What is a Parking Agreement?
Parking agreements play a crucial role in real estate and commercial contexts. They are used in both residential and commercial contexts, but we use them almost exclusively in our office for commercial contexts. In the commercial context they are most regularly used for co-tenants (also called co-owners) in a property that is leased to a single occupant.
A definition is a standard parking agreement is an agreement between two or more parties wherein one party to the agreement grants the right to another party to use one or more of the first party’s parking spaces in accordance with the terms of the agreement. The intent of a parking agreement is to allow the owner of the land to grant the right to use a parking space which person also may not be the sole user of the subject land.
For example, in our office there are 25 parking spaces available to be used by our staff and guests. However, our office sometimes has more than 25 employees working on any given day. Accordingly, where we can, we grant the right to use parking spaces to persons outside of our office for the few days a month when we have extra employees. In those instances, we will either rent the use of the parking space or grant the use of the space at no cost to the person who is granted the permission to park. The terms of the parking agreement may be as simple as the address of the property, the date and time period for which permission is granted to park, and the charge payable by the person granted permission to park . These terms are outlined without elaboration in a simple parking agreement form, as we have done above.
While we almost exclusively use parking agreements in the commercial context to grant co-tenancies (or co-owners) access to a parking space with the possibility of renting out the overflow spaces where necessary, parking agreements are also used in residential and commercial contexts for private individuals to grant permission to a third party to park their vehicle on their property. For example, if you own a home with a driveway and you are going away for an extended vacation, you may rent out your driveway to a neighbor or even a stranger who is looking for parking. In these instances, the basic terms of the parking agreement would be outlined, including the date and time of possession, the fee payable for the usage, and the permission to remove the other party’s vehicle, if necessary. In these situations, the area of effect of the parking agreements is rather limited, but they can be useful for wishing to monetize excess unused spaces.
In my practice, I have used parking agreements on a number of occasions to allow for co-tenants to make best use of the spaces available to them. While there can certainly be a fair bit of customization involved, it can be helpful to have a parking agreement drafted either by you (as long as you fully understand the guarantees made) or by a lawyer who has experience with parking agreements.
Components of a Parking Agreement
While there is very little case law or examples of agreements governing parking rights and obligations, the agreement must be an enforceable and legal contract. Therefore, it is important that a parking agreement contains the following elements:
• Details of the car being parked, including its registration number;
• The terms of use (i.e., allowing parking of one vehicle at a time);
• The duration of the agreement (i.e., daily, weekly, monthly);
• The rent payable by the client for the parking space, as well as all applicable taxes, and the payment schedule (i.e., in advance, two weeks before expiry, etc.);
• The date of commencement and termination, including any provision for early termination (i.e., by mutual agreement, notice in writing);
• Any restrictions on the use of the parking space (i.e., using the space for any other purposes other than parking a vehicle);
• The obligations of the car owner under the agreement (i.e., to verify the insurance of the vehicle, to immediately notify any change in ownership of the vehicle or if the vehicle is disposed of); and,
• The obligations of the landlord, including the hours that access to the parking space is available to the client (i.e., only between 8:00 a.m. and 7:00 p.m.).
Types of Parking Agreements
There are three sorts of agreements you can grant over a parking space.
A residential agreement is an agreement between the owner of the land and a resident. This is essentially a tenancy. In this sort of agreement, the park resident has quiet enjoyment over their home and upholds all responsibilities of a tenant in terms of paying rent on time, keeping the home in good repair, not causing a nuisance, etc.
On the other end of the spectrum, if your parking space is vacant for only short leases (i.e. you do not wish to enter into a long-term arrangement), then you should enter into a commercial licence.
In this sort of agreement, you have no ongoing obligations to the tenant of the car parking space. They must pay a fee for using the space, but there are no further obligations to maintain or repair.
You may also wish to rent out your car space on a commercial basis for a longer period of time. For example, you may wish to enter into a leave of absence/holiday arrangement with your tenant.
In this sort of agreement, you are not allowing your tenant to occupy the premises, but you are providing them with an exclusive right to use the space during the term of the agreement.
As you have retained ownership of the land, you do not owe your tenant any further obligations under the agreement than those set out in the terms. However, it is always good idea to act professionally and keep your tenant informed for the duration of the lease.
Legal Considerations for Parking Agreements
When a landlord or parking space lessor is drafting or reviewing a parking agreement with a tenant or parking space lessee, there are several legal issues that must be considered. While each situation may vary, the following considerations should be taken into account when dealing with issues such as local laws, enforcement and liability.
THEFT OF AUTOMOBILES
Theft Of Automobiles: Liability
Statutes in Alabama require that owners of automobiles in a parking lot not be held liable for the theft of those automobiles by a third party on the premises of the lot unless the automobile owner can demonstrate that the owner of the lot had control of the car and thereby took possession of it. Liability is not automatically implied upon the loss of the auto from the premises. In order to prevail on a claim, the plaintiff-property owner must show the following:
A shopping center parking lot, then, is charged with carefulness where the property lies within the area of its control while it is not within the knowledge of the property-owner, and to this extent the parking space lessor is liable for theft of ownership.
If the property does not lie within the area of control of the owner of the parking lot, it is not an implied bailment and he is not charged with the duty to maintain protection against theft. (Louis Pizitz Dry Goods Co. v. Yancey Bros. & Co., 194 So. 34 (Ala. 1940).)
Even if nothing else were included in our holding, it would seem to us clear that the general rule of law applicable to the bailment of personalty must be at least equally applicable to the bailment of automobiles. Certainly, this being so, "it must be clearly demonstrated that they [the owners of the automobile] have met the strict requirements of the law before they will be allowed to recover."
Of course if the spaces are not numbered, the person parking the auto should obtain the name and description of the space from the lot operator.
PARKING PERMITS AND RESTRICTED AREAS
The enforcement of parking permits may also affect liability in the case of theft of an auto. A notice posted at the time a permit is issued which states failure to display a permit subjects a vehicle to removal for violation of any parking regulations, and a deposit of $15.00 is required to obtain an impounded vehicle does not create an equitable lien upon the vehicle. The amounts the owner is required to pay to secure release of the vehicle are not being paid for space occupied but for additional protection and service, and this protection and service is reasonably open to all. (Cleveland v. Braham Bros. Trucking Co., 300 Ala. 283 (1973)).
RETRACTABLE TROLLY BARRIER GATE
However the parking of an automobile beneath a retractable trolly barrier gate clearly establishes that the owner parks at his own risk and must pay for damages resulting from his own negligence or negligence of his own agents or employees. Failure to put the gate in operation is no defense to the parking operator when a patron is injured by a third party. (Bailey v. Pignato, 357 So.2d 960 (Ala. 1978)).
How to Draft a Parking Agreement: A Step by Step Guide
As with any other property-related contract, drafting a parking agreement is straightforward if you carefully follow a useful process. Whilst different lawyers will have their own variations of the following process, this section sets out a common approach.
In the first step, the actual boundaries of the parking area, in addition to the exact portion of land to be conveyed, will have been agreed following the work to ascertain the requirements of the existing or proposed tenant.
The second step is to produce a contract to convey the agreed land. Conveying a portion of a parking lot can be as simple as referring to some land by an existing boundary. If the parking area was not previously owned by the person being granted the right of use or if any new boundaries are being used, there does need to be a reference to the actual portion of land.
In step three the parties will be checking a system of register for any rules that apply to the land. A review of said rules will highlight information relating to ownership restrictions and requirements that will impose on the proposed lease or license. A caveat will be managed, as should references to any documents or decisions. A surveyor may confirm the amount of land involved, in addition to a diagram of this .
The fourth step of a parking agreement is confirming whether there are legislative, insurance or banking restrictions that will impact the parking area. This means reviewing the intended use for the parking area.
The fifth step involves the record of the process being produced. Diaries, notes and practice manuals has to match all steps that were taken in the production of the agreement.
Following several stages of negotiation, step six will see the parties agree the final provisions of the parking agreement. This should then include an attached schedule which highlights any terms or agreements that relate specifically to the parcel or agreement.
Step seven is the final stage of the process of a parking agreement. This will involve the appropriate paperwork being produced which agrees and finalises the contract. This should be copied so it can be sent to those with an interest in the overall arrangement.
Following this step, despite all due diligence being done, it is even possible for the land included in the parking agreement to be subject to existing matters that may have an impact on the use of this land. The final agreement should therefore contain reassurance that, should this occur, no financial compensation or liability will be placed on the person granted the right of use.
Parking Agreements Common Issues and How to Fix Them
Common issues that arise with parking agreements include disputes over whether the parking lot owner has the right to set the hourly parking fee, and the costs to operate the parking lot and provide security typically cannot be passed on to the employees or customers who are using the parking lot. This is an issue that commonly arises at the renewal of the parking agreement.
Another common issue is whether a stipulated number of cars must be permitted to park in the parking lot or whether the parking lot owner can take the position that a smaller number of cars is permitted to park in the parking lot. A related issue concerns whether a specific number of cars must be permitted to park for a particular customer.
Common issues also include the following: Are there adequate notice requirements for any change in the fee per hour? Must any increase in the fee be capped at some level? Depending on the wording of the parking agreement, one party may not have sufficient control over its costs because the other party has reserved the right to increase fees or change terms and conditions at will.
Advantages of a Parking Agreement
Having a formal parking agreement in place provides both property owners and tenants with benefits related to expectations and conflicts that arise.
Tenants: The rare serious dispute about parking spaces can be escalated in a way that requires expensive legal assistance from counsel for the tenant and from counsel for the landlord, and could result in litigation. However, with a formal parking agreement, it is likely that few "serious" disputes about parking will arise between the tenant and the landlord. Most disputes that arise are over less serious issues and can be managed by the tenant and the landlord without the need for counsel, since the formal agreement addresses all the material issues about parking.
Landlords: The landlord under a Commercial Lease has the right to determine how the parking spaces on the leased property will be allocated and used. However, the landlord is obliged (usually under the standard landlord’s lease covenants) to maintain the parking facilities on the property in a reasonable state of repair and to keep available for use by the tenant … that number of vehicular parking spaces … set forth in the Lease, or negotiated from time to time by the parties and recorded, if [tenant] requests … (see Commercial Landlord and Tenant Law in Ontario, 4th ed. (Toronto: Thomson Carswell, 2008), chapter 28 at p. 884). Therefore, unless the Commercial Lease expressly places these rights and obligations in the hands of the tenant for material issues in relation to parking (such as the right to decide who uses the parking spaces), or expressly gives the tenant the right to include those rights in the hands of its sub-tenants, the landlord is in a position of control about parking and how it will be allocated. (Commercial Landlord and Tenant Law in Ontario, 4th ed. (Toronto: Thomson Carswell, 2008), chapter 28 at p. 883). Having a formal parking agreement resolves any disputes that could arise from ambiguities in the Commercial Lease.
Conclusion: Importance of Clear Parking Agreements
A well-drafted parking agreement can help prevent misunderstandings, good neighbor relations and the many problems which arise when the rights and obligations of a landowner and a user of land are not well-defined. Issues about how parking spaces are assigned and who will control the amount of use , turn out to be important to both owners and users. If your arrangement is structured correctly, your agreement can become a tool for conflict resolution rather than the source of conflict.