Aug 22, 2013

The best way to avoid disputes when renting out your property is to communicate clearly with paying guests. You should never rent out your property to anyone without written terms, even if no payment is involved. Not only is your vacation rental agreement a contract between you (the vacation rental owner) and the guest, designed to protect your legal interests, it is a vital way to communicate important information to your guests. As such, it needs to spell out details about where the property is, when the guest may check in, when they must check out, payment terms, and your property's "house rules." We have arranged our vacation rental agreement into three pages as follows
  1. Dates of rental, and dates and amounts of payments
  2. Terms and conditions of use including our cancellation policy
  3. Guest information, including name, address, vehicle license numbers
In this post I'll share a copy of our blank vacation rental agreement and explain it section by section. If you only read one section, then concentrate on the cancellation policy and the references to trip insurance. 

Page 1 - Dates of rental, and dates and amounts of payments


Offer Expiration Date

It's important to spell out the date by which the contract must be signed and payment received in order for a reservation to occur. You don't want to be left waiting for several days for a commitment from a person who tells you he wishes to book, book the same dates to another party, and then find out the first person has assumed he still has a claim on those dates. It is up to you how long you are willing to "hold" dates on your calendar while waiting for a signed contract and payment; but without these, there is nothing to keep a person from backing out - perhaps after you have already turned away several others also interested in those same dates. We rarely hold dates for longer than 24 hours, and will continue to respond to inquiries for those dates until we have received both payment and a signed contract, especially during our high season. To make this clear, we spell out a date by which the offer expires right at the top of our agreement.

Please Note: Until we receive BOTH your Signed Agreement and your Reservation Payment, the Offer to Rent and the Terms outlined in this Agreement expire on _________, after which, we may not be able to hold your reservation. 
After the above date, please do phone to check that your nights are still available before sending payment.

Reservation Payment

In addition to receiving a signed agreement, you should also collect a reservation payment. It is up to you to determine the amount, and whether it will be applied to the rent or a refundable deposit. This is how your potential guest shows he is committed to renting from you, so it should be a non-trivial amount. (Later in this article, we'll discuss cancellation policies.) Again, we only mark dates as "reserved" on our calendars after receiving both the signed agreement and a payment. You don't want to turn away other inquiries, without having received these. So we also very clearly state at the top of our written agreement the amount we must receive by the offer expiration date, in order for there to be a reservation.

If we do not receive this completed Agreement, along with your $_________ payment, by the above date, and we have not heard from you, we will take that to mean that you are no longer interested in renting our vacation home and we are free to offer our vacation home to other parties for the same dates that you have requested.

Greeting

Once we've spelled out the offer expiration and the required reservation payment, we date the agreement itself, and include a short and friendly greeting to the person who will be signing. It is important to include the address of your rental property, so that there's no confusion about what and where they are renting. For security purposes, you may wish to leave out a portion of the address, such as unit#, or instead provide the name of the property, omitting the street number, until after the entire rent is paid in full.

Date: ________

Dear ______________________________________________________________________,

Thank you for choosing our condominium for your vacation. The villa is located in Wonderful Vacation Area, Great State USA.

We hope that you have a pleasant stay. And if you have any further questions, feel free to contact me.

VR Owner

Confirmation

We follow our reservation guidelines and initial greeting with a thorough description of the booking, including specific times and dates for when the guests may check in (and when they must leave the property), size of the group, as well as all payment amounts and their deadlines. Here's an example of what this section can look like:

Check-in date: June 14, 2014 (Saturday) after 4pm (No early check-in please)
Check-out date: June 21, 2014 (Saturday) by 10am

Number of people in party: 2 adult(s), 3 child(ren)

The total rental cost is $930.19 plus a $250.00 refundable damage deposit.

$930.19 = $750.00 (rental fee for 7 nights) + $75.00 (cleaning fee) + $105.19 (12.75% Sales and Occupancy Tax)

Payment Schedule:
1st rent payment ($465.10) to reserve your dates is due by offer expiration March 21, 2014*
2nd (and final) rent payment ($465.09) is due May 15, 2014
Refundable damage deposit ($250.00) is due May 31, 2014

*please call/email to confirm nights are still available before sending payment after offer expiration date

You'll notice this section repeats the offer expiration date, and also the amount of the payment ("1st rent payment") that is required to secure this booking. It also includes the check-in and check-out dates and times. These details are also repeated or referred to again in the terms and conditions and other sections that follow.

Invoice Details

It is important to let your guest know what to expect during the months prior to their check-in date, how they will be notified when a payment is due, and what forms of payment you will accept (for example, you may not wish to accept a mailed cheque for a final payment that is scheduled less than 30 days prior to the date your guests access the property). We take the majority of our payments by PayPal, so the next section in our agreement spells this out. Notice how we also indicate we are open to discussing alternative arrangements in advance. This will help prevent unfortunate misunderstandings regarding how you are to be paid later on, so you can hopefully be spared any "the check is in the mail" scenarios.

A PayPal invoice will be emailed to you for each payment. Please do not send payment via check, unless by prior arrangement. Shortly after the final payment is processed, your lock box code, driving directions, and other useful information will be provided.

The above section also sets the guest's expectations with regards to how you handle guiding them to, and into, the property. We make it clear up front that our guests must access the key to our property with a lockbox combination, and that they will be given a code after their final payment has been received.

Trip Insurance

The next section reminds the guest that any financial hardships he may face should he decide to cancel his reservation are his responsibility. By recommending that the guest secure his own trip insurance, we are making very clear that we cannot act as a travel insurance provider and cover his losses, if a situation arises so that he cannot hold up his end of the contract. This is intended to reinforce our cancellation policy, the terms of which are spelled out very clearly in the terms and conditions section of the agreement.

Please note that we are a very small operation with only one vacation home in Wonderful Vacation Area and cannot easily write off lost income from cancellations, as do large hotels. If you are concerned about the possibility of a last-minute cancellation or early departure, we strongly suggest that you take responsibility for this risk and obtain trip cancellation/interruption insurance.
I understand that my choice not to insure my vacation is my responsibility. Your Initials:________ Date: ________

Signature

At the end of each and every page of our agreement, we require a signature and date. For the majority of our Agreements, we are able to collect electronic signatures. If you're interested in doing that too, you can read more about How to use Electronic Signatures with your Vacation Rental Agreement.

Your Signature ___________________________________________ Date _________________
(Continued on next page)

Now that we've spelled out the details of the reservation, payments and dates, it is important to include terms and conditions governing how your guests may use the property. Of course, you have to be realistic as to what to include here, limiting yourself to including only the most important "do's and don'ts," such as any behaviors that break Homeowner Association Rules, or draw police attention and earn you the resentment of your neighbors. But apart from the major stuff, if you also include every little pet peeve in your terms and conditions, you will end up with a contract that your guests will just skim over with glazed eyes - or worse, a contract that makes them less sure of their decision to book your Vacation Rental!

Page 2 - Terms and conditions of use including cancellation policy

Check-in/Check-out, non smoking, no pets, no partying

We have 21 terms and conditions in our agreement currently. These have come from a variety of sources, and have been tweaked over the years based on our own experiences and the very valuable advice we have gotten from other vacation rental owners through online forums like the Vacation Rentals Yahoo Group and the HomeAway Community Forum. Links to these owner communities and others are on the Resources Page, and I highly recommend becoming an active participate in at least one of these.

RENTAL RULES AND REGULATIONS
The condo, is located at Wonderful Vacation Area, Great State USA.

1. CHECK-IN TIME IS AFTER 4 P.M. EST AND CHECK OUT IS 10 A.M. EST. NO Early Check-ins.
2. This is a NON SMOKING condo. We ask that you do not smoke inside the condo or out on the screened-in porch.
3. Pets are not permitted in rental unit under any conditions.
4. We will not rent to vacationing students or singles under 25 years of age unless accompanied by an adult guardian or parent.

The terms and conditions open with the address of the property, and a repeat of the check-in and check-out times. Both of these details were on page 1, but repeating them here underscores their importance to avoiding a major dispute with your guests. Next we make explicit our prohibitions against smoking and pets in the property. A minimum age requirement is one way to avoid groups of partying students.

Damage Deposit and Payment

The next set of clauses detail the terms surrounding our damage deposit, re-stating the amount and when it is due, and also outlining the conditions under which it will be fully refunded. One particularly important conditions to include here is the return of all keys, passes or access cards, with details on any fees that will be charged if they are lost. The cost of getting such things replaced in time for the next group of renters will often be much higher than many of your guests may realize.

5. DAMAGE DEPOSIT- A damage deposit of $________ is required, and must be received within two (2) weeks of check-in date. The deposit is a damage deposit. It is NOT applied toward rent. It is fully refundable within fourteen (14) days of departure, if  the following provisions are met:
a. No damage is done to condo or its contents, beyond normal wear and tear.
b. No charges are incurred due to contraband, pets or collection of rents or services rendered during the stay.
c. All debris, rubbish & discards are placed in the community refuse containers outside
d. Soiled dishes and cooking items are cleaned prior to departure.
e. The key is left in the lock box (2nd Key, with attached Pool Access Card, on hook inside) and all windows are closed and latched
and all exterior doors are left locked. A thirty-five dollar ($35.00) fee will be charged for a lost key and also for the pool access card.
f. All charges accrued during the stay are paid prior to departure.
g. No linens are lost or damaged.
h. No early check-in or late check out without special written arrangements made prior to the check-in day.
6. PAYMENT – The first rent payment must be received within 24 hours of booking the reservation. A PayPal Invoice will be emailed to you, unless other payment arrangements have been made with VR Owner. This rent payment is not a damage deposit. The remaining rent payments must be made by the due dates in the payment schedule provided.

We have also chosen to include a general re-statement of key payment deadlines, that were detailed in the preceding payment schedule.

Cancellation and Trip Insurance

Arguably the most important clause in the agreement is the cancellation policy. This is the clause that can be tested the most severely. So you should be certain that your terms are made very clear to the guest before you have completed the booking process. Guests used to large hotels which refund as late as 24-hours prior to a check-in date, probably will not appreciate how difficult-to-impossible it will be for the individual VR owner to re-rent any nights if they cancel at the last minute. Most VR owners require at least 30 or 60 days' notice for cancellations, before they can refund any amount of money. Also, you will need to determine whether you wish to make the amount of notice even longer than 60 days for occasions when the reserved nights total several weeks or a month. This is something you may change over time, as you begin to learn the timing and frequency that inquiries for certain time periods and different seasons generally occur. If you find that it is much harder to rebook a cancelled month less than 180 days prior, you may wish to detail a separate notice period for your longer-term bookings in your contract. Also, be sure that you reimburse yourself for the time and trouble of setting up a booking, with a cancellation fee, even when a full refund after a cancellation is warranted. One idea we picked up from another owner was to offer the option to move the reservation to another date during that year with no penalty, which we hope may prove useful in keeping a customer we'd otherwise lose. Over the years we've had a few cancellations for one reason or another, and have usually been able to work something out with our guests, sometimes re-booking the dates to others at a discount so we could refund at least some of the money. But, by keeping our cancellation terms up-front and clearly stated in our contract, such occasions remain always at our discretion.

7. CANCELLATIONS – A sixty (60) day notice is required for cancellation. Cancellations that are made more than sixty (60) days prior to the arrival date will incur a $100 cancellation fee or you may reschedule your dates one time at the prevailing rate for any available dates within one year with no cancellation fee. Cancellations or changes that result in a shortened stay, that are made within 60 days of the arrival date, forfeit the full advance payment. Cancellation or early departure does not warrant any refund of rent or deposit.
8. The renter acknowledges that he/she has been advised by the property owner to arrange adequate personal insurance cover for all members of his/her party to cover all travel, personal risks/injuries and liabilities, and any cancellation.

Again, notice that a recommendation that the guest secures adequate insurance to cover any vacation mishaps is repeated here once more.

Maximum Occupancy and Parties

In the next two clauses we detail the maximum number of people that are allowed in the property, and warn that there are to be no parties. Obviously, it is a delicate thing to phrase this particular clause so that you don't leave your guests feeling that they cannot invite another couple over for an impromptu coffee or meal together while renting from you. However, you want to dispel any assumptions made by your guests that they are free to invite a dozen friends over for a New Year's Eve party or wedding reception while they are staying at your VR, without first checking with you.

9. MAXIMUM OCCUPANCY - The maximum number of guests is limited to eight (8) persons. An additional charge or $15.00 per person per night for guests in addition to eight (8) will be assessed, unless previously authorized in writing at time of booking.
10. NO PARTIES ARE ALLOWED IN THE RENTAL. This includes any use of the rental that causes it to be occupied by more than 12 people. Use of the premises and common areas in such a fashion that disturbs neighbors shall be deemed grounds for eviction.

Fees, Service, Exceptions and Parking

The following six clauses are fairly straightforward. We use these to indicate what linens are provided, plus (for the benefit of guests used to hotels) a statement that there is no daily maid service included. In most contracts, you will find owners protect themselves from charges of dishonesty with a clause about rate changes. Also, it is a good idea to include an "out" for yourself, so that you can terminate the agreement and cancel the reservation yourself, should you discover that your future guests have lied to you in order to circumvent your policies.

11. INCLUSIVE FEES – Rates include a one-time linen-towel set-up.
12. NO DAILY MAID SERVICE – While an initial supply of linens and bath towels are included in the condo rental, daily maid service is not included in the rental rate. However additional cleaning services may be made available at an additional rate.
13. RATE CHANGES – Prior to a confirmed reservation, rates are subject to change without notice.
14. FALSIFIED RESERVATIONS – Any reservation obtained under false pretense will be subject to forfeiture of advance payment, deposit and/or rental money, and the party will not be permitted to check in.
15. WRITTEN EXCEPTIONS – Any exceptions to the above mentioned policies must be approved in writing in advance.
16. PARKING – Parking is limited to two (2) vehicles. Vehicles are to be parked in designated parking areas only. Parking on the road is not permitted. Any illegally parked cars are subject to towing; applicable fines/towing fees are the sole responsibility of the vehicle owner. HOA rules prohibit any campers, trailers, motor homes, or boats being parked overnight on Wonderful VR property.

There will be the odd occasion when you feel comfortable enough with a guest to negotiate an exception to one of your rules; but whenever you do, always, always make sure you and the guest have it in writing. If you get into the habit of making casual verbal promises, you are conditioning your guests to pay less attention to your written contract and other written communications.

Storms and Road Conditions

We've been fortunate that since we started renting our Sunset Beach condo in 2009, there hasn't been a hurricane evacuation that has impacted our guests. But acts of natures are always a possibility, so we advise our guests to secure trip insurance against inclement weather or other unforeseeable events that disrupt their plans. This will leave you free to choose when and under what conditions you may chose to accommodate a guest in such situations.

18. STORM POLICY/ROAD CONDITIONS – No refunds will be given for storms. We do not refund due to weather or road conditions. To protect against cancellations caused by unforeseeable events such as illness or bad weather, we recommend that guests purchase trip cancellation insurance from a private carrier.

Liability and HOA Rules

It is important to address liability issues, for any injuries or losses your guests could experience while on your property (although, it is critical that you also make sure you have adequate Liability coverage in place and that you practice due diligence in the maintenance of the property). Also, since owners are usually held responsible by their Home Owners Association for anything a paying guest might do, including relevant HOA rules in your contract is important, should you have to charge them any fines assessed against you if your guests break neighborhood rules.

19. All of the condos are privately owned; the owners are not responsible for any accidents, injuries or illness that occurs while on the premises or its facilities. The owners are not responsible for the loss of personal belongings or valuables of the guest. By accepting this reservation, it is agreed that all guests are expressly assuming the risk of any harm arising from their use of the premises or others whom they invite to the premises.
20. Wonderful VR HOA RULES - Please read and follow all the Wonderful VR at Wonderful VR Rules regarding the use of Wonderful VR amenities in the public areas (pool, tennis courts, grills, etc.), restrictions on items left outside the buildings (no towels on railings, bikes in halls or walkways, etc.), and Fire procedures. Copies of rules are posted in the condo and also included in the guestbook.

County and State where the agreement will be enforced

The final clause under the terms and conditions section of our contract is an important one, only recently added to our contract, and for which we are indebted to other more experienced VR owners. Should all your efforts to prevent a dispute with your guest fail and a guest decides to sue you, you don't want to be compelled to travel to some distant jurisdiction in order to defend yourself. To leave this detail undefined, makes you vulnerable to the added expense and inconvenience of dealing with legal problems far away from home. Likewise, you will want the ability to require that any actions you may need to initiate over damage to your property or payment owed will be handled in a jurisdiction near you.

21. This rental agreement is made in Watauga County NC and its terms may be enforced either in Watauga County NC or in Brunswick County NC at the sole discretion of owner.
By Signing Below, I agree to all terms and conditions of this agreement

Your Signature:__________________________________________ Date: _________________
(Continued on next page)


Page 3 - Guest information, including name, address, vehicle license numbers


Where did you find us?

We keep track of where each guest found us so that we can evaluate the effectiveness of each of our advertising methods. Most guests submit their first inquiry online from our web site, or a listing site, making it easy to track how they found us. But since a significant number of our inquiries still phone us first, we try to gather some of this kind of information through our agreement.

Where did you find us? VRBO? HomeAway? FlipKey? VacationRentals? Google? (Please specify if Other). ___________________________________

Vehicles

Another useful thing to establish through your contract is parking arrangements, particularly if your VR is located where parking is limited in any way. We ask our guests for the license plate # or a description for each of the vehicles they plan to park near our VR. The number of blanks we provide reinforces that they need to alert us to any need to park extra cars. Having a conversation about this and putting the agreed-upon arrangement in writing before the check-in date helps us avoid annoying the neighbors, and enables us to respond to our HOA or the authorities about our guests' vehicles, should the need arise.

License # (or just a description) of Vehicle(s) you'll be parking at the condo:
Vehicle 1: _____________________________ Vehicle 2: _____________________________

Names of guests

We ask for the names of each member of the group. Notice again, how the number of blanks provided reinforces the maximum capacity we have stated earlier in the contract.

Names of all the individuals who will be staying overnight at the condo:

1. _____________________________________ 5. _____________________________________

2. _____________________________________ 6. _____________________________________

3. _____________________________________ 7. _____________________________________

4. _____________________________________ 8. _____________________________________

Address and Phone Numbers

Even though we rarely if ever use snail mail to correspond with the majority of our guests, we still find value in collecting this information (for later analysis for our marketing, just in case any legal issues arise, etc.) Cell phone numbers are growing more important as a way to reach guests while they are at your VR (or traveling to/from). It is a good idea to collect more than one number, if you can. We add all the phone numbers provided into our own phones' contacts (labeled as "VR Guest" to differentiate them from our personal contacts) so that caller id will help us identify any calls coming in from our guests. And by requiring yet another signature right below this information, you are strengthening the guest's impression that the information he provides here is important.

Mailing Address:_________________________________________________________________

Home Phone:______________________________________________________________________

Cell Phone(s):___________________________________________________________________
(Please provide any cell phone numbers you may use to contact us during your  stay, so that we can prioritize your calls.) 

Your Signature:___________________________________________ Date: ________________


Of course, the contractual needs of every VR property and every VR owner will vary, and so what is appropriate for our VR may not be suited to you. The agreement we have shared with you here began as a collection of boilerplate clauses provided in a guide to VR management. But, we have tweaked and added to it considerably since then, as we've gained more experience over the years and - most importantly - benefited from the advice and cautionary tales related to us by other VR owners.

Also spend time to consider the special needs of your individual property. There are probably special features at your property (a swimming pool, stairs, security system), with implications for your guests that will be necessary to address in your terms and conditions. And, often the legislation governing short-term rentals will be very different from one state to another. Our Vacation Rental property is located on the coast of North Carolina, so we don't expect you use it unchanged for renting out your cabin in Montana or your apartment in Cincinnati, Ohio. You will want to familiarize yourself with the requirements in your state, and maybe even pay your attorney to look it over for you

Additionally, your current situation - for example, your mortgage situation, your local rental and insurance markets, the amount of time you can devote to your VR business - will greatly affect what your contract should specify. For example, people have very different tolerances for risk, so your cancellation policy, as well as terms and conditions, should reflect your comfort level in these areas.

So it is a given that our contract will not meet your needs perfectly, but we hope it will give you a good place to start in writing your own.

If you'd like a copy of the complete agreement, then feel free to download a blank vacation rental agreement. You may also be interested in reading our article on How to use Electronic Signatures with your Vacation Rental Agreement.

If you already have a vacation rental agreement, then please share your insights in the comment section below. Be sure to indicate the city and state where your rental is located. We'd be especially interested if you include a clause that we haven't discussed here. And if you'd like to get more tips and tutorials like this, please subscribe to Rent By Owner Guide so you will be notified of new posts by email.

Welcome New Readers! Take a look around. A couple of good places to start are the About Page, and the Getting Started page. If you want to read every article in order, then start at the Getting Started page and click the "Newer Post" link at the bottom. You can also see an alphabetical list of all the posts on the Archive page.

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