By Taylor Bushey

n today’s digital age, the self-storage industry is increasingly adopting electronic leases, transforming how facilities manage tenant agreements. These digital documents, which can be reviewed and signed online, offer a range of benefits that can streamline operations and enhance customer convenience.

With any technological innovation though, there are challenges and potential drawbacks present in digital adaptation. Delving into a comprehensive analysis of both the pros and cons of electronic leases in self-storage and insight from industry professionals, we’ve highlighted information necessary for business owners and managers to make informed decisions when integrating this technology into their operations.

When it comes to compliance checks, it can be troublesome if a lease doesn’t meet the standard requirements. In some cases, the lease could be voided if it’s not signed or completed in its entirety.

“I think electronic leases have made compliance easier, especially those leases that impose the duty on the prospective tenant to complete all sections of the lease and ‘approve’ or ‘accept’ the lease before they are given access to the facility to store their property. Certainly, with proper safeguards in place, it may be easier to govern the proper use and completion of an electronic lease than it was to govern the proper completion of paper leases,” says Scott Zucker, Esq., an attorney with Atlanta, Ga.-based Weissmann Zucker Euster and Katz P.C.

When a paper lease is involved, it’s easy for more human errors to occur too. “Historically, with paper, manual leases, we discovered that too often sections of the lease had been left incomplete or the agreements were not signed at all,” Zucker says. “With electronic leases, the tenant is obligated to execute the form before the lease is deemed completed, which is a great advantage for operators.” Depending on the software, requirements can be put in place to ensure a tenant can’t move forward in the agreement without signing a section.

It’s been seen by a few in the industry, where miscommunications are more likely to occur during the process of understanding the contents of a digital lease. Sometimes it’s a matter of not reviewing the full written lease with the tenant in person. “There have been issues, and when they’ve gotten there, they’ve gotten upset because they didn’t understand some of the rules,” says Carol Mixon, president of SkilCheck Services, Inc. Due to the simplicity of signing electronically, it’s easy for a tenant to skip over the vital information in the agreement and jump to each required signing area.

“I think the industry still needs a little human touch,” says Jeffrey J. Greenberger, an attorney and partner with the Cincinnati-based law firm of Greenberger and Brewer, LLP. Greenberger mentioned an example regarding ensuring customers understand the purpose of some of the listed required questions. For instance, there is a required question on certain leases asking if tenants have been involved in the military. For some tenants in the past, Greenberger notes that they’ve assumed the reason for the question is a potential military discount, when in fact its true purpose is to ensure all rights and responsibilities of the military and its veterans are protected. This has led to past tenants answering the question incorrectly.

One thing to note, however, is that once the agreement is signed by the tenant, they are legally bound to it even if they did not read each of the sections themselves. “The responsibility is on the signer,” says Anne Mari DeCoster, a self-storage consultant. “You’ve provided the lease, you’ve provided the signature place, and we’ve agreed to an electronic signature.”

To make it easier for the tenant to better understand preemptively though, DeCoster notes that there are other ways the business can inform the client. “That can be through a summary of the lease that states critical points like ‘These are our access hours and this is the late fee.’ It’s that 20-minute lease presentation that’s been done in person, but it’s shortened in a way the tenant can receive and keep a hold of.” This allows both parties an additional source to refer back to if needed.

For many self-storage businesses, electronic leases and company data are stored with a third-party service with privacy laws that are agreed to during the initial setup. “It’s all locked down and you don’t have a Saturday or Sunday employee picking through the files and taking personal information about any one of your occupants out of hard paper files,” says Greenberger.

Since the law began to recognize and accept electronic signatures, it’s also become much easier and more efficient to adopt into a business overall. “Accordingly, the advantage of electronic leases for better record-keeping is an easy one,” says Zucker. “Similarly for document management purposes, locating pertinent records is much faster and more efficient with electronic records than paper records. Of course, there can always be the risk of legal challenges to digital records, but there are systems available that can verify the authenticity of scanned documents much easier. Much of the concern over the admissibility of scanned records has lessened over the last decade, but it has not completely disappeared.”

One thing to note is that electronic leases from several years prior may take longer to retrieve, depending on the software company, because they may have been digitally archived.

With any new system, conversion isn’t an instant event. It can take a few weeks to process all the data and have all employees trained on the new system. “The challenges we faced in 2018 when we converted to paperless were just taking time to set up everything within your software and website and tie in with the merchant service provider to ensure payments are received correctly,” says M. Anne Ballard, president of marketing, training, and developmental services at Atlanta, Ga.-based Universal Storage Group.

The beginning stages may also be the hardest part of the whole transfer. “The drawbacks at the time [were] for formatting everything to be a smooth easy process,” she says. “We used tablets in the office in the beginning, and are even to this day working to smooth out the signing and authorization processes so everything is seamless to the consumer.”

While it may seem daunting in the beginning, it’s also important to know that the “learning stages” in the conversion are only temporary.

Due to the various types of severe weather that can flare up across the country, it’s not necessarily a rarity that a business disruption from a natural disaster can occur. If this does unfortunately happen, it’s a relieving feeling to know that electronic files won’t disappear in a mess like paper could from flooding, fire, or any other disaster. “Our files are now stored off site in the cloud where they can be accessed from anywhere,” says Mark Amos, director of IT at Universal Storage Group.

Although rare, the possibility of technology crashes and cybersecurity attacks exist. There may be a delay in retrieving company information, and in extreme cases, files could be erased unexpectedly. For this reason, it may be best practice to always save backup files at an off-site location for safekeeping.

Mixon also mentioned that there have been times when documents have not been saved correctly in the past, causing them to go back to the client for updated copies. While it was a relatively easy fix, extra steps were still needed to complete the process.

Any business initiative has the potential for a few adverse things to arise, but there have been major benefits to converting to electronic leases within a self-storage business. Overall, Ballard says, “They take much less time than the old paper-based system; even when multiple addenda are needed, it is quick and easy. About 67 percent less time to complete, then no trouble to maintain files, etc., as it is in the software instead of filling up filing cabinets.”

With new technological innovations happening more frequently as well, it can be expected that electronic leases will continue to evolve. “In the future, I would imagine that our phones will be able to autofill the entire document or a short chat with AI will do it all for us, allowing for time savings once again,” says Ballard. “We will be prompting them to check the accuracy I am sure.”