Every business faces legal challenges. Some legal issues are more common in self-storage than in other industries. The most important first step to being prepared for legal issues is to work with a trusted lawyer before a problem arises. Preparedness is the key so issues can be avoided and dealt with quickly should the need arise. Let’s discuss a few of the most common legal challenges that self-storage owners may face.
- Improper business classification
- Lack of legal representation
- Onsite injury claims
- Self-storage lien sale
- SCRA violations
- ADA violations
Improper business classification
When starting a business, it’s important to begin with the correct legal classification. There are several options for the business entity classification: partnership, LLC, trust, or corporation. The classification of the entity will need to be determined by the business owners and properly registered with the state. This classification will be important when paying taxes because each option has varying tax requirements, and it will also be important if the business is sued.
Some business owners unknowingly classify their business incorrectly. Incorrect classification of the entity can lead to the loss of revenue if they are sued or make other business mistakes during operation. The tax burden can also change significantly under each classification and this must be considered to keep the business operational and paying the appropriate taxes.
Lack of legal representation
Any business entity needs legal representation to ensure operation according to the law. Legal representation also helps to protect against frivolous lawsuits or negative tax implications. These two huge issues are just part of the big problems that business owners can face when running a small business. Even a small, single-location business with limited liability should have an attorney who can be reached for questions to head off preventable loss or damages from negligence.
If a business owner doesn’t have an attorney, this should be the first course of action today. It’s the most important thing that can be done to protect your business and personal assets. The remaining legal challenges discussed can be handled expeditiously by a competent attorney and can be avoidable altogether.
Onsite injury claims
Onsite injury claims are a common issue facing self-storage owners today. Especially following a hurricane when a building may have damage or debris may litter the parking lot, onsite injury claims can be an issue. Performing regular walk-throughs of the property and daily onsite maintenance is essential. It’s important to ensure that all state safety requirements are met like available PPE or fire extinguisher maintenance. If there’s a question about compliance, it might be worth having an insurance inspector come to the business for a visit.
Onsite injury claims are the most preventable legal issues facing self-storage owners. Routine maintenance and inspection will detect many issues that could become injuries so they can be fixed before problems arise.
Self-storage lien sale
Many self-storage business owners are nervous about selling off the personal property of a tenant who has not paid rent or claimed their items. There is good reason to be concerned about this process as a wrongful sale lawsuit could devastate a self-storage business. Each state has different requirements for the sale of property in the event of nonpayment of rent. If a former tenant has hired an attorney to represent them following a self-storage lien sale, the self-storage business must consult their attorney as well. Representation is necessary when a lien sale has gone wrong. This article from Inside Self Storage explains the necessity of legal representation in a wrongful sale situation.
SCRA Violation
The SCRA is the Servicemembers’ Civil Relief Act. You can read the SCRA in its entirety here. This act protects active service members called to duty with little time to prepare before leaving. If a service member is called up unexpectedly, he or she may not have sufficient time to settle accounts while they are gone. The SCRA protects service members from having their belongings sent to auction in a self-storage lien from non-payment. Ignorance about whether a tenant is a service member is not a sufficient defense against a wrongful sale of property if the customer is a service member called to active duty. It’s necessary to ask if customers are in the military. It is also important to check this information in the event of default on rent to avoid an unnecessary and preventable lawsuit.
ADA Violations
The Americans With Disabilities Act requires businesses to make reasonable accommodations for individuals with disabilities. According to the ADA website, “The Americans with Disabilities Act (ADA) is a federal civil rights law that prohibits discrimination against people with disabilities in everyday activities. The ADA prohibits discrimination based on disability just as other civil rights laws prohibit discrimination on the basis of race, color, sex, national origin, age, and religion. The ADA guarantees that people with disabilities have the same opportunities as everyone else to enjoy employment opportunities, purchase goods and services, and participate in state and local government programs.” Find more information about the ADA here.
Businesses that are not properly equipped to accommodate people with disabilities can find themselves in trouble when a claim of discrimination is made. If an owner is renovating an existing property, it’s important to use a construction manager with knowledge of ADA requirements. If the project is new, the construction company will likely be familiar with ADA requirements and include those already.
Each of these issues is entirely preventable by seeking out the help of a qualified attorney who is familiar with self-storage businesses. Attorneys provide expert advice and can navigate difficult situations. Most of the pitfalls that self-storage owners encounter can be rectified with the help of an attorney who will advise owners in advance.
As self-storage experts, Coastal Storage provides expert advice to business owners about situations that can arise in owning and operating a self-storage business. Additionally, we can connect clients with attorneys knowledgeable about self-storage businesses and work with clients to ensure they operate profitably and legally. Call us today at 904-591-0140 to work with our team to find your next self-storage investment.