Having a short term rental agreement in place has many benefits. Perhaps most importantly, it helps you as a property manager avoid unnecessary headaches and prevent damages. How vital this short term lease is might depends on the platforms you are using to rent out your properties. In this article, we look at why agreements are important, who needs them, and what to include in them.
What is the purpose of a short term rental agreement?
A short term rental agreement helps to ensure that a tenant will leave your property in the same condition they found it. It also puts all the important details in writing so that there’s no confusion on what’s provided on your end, and what’s expected from the tenant. Once it’s signed, it becomes a legal obligation for both you and your guest to adhere to your vacation rental contract. Most rental agreements outside the listing sites like Airbnb or Vrbo are written in a way that favor the property owners.
Note that short term rental agreements are much different than in a traditional real estate lease. Short term rental guests typically have less protections than long-term tenants. There are also few (or none at all) landlord and tenant obligations like in a long-term rental. That means you can load your agreements with many more stipulations that favor you (regardless if you’re a manager or property owner.)
Do you even need a short term lease agreement?
If you’re renting your property through sites like Airbnb, Vrbo, or Booking.com, then put simply, no you don’t. These property rental sites have their own vacation rental agreements that are written into their terms and conditions. However, these short rental agreements are incredibly broad and don’t cover important specifics related to your property.
You also have to remember that the short-term rental agreements found on these sites were written in the best interest of the platform. Not necessarily the property owners or you, the manager. So some finer points may not be covered, or could sway in favor of a guest. After all, the goal of these listing sites is to get repeat guests, not necessarily to protect the property managers or owners.
If you’re hosting guests outside of a third-party platform, like through a direct booking site, then some sort of vacation rental contract is necessary assurance in the event that something goes awry.
Managing your short-term vacation rentals can be difficult when you’re using several different platforms for booking rentals. If you’re looking for an easier way to organize and manage your bookings, or if you’re looking to scale up your business with ease, consider using a platform management software. It will save you time and increase your bookings.
Why you need a vacation rental agreement
Regardless of what platform you’re using, asking guests to sign what is essentially a short term lease is never a bad idea. The agreement makes sure that the renters have actually read your conditions for their stay and mitigates the risk of a potential disagreement or miscommunication. It holds both parties accountable for the terms of the vacation rental contract. It also shows your commitment as a property host to fairness and professionalism.
So what goes into a short term rental agreement?
Including all of this is especially important if you aren’t using a platform like Airbnb or Booking.com. The information needed in a vacation rental agreement can be broken down into five categories:
- The basic Information
- The amenities and extras
- The rules
- The logistics
- The security deposit
- The signatures
The basic information
The first thing you want to have in a short rental agreement is all of the information about both parties, the stay itself, and the property. Be sure to include:
- Full names, addresses, and contact information (email and phone numbers) of both the property host and the guest tenant
- The arrival and departure date of the stay (sometimes called the rental period)
- Check-in and check-out times and whether guests can self-check-in
- The daily, weekly, or monthly rate that the tenant is expected to pay
- If there is a security deposit, you should include the amount as well as your terms around its return. Most agreements have a dedicated section for that (see below)
- Your detailed cancelation policy
- Basic stats on the property, like the number of beds or bedrooms, and the maximum occupancy
- Whether the guest will be charged a cleaning fee, and when that fee gets charged.
The amenities and extras
After you get your basics out of the way, we recommend highlighting the amenities you offer, as well as any potential fees that your guests should be aware of. Outlining the amenities gives you a chance to show off exactly what your property offers. If your property has a pool or a nice outdoor barbeque area, you want to make sure that your guests know that. It also clears up any doubts between what is and is not included in the booking.
This part of a vacation rental agreement also gives you the opportunity to communicate other fee-based services you may have. This would include things like bike rentals, tours, airport pickups, or other services that you offer for a fee. Be sure to also include your fee rate for pets or additional guests, if you have them.
No vacation rental contract would be complete without some basic house rules. House rules are based around what your preferences are as a host or manager, such as no smoking, the number of guests allowed, or parties. It is always a good idea to mention that no illegal activities are allowed, even if it feels like stating the obvious.
If the property adheres to quiet hours, it’s nice to include those with your rules as well. You can also reiterate previously touched upon topics, like cancelation policies and pet fees (or lack thereof).
Don’t forget to include applicable local rules, state laws, and municipal bylaws and ordinances. Breaking some of these rules could lead to eviction from the vacation home if there’s a visit by law enforcement. So it’s important to remind the guest that if that happens, your company isn’t liable to provide alternate accommodations.
Finally, you should have a quick mention about subletting. While it’s unlikely anyone will sublet a vacation home (it may not be profitable), you still want to reduce your exposure to shady tenancy.
In this last part of your short term rental agreement, you will provide more information on the property that the guests will need to know during their stay. This may include specific directions to the property, where to find the keys or how to enter the building, any needed info on parking, etc. You know your property best! So think about what guests will need to know to get settled in as easily as possible.
Another statement to include is your rights as the property host, such as the right to enter the property during someone’s stay in the case of necessary maintenance or an emergency. However, specify the period of time you may need access to the property.
Stating specifically how you expect the property to be left would also fit in here, as well as if there will be someone coming to clean the place or change the linens. Again, think about what would be good for guests to know about your property specifically! This part can also help you give your renters a better guest experience.
The security deposits
If you ask for a security deposit, it’s important to highlight that the reservation will only be valid once you’ve received the deposit in full. You’ll also have to detail the amount required for the security deposit, and the time by which it’s expected. Generally, most hosts or managers list one or two payment detail methods.
You’ll also have to explain what the deposit covers, that it covers a specific rental period, and conditions under which your vacation rental management company will withhold the deposit in case of damages. This section usually ends with a sentence of two about when the deposit will be returned (usually 2-3 business days after the rental period ends.)
Your short term rental contract should also be a short rental agreement, meaning it doesn’t need to be longer than a few pages. You want to hit all the necessary points, but also make it brief enough so that someone wanting to start their vacation will actually read it through. Both parties should also sign the agreement in order to make it legally binding.
You can use an online service so that your guests can e-sign the agreement before their arrival. You can also get them to sign in person upon arrival. However you go about it, this step should not be skipped!
Does all of that really need to be included in a vacation rental agreement?
You may have noticed that a lot of the information that was listed above is already provided on sites like Vrbo and Airbnb. With guests that book through these sites, it isn’t necessary to include, but it never hurts to give them the information again. As part of your property management due diligence, you should read through the terms and conditions of the third-party booking sites that you are using to see how adequate they are to your needs.
In the case that renters are booking directly through you, all of this information should absolutely be included in the contract. Again, every rental property is different, and the formula is not one-size-fits-all. Give some thought to any other policy or terms you would like your guests to agree to.
Other things to keep in mind
Here are a few other factors to consider when preparing a vacation rental agreement:
It’s important to make sure that your short term rental agreement is compliant with local property laws. In general, you want to make sure that you understand governing laws and any implications they might have for you. Meet with a lawyer to gain an understanding of local property laws and to review your rental agreement.
Including a solid back-up plan
While a signed short term rental agreement holds both parties legally accountable for following the terms of the agreement, it’s never a guarantee that nothing bad will happen. That is why you should also consider vacation rental insurance for your property. In fact, you will likely be required to have liability insurance, but you may want to consider your insurance options further to cover damaged or stolen property.
A vacation rental agreement benefits your guests too
Having a short rental agreement between you and your temporary tenants doesn’t just benefit you. It also protects your guests as well. Signing a short rental contract will give them peace of mind that their host won’t try to pull anything shady, like adding on extra fees. Essentially, it improves the guest experience.
Where to find rental agreement templates
Drafting up your own short term rental agreement might seem like a lot of work at first. That’s why it may be tempting to download a ready-made rental agreement template. However, bear in mind that templates you’ll find online are by default general and may not cover some of the unique elements of your business.
Instead of downloading a rental agreement template, start by writing down your own following the guidelines above. Then bring your rough template to a lawyer or an attorney for final review. If part of the work was done ahead of time, the attorney’s fees might not be as expensive as you’d think.
It all comes down to YOUR preference and needs
At the end of the day, you know your properties better than anyone. So, when it comes to your short term rental agreement, the when, why, how, and what it includes all depends on what you need to be a successful property host.