How To Use Custom Vacation Rental Agreements with

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The Law About Post-Possession Agreements
Real Estate

Well drafted rental agreements help prevent disputes and protect the owner’s legal interests when disputes do arise – especially in regard to vacation rentals. Thoughtful vacation rental agreements provide owners with important safe guards and protections. For example, without an express vacation rental agreement, many vacation rental relationships will be governed by the state’s Residential Landlord Tenant Act and not the Inn Keeper Statutes. For good reason, owners prefer for the relationship to be governed by the Inn Keeper Statutes. See Vacation Rentals and the Super Bowl, October 15, 2014. Excellent vacation rental agreements also establish appropriate Rules and Regulations to help ensure that the renters are respectful of the neighbors and any CC&Rs.

And so, prudent owners should include a custom vacation rental agreement with any online booking, including online bookings with airbnb. As discussed in the above-referenced October article, any vacation rental agreement should at a minimum expressly state that the parties recognize and agree that the agreement constitutes an “innkeeper relationship” and is exempted from the Landlord Tenant Act. Further, the agreement should expressly state that the owner may perform a non-judicial lockout in the event that the guest breaches the agreement or willfully holds over post conclusion of the rental term. And if the property includes a pool or hot tub, the owner needs to include a separate waiver and release of liability.

Airbnb Allows Owners to Utilize a Custom Vacation Rental Agreement.

Contrary to popular belief, property owners (referred to as “hosts” by airbnb) can require guests to submit to additional terms and conditions prior to booking on the website.

First, as a practical matter, owners should disclose in the “property listing description” that there are additional terms, along with any additional steps needed to execute the contract. Airbnb suggests that hosts simply “copy-and-paste the terms in the message thread” with the guest. Otherwise, owners should consider separately sending a comprehensive agreement that the guest can sign with an electronic signature, via a convenient online service such as DocuSign. This allows owners to strengthen their legal protection while maintaining ease-of-use, which is one hallmark of airbnb.

Owners should utilize a custom vacation rental agreement based upon their particular property, considering that all properties and communities are unique. Avoid stock agreements and one-size-fits-all solutions.

For example: Airbnb does not process taxes. And the municipality in your jurisdiction may impose taxes on certain short-term rentals. For example, the City of Scottsdale assesses a Transient Tax Rate of 5.0%. In that case, in addition to the 1.65% privilege tax on rental of real property, there is a 5.0% transient lodging tax on any hotel, motel, apartment, or individual charging for lodging space to any person for 29 days or less. An owner in that situation should specify in the agreement that such amounts are also included in the rate.

And as another example, airbnb does not collect security deposits. Rather, airbnb has a set of procedures for an owner to make a claim on an airbnb insurance policy if the damage and property is within the scope of the Airbnb Host Guarantee Terms and Conditions. Depending on the nature of your property and the length of the rental, owners should consider collecting a security deposit to minimize the cost of potential property damage — and not exclusively rely on protection through airbnb’s insurance.

Owners can fully address these issues, and many others, in a customized vacation rental agreement. With a bit of planning, a custom agreement will eliminate disagreements before they arise, allowing owners to increase profitability and reduce headaches.

Beware of Property Use Restrictions

Even with the right vacation rental agreement provisions, local ordinances or applicable community covenants, conditions, and restrictions (“CC&Rs”) may restrict short-term rentals. Consequently, before owners market their property for rent to the public on websites like VRBO and airbnb, owners and property managers should consult with a real estate attorney to confirm any legal hurdles in your area.

In Closing

Websites like VRBO, HomeAway®, onefinestay, TurnKey®, and airbnb are priceless tools for finding interested renters. But owners and property managers who use these websites without requiring renters to submit to additional terms and conditions, unnecessarily expose themselves to risk and liability. With just a few simple steps, owners can incorporate a smart vacation rental agreement into websites like airbnb and prevent disputes from arising, shield owners from liability, and protect their property interests.

If you or someone you know needs help drafting a vacation rental agreement or has questions regarding vacation rentals, please contact us today.

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