Notes from Underground

It was four years since the shareholder moved out and only a month since the board of directors at the 50-unit, Upper West Side cooperative had ordered her storage locker emptied of unclaimed items. But then, like a bad penny, the ex-shareholder suddenly turned up - and threatened legal action over the disposal of her "valuables." The board was in a quandary: was the building liable?

Probably not, but there would never have been a question if the co-op had had a properly drafted storage room agreement. Simple to create, it is a useful protection, but also one that some buildings pay little attention to - or simply go without.

A storage room licensing agreement should usually be drawn up by an attorney. This document is between the board and the shareholder who rents space directly from the cooperative. Some properties hire storage companies, such as Bargold, which builds the bins and collects rent from the tenants with a percentage going to the co-op. Such companies should have licensing agreements of their own with the tenants, which the board should review.

When drafting or referring to this document, never call it a lease or else you could make more trouble than you need. "A lease gives more rights to the holder of the lease than a license agreement," explains Arthur Weinstein, a co-op attorney. "There is a more limited right with a license agreement."

"A licensing agreement is revocable," adds Ira Meister, president of Matthew Adam Properties. "When you have a lease, you have to through landlord-tenant court to revoke it; it's much more difficult to terminate."

A licensing agreement for storage space regulates what can and cannot be stored in the building's basement space. That means, in typical lease language, the owner may not store a living creature or organism, or any dead animal; gasoline, oil or oil-based paints, fuel, grease, or flammable chemicals; corrosive, toxic, or hazardous materials or waste; asbestos; construction debris, or new or used batteries; weapons or ammunition; anything with a fuel tank; liquid propane tanks, oxygen tanks, or similar containers; and food, fertilizers, pesticides, or items which are wet and could mildew. A typical lease will also prohibit lodging or sleeping in a storage area; cooking in one; or holding meetings, parties, or other gatherings there.

There are also liability issues to worry about. To protect the property, the lease should contain a warning like this: "All property is stored at tenant's sole risk. Lessor is not responsible for damage or loss to person or property caused by fire, smoke, water, weather, vermin, insects, interruption of utilities, unexplained disappearance, negligence of lessor or lessor's agents, or any other cause, including theft and criminal acts of others."

Security and safety issues should be a concern. For instance, one co-op found a bed set up in a larger locker room area. "Someone had slept there for a couple of nights," recalls David Khazzam, vice president of management at PRC, the co-op's manager. "That should be clearly forbidden. You are still bound by the building codes."

In addition, the agreement should define the hours that an owner can gain access; you do not want to worry about a shareholder leaving the basement door open late at night and an intruder entering the premises and/or attacking someone.

The agreement should stipulate the amount owners pay for the use of the space, with prices ranging from $10 to $20 a bin. Experts say the amount should be tied to maintenance, increasing at the same percentage as maintenance. (Since this is resident-supplied money, it is considered "good income" in the 80/20 tax equation.) Ray Hoey, president of a 65-unit Upper West Side co-op, says his building has both storage lockers and storage rooms. The corporation charges between $30 and $50 a month for the use of the amenity. Since there are fewer spaces than tenants, there is a waiting list.

Having written protection is important. "If you don't have an agreement, everything open for discussion," observes Khazzam. Finally, be clear about when the agreement ends, usually when the resident moves out. Otherwise, four years later, you could be dealing with one angry ex-tenant.