Vacation Rental Agreement: 9 Steps to a Perfect Short-Term Rental Contract

Tim Casey (00:34):

You know, John, you and I have talked a lot about rental agreements and you and I both know that if you book with Airbnb or VRBO, they've got their templates that's out there. But what I found again, another lesson learned that I'd love to share with our community is that I found that creating your own rental agreement has a lot of value because what you as an owner can do is spell out the rules and the guidelines of your home to set the right expectations for the guest. And what I have found is that most guests really appreciate knowing what those guidelines are. And sometimes you're just sharing with them how things work in your home and in your community like trash. If I'm a guest, I need to know how do I manage trash appropriately. The templates, the rental agreement with all the house guidelines, really can add a lot of value to the guests, but also as an owner, it allows you to set the expectations with the guests. So if the guest doesn't take care of your home, you've got that to fall back on. John, what's been your experience?

John Candelario (01:51):

I think rental agreements protect you, but it also helps the guests understand what to expect. So I think every host should use a rental agreement because the standard agreement has some protections in it on the OTAs, but it doesn't have what you find important. It just has what those companies have important to protect themselves. You know? So anything that's important to you like your house rules specific to your home, or say you have the spa and you have specific rules for your pool and spa, you can put it in there. If you have noise rules, you can put it in there. So anything smoking, right? Anything that's important to you can be in your rental agreement and you can include the cost, if those rules are not followed, but make sure the language is not abrasive because you can rub people the wrong way making them sign something.

John Candelario (02:39):

So it should be simple, easy to read, comprehensive, and easy to sign. I mean, they're not going to sign a piece of paper, like a manual hard piece of paper, because that just makes it confusing. You got to print it out, you got to give it to them, scan it, you need to make it easy. There's a lot of apps that you could use to electronically sign and send things back and you could even copy and paste it into the platform like Airbnb and have them say I agree. There're different ways you can do it, but having them acknowledge the rules you have and sign it before they check in, I think it's a must and I've found that most hosts don't have a rental agreement.

Tim Casey (03:17):

I think that's right. And you know, John, some of the things that I put in our rental agreement is I talk about the fact that the house is a no smoking home. And I talk about if smoking does occur, there's a penalty. And that penalty only covers the cost of a deep cleaning that's required to get the ready the house ready for the next guest. I also talk about this is a no pet home, unless you have a service animal. We can talk about that maybe in a future podcast, John. And I outline all the specific details of the home so the guest knows exactly what the rules are and what the consequences are if they're not followed.

Tim Casey (03:53):

And to your point exactly, I learned this lesson the hard way, in the beginning, my rental agreement was too intimidating and I've now come full circle and I think about it very differently. I think about communicating the guidelines of the home in a very non-threatening very fact based way to the guest. And most times they appreciate that. And you're exactly right, there's plenty of services out there, whether it's DocuSign or PandaDoc, there's several like that out there that an owner can use to make signing those documents very easy, very straightforward.

John Candelario (04:29):

Absolutely. And there's a lot you need to cover in that rental agreement like security deposits. We'll talk about deposits on another episode, but that's a perfect place for you to explain that. Explain in detail what happens if something's broken, damaged, et cetera, smoking, that's a perfect place to explain what will happen with that security deposit because it's spelled out in legal language, but make sure the language, although it's a legal document, you're not making it too complicated because it needs to be able to be read and understood. And we're not lawyers, right? But you don't need a lawyer to have a rental agreement.

John Candelario (05:07):

There're templates and standard agreements. We'll share one that we use in the show notes, so that's your freebie for the day. You get a template that we are going to share with you so you can edit it as you will, but please remember, it is really responsible to have a lawyer review this before you actually put it into practice. But I do recommend having a rental agreement before you rent out your place. Because if worse comes a worse and push comes to shove and stuff gets broken, you need to have it spelled out in writing.

Tim Casey (05:36):

And you know, John, a best practice that I might share with our audience is in the past what I used to do is wait for the guests who actually reserve the home and then I would send the rental agreement. But what I've learned is that guests like transparent information. So now when the person, when the guest first reaches out to me and is just interested in the home, I let them know there's a rental agreement, I share a copy with them so they have a chance to read it and review it. What I don't want a guest to ever do is think that I'm renting a home and then I'm surprising them with this rental agreement.

John Candelario (06:12):

Right. And you don't want surprises so it's good to set expectations and the rental agreement's a perfect way to do that. On the next episode, we're going to talk about the house rules, but you want to put the house rules in the rental agreement. That's the place where it goes. So although Airbnb has a section for house rules, you also want to include it in the rental agreement and spell it out in plain English or any other language, if you're hosting in a different country so that people understand what your expectations are because maybe they plan to come and bring a dog or to order smokers and they need to know these things before that they make... Well, they're going to make the booking, but they need to know this before they check in. So if you look in the show notes, we'll include that template so you can review it and you can adjust it as you will. And that'll be your way to get started in having your very own vacation rental agreement.

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