The Package Predicament

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Is Acceptance Problematic?

It’s a question as old as self-storage facilities themselves: Should you take responsibility for packages delivered to your facility on behalf of your tenants?

It’s also a question that will invariably spark a lot of debate and varied opinions. Take, for example, these online responses to a forum question of whether a facility operator should begin accepting packages for a tenant:

“I accept no deliveries for any tenant and let them know that I will not do that. You sign for the delivery and then assume liability,” the poster then goes on to explain that if they lose customers because of this, it’s “one less headache”.

Another poster writes: “Never accept any deliveries, never keep a key, nothing but bad can happen.”

Richard Marmor, chair of the legal and legislative committee for the Arizona Self Storage Association, agrees mostly with these posters. “We are not a warehouse; we are landlords,” says Marmor. “We never should become bailees of our tenant’s contents. When we do that, comes responsibility.”

Marmor states that there are two ways in which packages are delivered and accepted at self-storage facilities, both of which opens the facility up to liability:

  1. Management accepts packages at the office and stores it in the office, hoping the tenant will show up soon and claim the package. “This is already problematic, and management is held to a very high degree of responsibility,” says Marmor.
  2. Management opens the unit and allows delivery people to leave the package directly in the unit. “The problem is the liability is that much greater because you have a key,” says Marmor. “The old adage is that people store junk, but they lose heirlooms. As soon as something is missing, the facility is blamed.” Marmor adds that even if you allow the delivery person to take the key and enter himself, it still opens the facility up for liability.

Some others have a differing view, saying they do accept deliveries and even have specific holding areas for pallets meant for business tenants and wine.

“By having had a wide variety of self-storage properties, the need is definitely different by location,” says Carol Mixon-Krendl, president of Skilcheck, Inc. in Tucson, Ariz. “A downtown location, for example, might have a greater need for it since there are typically more business customers.”

M. Anne Ballard, president of marketing and training developmental services for Universal Storage Group in Atlanta, Ga., notes that her company does accept packages for their tenants. “It is one of the benefits of storing with us,” says Ballard.

However, there are some key dos and don’ts when accepting packages.

The Legalities

The biggest reason many storage facility operators are hesitant to offer this service is that they are afraid of the liability risk. Scott Zucker, partner with Weissmann Zucker Euster Morochnik in Atlanta, Ga., works with operators in the self-storage industry on a variety of issues, including drafting separate addendums that allows operators to accept packages while reducing their liability risk.

“I don’t have a problem with self-storage facilities accepting deliveries for their tenants as long as the operators understand that package deliveries are not self-storage, meaning they need to have a separate agreement that limits their liability,” Zucker says. “Once a facility accepts deliveries, it arguably accepts bailment of the property in their possession. So, an agreement would need to clarify the facility’s risk and seek to minimize or eliminate those risks. That is why, if a facility is agreeing to accept deliveries, they need a separate agreement with the tenant to limit the potential exposure to liability for loss or damage to the property that is being accepted by the facility operator.”

In Favor

In many markets, especially ones in which a self-storage facility is actively competing with commercial customers, accepting packages has become the norm and has to be, argues some managers and operators, in order to win more business.

Mixon-Krendl cites one storage facility in Honolulu that competed for a high number of pharmaceutical representatives in the area. The facility rented to 13 such reps and it decided to give them a cash rebate to attract other customers. The facility ended up with 88 reps. Of course, these reps, who are on the road most of the day and many of which do not have separate office space from their homes, needed a place to have their samples delivered so they could be moved into their storage units.

The first thing the facility did was have tenants who wanted the managers to accept packages sign an addendum that released the facility of any and all liability. Accepting packages at the storage facility made it convenient and easy for the reps, but what about for the storage facility? At first, the facility was accepting the boxes in the office and keeping them in special locked cage. The management documented each box and allowed them delivered to the locked area. When the tenants came for the boxes, they signed them out.

It also presented a problem when some of the boxes went missing. “It was a sample box of Viagra,” Mixon-Krendl recalls. “We had five male employees at the facility, and all of them denied it. Turns out, another rep spied the box and walked out with it. We then decided we needed more security and had to send a manager in there when they came to pick up their boxes.”

While that solved the security issue, the facility was taking on so many new reps as tenants that it began accepting 200 to 300 boxes per day. The facility finally changed the policy (and its legal addendum) so that delivery persons were taking the packages directly to the units.

That is the policy Ballard’s clients follow at their facilities. The customer must sign a release form that releases the facility of any liability for the package and for the delivery person gaining access to the unit.

When a delivery is made, the office checks out the key, logs what delivery is being made and by which company, and then logs the key back in when the delivery person returns it to the office. “We don’t take packages in the office; if it is lost or damaged, we could be held responsible,” says Ballard. “When a delivery company makes a delivery to the unit, they certify the goods were delivered, in good condition.”

Ballard notes the only problem they’ve had with the service is delivery people balking at going to the actual unit to make the delivery. “We tell them, ‘You have to deliver it directly to the customer,’” says Ballard. “We usually have something for them in our office to build a rapport with them, a warm cookie or cold drink. We don’t have issues very often.”

Ballard has heard that some facilities even charge extra for the service, whether it be $25 a month extra for unlimited deliveries or 25 cents per box. Rather than using this as a way for additional ancillary income, however, Ballard prefers to just offer it as an extra amenity. “I think offering package delivery for free gives us a leg up on the competition,” says Ballard.

Mixon-Krendl agrees. “I love it, and it gives our customers a tremendous service,” says Mixon-Krendl. “But it is based on where the stores are. Everything has a liability; the key is to try to mitigate and minimize it with the releases.”

Tips For Minimizing Liability When Accepting Packages

  • Have an addendum drawn up by your business attorney or one of the attorneys familiar with self-storage in your state. At minimum, if you’re going to accept packages, the addendum release should state that the “operator’s sole duty is to provide access for deliveries. Management has no other duties regarding to storing items or policing access,” advises Marmor.  
  • Create a paper trail. “The operator needs to keep records of what is delivered, including the number of boxes, time, service used, where it was stored or if key given, and tracking number,” Zucker says. “Also have the delivery service sign a confirmation that the delivery occurred. It’s important to note if the package was damaged upon delivery so the facility is not held liable if the property is found damaged.”
  • Obtain insurance. Zucker says that it is certain a standard CGL policy will not cover the accepting of deliveries, so getting extra insurance for this service is a good idea.

Kerri Fivecoat-Campbell is a freelance journalist based in the Ozark Mountains. She is a regular contributor to MiniCo’s publications. Her business articles have also appeared in Entrepreneur, Aol.com, MSN.com, and The Kansas City Star.

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