Facility Rules and Regulations

Somewhere along the way, most self-storage operators have developed a set of rules and regulations for their facility that is meant to work in addition to their lease agreement. These guidelines serve an important purpose, but many operators use them wrong way, i.e., to restate what is already in the lease. Also, many have not made the appropriate provisions in their lease to make the rules and regulations enforceable or easily modifiable.

A rule or regulation is an item necessary to the operation of the storage facility but which doesn’t belong in the lease, either because it’s more of an administrative issue, it’s a less-significant item than a lease clause, or it requires more frequent modification than a lease. Rules and regulations should be enforceable but are not suitable as lease provisions. Examples of some items that might fall into this category include:

Avoiding Repetition (and Ambiguity)

There are also items that should not be included in your rules and regulations, many of which are repetitions of things already addressed in the lease. For example, if the lease states when rent is due and how it is to be paid, you shouldn’t include this as part of your rules and regulations. The reason is if there is even the slightest discrepancy between the lease provision and the rules sheet, and you find yourself in a legal entanglement with a tenant, the court will generally enforce the more forgiving of the two options.

There are other rules/lease repetitions used by storage operators that create undesirable ambiguity. Some examples are:

Many of these items comprise the “meat and potatoes” of the lease agreement and do not often change. They belong in the lease only, clearly defined with all the information a tenant might need to understand the provisions. If you think you’re “covering your bases” by repeating terms from your lease in your rules and regulations, think again. What you’re doing is opening the door to customer confusion and legal uncertainty.

If you feel it’s absolutely necessary to reiterate certain items for emphasis, create a separate summary of important lease points. This is not part of the lease agreement or rules and regulations, just a separate sheet with highlights for clarification. Personally, I’m not a big fan of such summaries. Some tenants will actually argue that if an item isn’t addressed on the summary sheet, you haven’t placed sufficient importance on it, and it is therefore unenforceable. While this may be a difficult argument for the tenant to win in court, there’s no point in setting yourself up for this situation. A simple verbal summary of the lease at the time of signing may be a safer solution to the problem.

Validation and Modification

Now that you have an understanding of what your rules and regulations should include, there are two common mistakes to avoid. The first is failure to incorporate the rules and regulations into the lease by reference. The second is failure to retain the right to easily modify rules and regulations. You should have a provision in your lease that states the rules and regulations are an actual part of the contract. The lease should also stipulate that you have the right to change rules and regulations at will. While you should consult your legal advisor before making any modifications to your lease, your provision might read:

The rules and regulations of the facility have been provided to the tenant and are incorporated herein by reference. Landlord may change any portion of this lease, including but not exclusively the rules and regulations, upon 30 days advance notice from Landlord to Tenant by mailing notice of the proposed changes to Tenant or posting the proposed changes at the entrance of the facility. Payment of your rent for the following period constitutes your acceptance of these changes.

Again, rules and regulations are generally modified more often than lease provisions. Making substantial changes to a lease, such as adding new clauses, instituting a whole new contract or deleting key portions, is a relatively large undertaking that may involve all customers signing a new agreement. Rules and regulations, however, can be more flexible. You should be able to change things such as gate hours, office hours, etc., without difficulty. When you modify rules and regulations, you can simply circulate a notice to tenants with your invoices or other mailings or post signs throughout the facility. One note here: If you circulate the notice with customer invoices, when a tenant pays his bill, acceptance of the change is implicit.

The next time you review your facility documentation, make sure your rules and regulations do not repeat your lease provisions, and that you have drawn the distinction between items that belong in the lease and day-to-day operational issues. Also ensure your rules and regulations are incorporated into the lease by reference so you have the grounds on which to enforce them, and you have left yourself the ability to modify the rules when necessary.

Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati, which primarily represents owners and operators of commercial real estate, including self-storage. He is licensed to practice in the states of Ohio and Kentucky, and is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. He is a regular contributor to Inside Self-Storage magazine. For more information, call 513.721.5151.