Vacation Rental Agreements 101 How to protect short term rental with a vacation rental agreement listen to the podcast episode...
Vacation rental agreement highlights from the podcast episode
In this episode, John and Tim discuss creating your own vacation rental agreement. The podcast episode transcript is at the bottom of this post.
Spelling out the rules and guidelines for your home can set the right expectations for the guest. Most guests really appreciate knowing what your guidelines are and how it works. We will also share with you:
- Setting expectations with your guests through your rental agreement
- How to manage trash appropriately
- Going beyond the standard agreement that OTAs have for their guests
- Including your house rules
- Making it easy to understand and sign electronically prior to check-in
- Most host do not have their own rental agreement and how having one can help you protect your rental from pet damage, smoking damage, and more
- Outlining specific details about your home, how to work it, and penalties for house rules violations
- Not making your rental agreement too intimidating to prospective guests
A short-term rental contract (also known as a vacation rental agreement) is a document highlighting the legal agreement between the owner / manager and the tenant / renter. All agreements highlight several important elements, including, but not limited to:
- Names of each guest and dates of stay
- Terms of payment & security deposit
- Cancellation policy
- Check-In and Check-Out policies
- Cleaning and Maintenance
- Maximum Occupancy
- House rules
- Missing and damaged items
This post will explain how to customize our free template to make the perfect vacation rental agreement for your Airbnb or vacation home. Make sure at the top of your agreement you include the names of each renter and the dates of stay. Please note, it is always best to have an attorney look over legal documents before using for your vacation rental property. Please fill out your name and email below if you need assistance.
First, Terms of Payment for Vacation Rentals
First off, highlight the terms of payment for your rental property. When are your payments due? Most vacation rental payments are due in full 60-90 days before check-in. Commonly, renters pay around 25% of the booking upfront, with the remainder due 60-90 days prior to check-in. When payment is not collected in full, usually a cancellation policy protects the owner / manager from risk of a renter not committing to their reservation. If there is a security deposit, please explain amount and refund policy in the terms of payment section.
Terms of payment should detail the exact costs per night, applicable taxes, extras like pool heat and cleaning fees, security deposit and the arrival and departure dates of the stay. Clearly highlight check-in and check-out dates and times so there is no confusion.
Cancellation policy for vacation rentals
Secondly, all vacation rentals have a cancellation policy to protect both the owner and renter in the event of a cancellation. HomeAway and AirBnB have their own cancellation policies you can choose from. For your convenience, I have linked AirBnB cancellation policies.
If you are choosing your own cancellation policy, I usually go with full refund if cancelled within 60 days, no refund if cancelled after. This is common, because if a guests cancels and you cannot rebook, you will lose a lot of rental income.
Check-In and Check-Out Policy for Vacation Rentals
Thirdly, vacation rental check-in and check-out policies let your guests know how to get in and how to depart smoothly.
Check-In Policy for Vacation Rentals
Guest check-in time across the vacation rental industry is usually between 10-11am. What time should you choose? Well, this question is twofold. On one hand, the guest wants an extra hour to sleep so 11am may be best for great reviews. On the other hand, if you have a large home and an arrival departure on same day, your housekeepers may not have enough time between 11am-4pm to prepare the home properly. The choice is yours, but I personally prefer 10am.
Next, let's discuss late check outs. Your vacation rental agreement should clearly explain that late checkouts are allowed up to a time of your choosing, but charge 1/2 a nights rent for a late checkout. Do not allow a late checkout if you have a same day check-in. Seems obvious, but remember to check that calendar!
Check-Out Policy for Vacation Rentals
Equally as important, your check-out policy in your vacation rental agreement needs to clearly explain what is expected of your guests upon check out. A check-out policy for a vacation rental includes:
- Check-out is at 10am. Late check-outs are subject to one-half nightly rent rate.
- Please place towels by the washing machine
- If dishes were used, please start dishwasher
- Take out trash and place in trash receptacle
You can add or remove check-out rules as you wish.
Cleaning and Maintenance in Vacation Rental Agreement
Use this section to lay out expectations for guests on the standard of cleanliness and how they should leave your home when they depart. Be reasonable, guests will usually strip beds and put dishes in dishwasher, but they will not clean the home if they are paying a cleaning fee. Next, let guests know how to contact you if there is a maintenance issue and how they should expect you to respond.
Do not forget to let your guests know what maximum occupancy levels are. If your home allows a maximum of 8 guests, then it is 8 guests. In the first section of a vacation rental agreement, all names of guests should be listed. Any extra guests are in violation of rental agreement and should be charged per guest per night accordingly. This section prevents horror stories - like large parties with loud music!
House rules for vacation rentals
House rules are extremely important. Luckily for you, we have a related blog post on house rules for vacation rentals.
Click on the link above for house rules to insert in your vacation rental agreement.
What about a breach of my vacation rental contract?
Explain consequences of breaching the contract in a professional way. If the contract is breached and you clearly highlight what occurs in the case of a breach, you cover yourself.
Missing and Damaged Items
Next, our least favorite part. It breaks my heart, but guests sometimes take or damage your property. Vacation rental agreements should clearly state guests will be charged for damaged or missing items from their security deposit or beyond if necessary. There should be no surprises here.
Vacation Rental Accidental Damage Insurance
If you offer vacation rental accidental damage insurance, highlight what the policy covers and does not cover so expectations are set. Commonly confused, guests think all damages are covered by a small insurance fee they pay on the booking - this is not commonly the case and you will be on the hook if you do not include details in your vacation rental agreement.
Vacation Rental Agreement Episode Transcript
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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3 thoughts on “Vacation Rental Agreement: 9 Steps to a Perfect Short-Term Rental Contract”
Hi. Whats the best tax vehicle for short term rentals? Corp, individual, etc.