How to Build a Great Storage Contract: The Key Elements and a Sample Contract

Demystifying Storage Contracts

A storage contract is a mutual agreement between the customer and the operator, specifying the parameters of the rental relationship, including the rights and responsibilities of both parties. The contract will also address unique requirements for the storage of mobile homes, motor homes, RVs, boats or trailers, if applicable. A storage contract serves three major purposes: it sets the specific terms the parties have agreed to; it provides written evidence of the parties’ agreement; and it lays out the liabilities of each party in the event of a loss, injury or damage . For example, a signed contract making a specific reference to a valuation statement can help bolster a facility owner or operator’s position in challenging a customer’s claim that with the exception of physical damage, the facility was responsible for all of the customer’s on-site losses. Retail facilites that offer services such as movie or game rentals often include these services in the contract.
A well-drafted contract that explicitly incorporates all of the expectations of parties is beneficial to both storage facility operators and customers. Not only are there terms and conditions that have to be taken into account, but the special needs of the customer and/or their property must be expressly addressed and included in the contract.

Key Elements of a Storage Contract

For a storage contract to be effective, it should clearly and comprehensively identify the parties, describe the items to be stored, outline payment terms, address liability and claims management, annual renewals, and termination conditions, among other things. Addressing these topics in your storage contract will help avoid disputes down the road. In some states and under certain circumstances, written storage agreements are required by applicable law, and a storage company should check for applicable state law prior to using (or having their customers use) a standard form storage contract.
The storage contract should provide space for entering the names of the customer and storage company, as well as their addresses. The effective date of the contract should also be included. It is proper to have the customer acknowledge receipt of a copy of the agreement, and to further provide for any amendments or special instructions to be made part of the contract.
The storage contract should require the customer to itemize items to be stored with the storage company. The contract should further provide for dated photographs to be taken of each item, and that the photographs will be retained by the storage company until the property is returned to the customer. Further, the customer should certify that he or she has full legal title to all items being stored, and that the property is not stolen or otherwise illegally in their possession. If the customer fails to itemize items when using a standard form storage contract, it is recommended that the storage company rely on the claim denial language set forth in the standard form. In such an event, the company should consider identifying the pre-printed language on the contract, and explicitly incorporate it into the contract.
Storage contracts should require that payment be made in advance based on the number of items being stored, and that payment terms should be drafted in accordance with applicable state and federal laws. In addition, the contract should specify the method of payment (i.e., monthly via an automatic withdrawal, quarterly on a particular date, etc.). Further, all fees, including tax, should be clearly spelled out in the contract.
With regard to limitations on storage company liability, it is common practice for storage contracts to include a disclaimer of liability, or various limitations on liability. Those types of disclaimers may be enforceable in some states or jurisdictions – but not in others. State law and public policy should be carefully reviewed prior to a storage company’s decision to include such a limitation in its standard form storage contract. If the choice and availability of insurance is required or offered to the customer, this should also be set forth in the contract. Rarely is a customer going to be satisfied with a storage company denying a claim based on a disclaimer of liability. Instead, a customer will most likely take their chances with a judicial forum, so the storage company may be better off providing limited coverage through an optional insurance plan or other product. Further, in some states where "as is" disclaimers are not enforceable, disclaimers of liability language has proven effective in guiding the direction of subsequent litigation. Remember that many states have laws relating to the storage of goods and what storage companies are allowed to do with goods after a certain period of time has passed without payment or any contact with the customer.
Either on a yearly or quarterly basis, the storage contract should remind the customer that the customer is responsible for updating records of the property stored and for making any changes to the current agreement. This should also be the time for the parties to consider whether any amendments are necessary based on the prior year’s experience.
Storage contracts should provide for a procedure whereby if the customer fails to pay for his or her items, or to make decisions about the disposition of stored items, the storage company can terminate the contract and ultimately dispose of the items. The length of time that a storage unit may remain unpaid before the company has a right to dispose of the property should be in accordance with applicable laws and regulations in the state where the items are being stored.

Your Rights and Obligations Under a Storage Contract

Adequate and proper consideration of the legal obligations and rights in the creation of a storage contract is imperative to the effective operation of the storage contract. It is to be determined based on whether the obligations and rights are enforceable and lawful based on the governing law and distributive provision that controls in instances where the governing law is a conflict of law. Typically, the governing law is the location of where the products are stored.
There are certain usual and ordinary legal obligations and rights that should be present in every storage agreement. The following is a list of those obligations and rights that we normally see in storage agreements:
Obligations
Rights
In addition to the above legal obligations and rights of the parties a storage agreement may have other legal obligations and rights, including:
Local ordinance may require that the storage facility provide a specific amount of minimum space for each unit rented at a facility, or may provide that such unit is not fit for certain types of goods. Local ordinances may also limit the value of goods stored in each unit at the facility to less than $10,000. Many local ordinances have a late fee schedule that must be followed. These issues may affect the manner in which a storage contract is created. Therefore, as stated above, legal advice is imperative in this area.

Common Issues Found in a Storage Contract

Empty promises and inadequate coverage create the biggest problems in storage contracts. Many storage contracts make promises about the coverage for the stored goods without specifying precisely what that means. Through no fault of their own, many customers mistakenly assume that the facility will be liable for the full value of their goods, even if they are apparently underinsured. Many contracts also limit liability to the actual cash value of the item damaged – thus capping the liability for a 20-year-old television at the depreciated value of $25, even if the customer paid thousands for it new. This is not as unfair as it may sound; most states prohibit any claim for so-called "consequential damages," so if a person has $10,000 in clothing, that person would not have a separate claim for the loss of his or her ability to go out socially as a result of not having that clothing. Though it may turn out to be less than the customer desires, the obligatory statement that the maximum liability will be the replacement cost of the damaged property can serve as notice to the customer to be mindful of whether the facility’s coverage makes sense in light of the customer’s needs to avoid making a lawsuit unnecessarily more expensive. Many unregulated "exotic" types of storage may fall under the common law bailment for mutual benefit category, which provides that the bailee (or the storage facility) is not liable unless the bailee is found to be negligent. This is important for customers to know because it is an undeclared (i.e., frequent but implicit) part of the contract that may allow the facility to be absolved of liability where something happens that simply could not have been prevented, such as a flood. However, a court may depart from this rule to impose strict liability in certain circumstances if the contract is one that "deals in the everyday and expected[]" activities of a facility such as a self-storage unit. There are other potential pitfalls such as limiting the customer’s time to sue. Many contracts require customers to give written notice of a claim and sue within a certain period of time. Even a contract requiring a letter be sent to the facility within a certain number of days after the loss in order to demand replacement or repair of the damaged property is largely acceptable, but if the time is too short, it may be struck down as unreasonable. A good standard is to allow customers to provide notice of a claim within a reasonable time not to exceed 60 days after becoming aware of the damage, and to allow customers to sue within one year of providing notice of the claim. A limit of 30 days is often considered to be unconscionable, particularly for facilities in rural areas, which may only be open a few days a month. The contract should state specifically the period during which the facility agrees to keep insurance covering stored goods on the premises and whether the facility will otherwise assist customer when making a claim. It is part of the duty of the facility to prevent foreseeable losses caused by third parties or acts of God. If the facility fails to maintain insurance on the facility, it is sometimes possible for a customer with claims against the facility to avoid the contract’s limitations of liability. For example, if a fire destroys the facility and the contract does not specify the period of time the facility must carry insurance, the facility may be found to be liable, even if the contract limits liability to the actual crash value of the stored goods.

Sample Storage Contract

This storage contract ("Agreement") is made and effective as of this ___ day of _____, 2019 at ______________, between [Name of Storage Company] ("Company"), located at ____________________, and [Name of Customer] ("Customer"), located at _____________________________ . In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows:

• Term. The term of this Agreement shall commence on the ___ day of _____, 2019 ("Term") and shall terminate pursuant to Section 3.
• Storage Area. The Company will provide Customer with a storage area ("Unit") that measures approximately ___ feet by ___ feet located at _______________________.
• Termination. Either party may terminate this Agreement upon ___ days’ written notice of termination to the other party. This Agreement shall terminate immediately upon the removal of all items in Customer’s Unit or upon the date specified in a written notice to Customer from the Company.
• Rent. Customer will pay the Company rent of _____ dollars ($___) per month for the term of this agreement ("Rent") and shall pay Rent on or before the ____ day of each calendar month during the Term. Rent payments are to be paid to [Name of Storage Company], at [Storage Company Address]. All payments shall be in lawful tender of the United States.
• Use/Occupancy. Customer shall use the Unit solely for the purpose of storing personal property of Customer. Customer shall not store any food, explosive, toxic or hazardous materials in the Unit . Violation of the provisions of this Section 5 shall constitute just cause for the Company to exercise its right to terminate this Agreement.
• Access to Unit. Customer shall have access to the Unit during normal business hours (8:00a.m.-7:30p.m., Monday through Friday; 8:00a.m.-6:30p.m., Saturday; and 12:00p.m.-5:00p.m., Sunday).
• Insurance. The Company is not the insurer of Customer’s property. It is strongly recommended that Customer insure its property stored in the Unit.
• Release and Waiver of Liability. As further consideration, Customer hereby releases the Company from any and all liability for, any claims, demands, damages, costs, expenses and losses of any kind or nature whatsoever arising out of, related to or based upon any fire, theft, water, mildew, or any other loss to Customer’s property while the property is upon the premises of the Company, regardless of any negligence of the Company.
• Miscellaneous. This Agreement constitutes the complete and exclusive statement of the agreement between the parties with respect to its subject matter. Any modification of this Agreement, to be binding upon either party, must be in writing and signed by both parties. If any provision of this Agreement shall be invalid or unenforceable, then such provision shall be construed as severable and the remainder of this Agreement shall remain in full force and effect. This Agreement shall be construed and enforced in accordance with the laws of the state of ____________.

IN WITNESS THEREOF, the parties hereto have executed this Agreement as of the day first above written.

Contract Negotiation Tips

All parties involved benefit greatly from negotiating fair and equitable contract terms. Fair and affordable fees are the ideal. A few things to look for include: Storage companies often charge a one-time or annual administration fee for administrative set-up and paperwork. Be sure to ask for a list of all charges and be certain that you understand what they entail. Any storage facility that has an insurance requirement (such as UK storage companies) must present a proof of cover when requested. Such proof will be furnished by an insurance company, insurance agent or broker. A certificate of insurance must not be used because it only represents that payment has been received on the premium, not that the insurance is actually in force. The insurance agent or broker must be contacted directly to obtain proof of correct coverage. It happens that estate owners are placed in a position of obtaining storage for an immediate need. It is always best to do necessary research by asking other consumers of the storage company that you are considering. This is very important. When immediate storage is needed, it is always best to search online and contact multiple storage companies to compare contract terms, pricing and services. Most providers appreciate the consumer requesting a reasonable minimum term, if storage fees are required to be paid prior to moving in.

The Future of Storage Contracts

The future of storage contracts is very much connected to the evolution of how businesses create, use, and store their contracts. That means it involves trends such as digital contracts. There has been a pronounced shift away from traditional paper contracts to digital contracts, as workforces become more computer or Web-based. That’s true both for businesses and consumers. Digital contracts come with some advantages for both. They’re often considered more secure than a traditional contract, if made well. It’s true that for businesses in particular, cloud storage of all documents adds a layer of convenience. Against those advantages, you have the fact that people sometimes fail to send the digital contract in the first place. From the consumer perspective, you’re also talking about legalese being left unread. That’s already a problem with traditional contracts, but more so when it’s on your phone or tablet. It’s easier to gloss right over or not find the relevant details of a digital contract. With this in mind, it’s worth pointing out some advances in cloud storage. One issue to address is a malicious hacking. To reduce the chances , businesses host their contracts on web platforms that are highly secure. Those platforms can also help in some ways to put digital contracts on par with traditional contracts. For example, a document signing platform can help have both parties sign at once in a highly visible way. With a traditional paper contract, it’s very straightforward. With one on my phone, it’s not always immediately clear who and what has gotten signed. But a proper document signing program ensures a legally binding signature is attached and recorded. Looking ahead, a database combining aspects of cloud storage and blockchain technology may also improve contract security. In such a case, the digital contract is encrypted and time-stamped. It may be more meaningful to a company or business if one party is based in a different country. A cloud storage platform that uses blockchain technology might also be an additional incentive for businesses and consumers to start using digital contracts to begin with. As far as digital contracts are concerned, being more legally binding may be one of the most important shifts so far. The contract signing platform and database we’ve discussed in the last few paragraphs may make that a reality.