home warehousing

In-Home Warehousing Is A Growing Trend — But With Legal Implications

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Home-Turned-Warehouse Movement Is Hot But Needs Legal Vetting

By Judith Bachman

The demand for warehouse space in the Hudson Valley has been on fire since the pandemic shifted the economy to an e-commerce model.

judith bachmanThe warehouse market is “hot to the touch” since “it is critical for last mile delivery,” said Paul Adler, Esq., Chief Strategy Officer of Rand Commercial.

Surging demand for warehouse space has forced some business owners forego secure their own warehouses and look for alternatives. As such, the growing trend know an “on-demand warehousing.” On-demand warehousing is partnering with a third party that arranges temporary shared warehouse space in storage locations that would otherwise be underutilized.

In some cases, on-demand warehousers are turning to residences to be used as “mini warehouses.” Another creative solution borne from the wreckage of COVID-19 – and one that presents opportunity. But it also raises legal questions.

For example, Pickups Technologies Inc. has begun offering on-demand warehousing in people’s homes. They ask residents to “sign up to hold inventory for retail brands and tell us about your schedule and location.”  Then “when an order is placed, [the resident] grab[s] the right item from [the in home] stock, and place[s] it into a sustainable packaging.  Another neighbor will come pick it up and bring it to the customer.”

As creative as the home-turned-warehouse movement might be, the idea needs legal scrutiny before being embraced.

Acting as a warehousers, homeowners are taking on significant liability in storing a third party’s goods. Under New York law, a warehouser, also known as a bailee, is required to exercise reasonable care to prevent loss or damage to stored goods. The failure to return the stored goods creates a presumption of negligence that must be rebutted by proof from the one storing the goods.  In essence, the home warehouser would be presumed guilty of negligence for any loss or damage to the goods.

With this legal burden, home warehousing would require a careful review of the availability of insurance coverage for the storage business. Acting as an in-home warehouser could leave dangerous gaps in insurance coverage.  Residents should consult with their insurance agents as a standard homeowner’s policy might not cover all of the new risks posed.  These risks could include damage or destruction of inventory, storing hazardous materials in a house, or risks of personal injury.  In fact, without special insurance accommodations, carrying on a warehouse business in a house could even jeopardize standard home coverage.

Beyond liability and insurance concerns, in home warehousing could run afoul of local zoning codes.  For instance, Clarkstown’s zoning code prohibits the use of homes for “the keeping of goods for sale or rent.”  Even if it were otherwise permitted under the Clarkstown code, a homeowner would at least have to get a permit from the Building Inspector to legally engage as a home warehouser.

Obviously, the dearth of warehouse space is inspiring all sorts of creative solutions.  With the legal concerns, however, in-house warehousing may have some legal landmines.

Judith Bachman is the founder and principal of The Bachman Law Firm PLLC in New City. judith@thebachmanlawfirm.com 845-639-3210, thebachmanlawfirm.com