Should You Rent Storage Space to Gun Dealers?

by TSSA Legal Counsel

TSSA is occasionally approached by its members with questions about firearms found in or sold from storage units. The 2021 calendar year was a banner year for such legal questions due to changes made to the Texas Penal Code during the 2021 Texas Legislative Session, combined with a general uptick in gun sales. This article is intended to address a question TSSA members may increasingly start to face: Should I rent space to someone who wants to sell guns for profit at my storage facility?

WHAT IS GENERALLY REQUIRED FOR SELLING FIREARMS IN TEXAS (AND THE UNITED STATES)?

If an individual or business wishes to be “engaged in the business” of selling firearms, then they are considered a “dealer” and are required to obtain a Federal Firearms License (an “FFL”) from the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”). In order to apply for an FFL, the applicant must submit an Application for Federal Firearms License with the ATF, together with a fee appropriate for the license type.

In addition to submitting the application, applicants are also required to undergo a background check. The timeline for issuing an FFL is approximately 60 days.

Texas does not require holders of an FFL to submit to any further licensing requirements. However, applicable local laws and ordinances should be reviewed to determine if there are any additional municipal or county restrictions on licensing requirements.

Most relevant to TSSA members, however, are questions surrounding a dealer’s “business premises.” In addition to the other items required on the FFL Application, an applicant is required to submit the business address of the premises and, if the premises are leased/rented, the name, telephone number and address of the property owner. It is also likely the case that the lease or rental agreement will need to be attached to (and submitted with) the FFL Application. (1)

Prior to being granted a license, however, TSSA has been advised by the ATF that, in the event that the applicant desires to sell guns out of a rented space, the ATF will generally require either (a) a copy of a commercial lease permitting the sale of such firearms or (b) written permission from the landlord of the space stating that they know the space will be used to sell guns and ammunition.

From a practical standpoint, members should probably not permit businesses to operate out of storage units, since a commercial lease would be more appropriate given Texas landlord/tenant laws and, for the reasons discussed below, it is likely that it would run afoul of the terms of the TSSA lease.

DOES THE TSSA LEASE PROHIBIT GUN SALES FROM UNITS?

In most cases, the TSSA lease will prohibit guns sales from units.

First, Section 36(a) of the TSSA lease strictly prohibits the storage of “ammunition” and any “prohibited weapons under the Texas penal code” (such as machine guns sawed-off shotguns, etc.). This prohibition also applies to other explosive materials, such as gasoline and fertilizer.

But more to the point, Section 36(c) of the TSSA lease prohibits (unless lessor’s prior written consent is given) a tenant from using the space (a) for direct sales or (b) for a business office or full-time work area.

In addition, unless the lessor explicitly gives prior written consent to the tenant saying otherwise, tenants are strictly prohibited from making direct sales from a unit or using the unit as a business office or workplace. Unless (a) the tenant does not sell ammunition from the unit and (b) the lessor has expressly given permission for the dealer to make sales from the unit, the TSSA lease will prohibit selling guns from a unit.

Another major red flag for such a tenant would be the lack of insurance coverage for such activities. First, standard tenant (renter’s) insurance would not cover this type of activity (i.e., selling and distributing guns from the property). Additionally, lessor’s insurance would also not cover activities arising from gun sales at the self-storage facility, leaving the lessor open to personal liability.

CONCLUSION

For the reasons set forth above, TSSA members should not lease storage space to tenants who intend to sell guns for profit from their units. Even in the rare circumstances where selling firearms from a unit would be legally–and contractually –permitted, there are other areas of concern: If word were to spread that a self-storage facility had declared “open season” for gun sales from units, it could lead to a rush of dealers to the facility, since self-storage units would be cheap alternatives to setting up shop at retail sites. This problem could be exacerbated by an environment where there has been a spike in gun sales. Further, future problems could possibly plague a self-storage facility, including issues arising out of thefts from a storage unit containing firearms, unhappy tenants (and potential tenants) knowing that gun sales are occurring at the facility and other unforeseen liability issues. One final note: This article does not discuss the ability to sell any firearms in connection with an auction sale. Generally speaking, the preceding licensure provisions would not apply in the case of a public auction since a firearms “dealer” must be someone who is “engaged in the business of selling firearms.” For further discussion on selling firearms and ammunition in connection with a foreclosure sale, members are encouraged to review the article entitled “Sale of Firearms and Ammunition: Is It Legal?” in the TSSA Goldbook©.

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