Is Your Self-Storage Property in a Flood Plain?

As weather patterns continue to change, the United States is experiencing greater snowfall and significant rain events than ever recorded. As the waters rise and the snow melts, flooding is inevitable. A key question for self-storage operators to ask is whether their properties are in a flood plain. The question has two important answers. First, if the owner’s property is in a flood plain, they should research and purchase (if not already required by their lender) flood insurance available from the Federal Emergency Management Agency (FEMA) to protect themselves from losses suffered as a result of a flood event. As most property owners realize, flood coverage is not typically included in a general property and casualty insurance program.

But the second reason is equally important. If your property is in a flood plain, depending on your state law, you may be required to disclose that information in your rental agreement. Currently, there is no federal requirement for landlords to disclose information about a property’s flood risk or previous flood damage to a prospective tenant. But numerous states do have language where such a disclosure might be required in self-storage. Certainly, the majority of the state law programs would require such disclosure only in situations where residential occupancy applies. Since every self-storage state statute specifically disallows residential use of a self-storage unit, many of these state disclosure laws would not apply to self-storage. But some state laws are more ambiguous since they may include “commercial use”.

As it stands there is currently only one state law that specifically includes self-storage rentals and flood plain disclosures. The Iowa Self-storage Act states: “The operator shall disclose in the rental agreement whether the self-service storage facility is located in a “special flood hazard area” as defined by FEMA” (Iowa Code Section 578A.10).

Again, other state laws may apply to self-storage while others may not. The California Code for example, limits disclosures to “lease or rental agreements for residential property” as does the New York law. Georgia too has a flood plain disclosure requirement, but the statute only references “residential occupancy”. The Texas disclosure law applies only to a “dwelling” as does the Oregon law. New Jersey also requires flood plain disclosures but only references the rental or lease of “commercial space” with limited occupancies. The Indiana Code includes “‘commercial property” and would require a landlord to disclose if the structure is at or below the one hundred (100) year flood elevation.

Some states not only require disclosures for properties identified to be within a designated flood plain, but also whether there has actually been a flood event within the past few years or, if the owner or landlord was aware that a flooding event had occurred.

Truth be told, whether or not a law specifically requires a disclosure to be included, it is a good practice for self-storage operators to notify their tenants about the flood status of their properties. As we experience more flooding events, it is inevitable that tenants will ask their operators “did you know about the risk?” As a means to avoid potential claims for otherwise uninsurable tenant losses, operators should re-evaluate their consideration of flood disclosures for their properties that not only have experienced flooding, but are otherwise designated to be within “Special Flood Hazard Areas”.

This article was originally published in Self Storage Legal Monthly Minute by Scott Zucker, April 2023

Scott Zucker is a founding partner in the Atlanta law firm of Weissmann Zucker Euster Morochnik & Garber P.C. and has been practicing law since 1987. Scott represents self-storage owners and managers throughout the country on legal matters including property development, facility construction, lease preparation, employment policies and tenant claims defense. He also provides, on a consulting basis, advice to self-storage companies in the areas of foreclosure and lien sales, premises liability and loss control safeguards. Scott can be reached at 404-364-4626 or by e-mail at Scott@wzlegal.com.