoration; oil changes; chemical-toilet cleaning and
washing; and boat launching and retrieving. Some offer to gas up
vehicles as well as stock them with food and beverages. But while
offering these customer conveniences may seem smart, they change
the nature of your relationship with customers.
The
Danger of Creating a Bailment
Providing additional
services for RVs and boats through your storage operation can put
you in a valet-type arrangement, making you a bailee of stored vehicles.
Having a bailment means you have control over what happens to an
item while it is in your care. In a typical selfstorage arrangement,
operators seek to avoid bailments—that is, they rent space
and, for all intents and purposes, what happens to what is stored
there is the business of the occupant only.
This sort of
freedom can also be the case in RV, boat and vehicle storage if
you simply let tenants “park and lock.” However, if you
have additional control, i.e., you hold the keys or park or rack
vehicles for tenants, you have a greater degree of responsibility
for the care, custody and control of stored vehicles.
Typically, the
duty you assume is that of ordinary care. It is similar to that
of a valet at a restaurant or shopping center, for example. People
expect a valet to carefully park their cars somewhere reasonably
safe and return them in the same condition in which they left them.
Otherwise, they expect him to be responsible for his own negligence.
Obviously, if the valet willfully damaged a car, he would be liable.
Conversely, he would generally not be liable for extraordinary or
unexpected events, such as a car being stolen from its “safe”
parking space. In short, as a bailee, you are solely liable for
ordinary and foreseeable damage.
Let’s say
you keep keys so you can park vehicles or have them pulled up, warmed
up or cooled off for tenants when they arrive at your facility.
During storage and delivery, you have an ordinary duty to take all
caution and avoid damaging the vehicle. Normal damage that occurs
on your “watch” is your responsibility.
Similarly, if
you gas up the vehicle, you are liable if you use the wrong type
of gasoline. If you undertake to have repairs or restoration made
to the vehicle, you are responsible if they are not made properly.
In a far more extreme case, if you stock a vehicle’s refrigerator
with food or beverages for a customer, and someone takes ill or
has an allergic reaction, you could possibly be held accountable.
Fear
of Finger-Pointing
In general, you
are liable for any damages or dissatisfaction a customer has with
the services you provide. Sometimes, however, you become the victim
of things that aren’t your fault, as in the case of a vehicle
owner who blames you for damage he inflicted himself. For example,
a tenant backs his RV into a tree or a bollard, causing $10,000
in damage to the vehicle. He then pulls the RV into his space and
parks it. You have a key because of services you provide, so you
have a bailment. The owner comes into your office a week later and
asks how his vehicle got damaged, attempting to hold you accountable
for his blunder.
In this case,
there are several simple steps you can take to minimize your liability
exposure. First, you must have the appropriate insurance, in adequate
amounts, to cover you for losses arising from your bailment. Remember,
RVs and boats can cost upward of $500,000. Having regular self-storage
insurance is not enough, since that policy presumes you are not
assuming care, custody or control of tenants’ property.
Second, having
digital video cameras that record the comings and goings around
your vehicle-storage area is critical. If you can show proof a vehicle
was damaged prior to being parked in your space—or have the
incident in question on film—a tenant will be less likely to
succeed in his claim that you caused the damage (or theft or vandalism
or whatever it is causing the dispute).
Third, make sure
the rent you charge is commensurate with the value of services you
provide so you can afford the liability you accept. Do not take
on a bailment gratuitously. If you are going to provide a gas service
in which one of your employees drives vehicles to a gas station
to fill them up for tenants, make sure your charge reflects all
of the additional costs of insurance and liability.
If your employee
is hit by a drunk driver on the way to the gas station, his injuries
(in most states) will count against your workers’- compensation
rating, and the damage to the tenant’s vehicle will apply to
your insurance. If the driver who hit your employee is insured,
you may make a recovery; but you must price your services to recognize
the risks.
Fourth, form
separate entities to perform certain types of services. That is,
while you store a vehicle as ABC Self-Storage, subcontract the repair
or moving functions to ABC Transportation Co., a separately owned
LLC or corporation responsible for the moving of vehicles. That
way, if there is a catastrophic loss or you are not adequately insured,
you may still be able to protect your investment in the facility.
Releases
of Liability
People often
ask whether they can have tenants sign a release of liability to
absolve them of responsibility in the event of a vehicle-storage
incident. Generally, these releases are ineffective in the case
of a bailment. If they worked, every valet-parking service in the
world would have you sign a two-page release before they took your
car. The case law usually holds you cannot be released from this
type of liability because you are undertaking the bailment for a
charge. If you assume the bailment, you are liable for the ordinary
and normal consequences if damage occurs.
While you may
include releases in your self-storage contracts (and I still recommend
doing so), do not rely on a release as your sole protection. Remember
that while all of your services represent a benefit to your tenants
and make wonderful marketing statements, you must be aware of the
liability you assume and be ready for it in advance.
This article
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.
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