As an Airbnb host, you can ensure that your vacation rental business runs smoothly by composing a short-term rental agreement that minimizes your risks. The agreement should cover the rights and responsibilities of the host and guests. In addition, it should contain the terms and conditions of the lease.
In this article, we will go over the 15 most important things that you should include in a short-term rental agreement and explain why you should use one.
A short-term rental agreement, also known as a vacation rental agreement, is a document that highlights the legal agreement between the owner and the renter. It is usually meant for a short rental period (between 1 and 30 days).
The agreement must meet all state laws and be consistent with Airbnb’s standard policies. In addition to the short-term rental agreement, you must provide a copy of the Lead-Based Paint Disclosure Form for the structures built before 1978.
A short-term rental agreement for Airbnb provides hosts with another opportunity to ensure that guests understand what can happen if they break the rules. Airbnb’s standard policy covers most circumstances. However, a short-term rental agreement can help hosts fill in the gaps to further minimize risks.
A vacation rental agreement should spell out the rules for guests. It should also explain the penalties for breaking them.
As a host, it gives you the right to require the guest to pay for damages resulting from violations of the agreement during the stay. You will gain the right to cancel a booking instantly if the property policies and rules are broken.
Given that a short-term vacation rental agreement helps define hosts’ and guests’ rights and responsibilities for a particular lease term, it is a good idea to use it every time you rent your property to new guests. The length of the stay should not determine when you use the agreement. Use it even if the guests are only staying one night, and even when renting to friends.
The only time that you shouldn’t use a short-term lease agreement is when renting with the intention of having a guest stay longer than 30 days. In this case, you should draw up a formal month-to-month or fixed-term lease agreement.
You can ask a guest to sign a short-term rental agreement as long as you disclose the terms prior to booking. Airbnb recommends that you do this by mentioning the agreement in your listing description.
You should also list the terms of the vacation rental contract again in a message thread with your guest.
As every property is different, the terms you should cover in an agreement will depend on the specificity of the situation. However, there are certain key things that should be present in each short-term rental agreement.
Here are 15 common elements you will want to include in your vacation rental agreement:
Write a clear description of your property. This section should explain all of the amenities that are included inside your rental. Make sure that the language is clear and unambiguous.
List all of the guests who will stay at your property during the dates of the rental. Be sure to include each guest’s full name, current home address, and phone number. You may also want to specify the effective date, i.e., the date that your short-term lease agreement becomes valid.
This is one of the most important sections of your short-term rental agreement. The agreement should include the date of arrival and departure. If you adjust these dates before guests arrive, they should sign an updated short-term rental agreement.
The maximum occupancy is the limit on the number of guests who are permitted to stay at your property. Make sure that you define the sleeping arrangements for each guest. Include the fire code regulations that justify your maximum occupancy number.
This section of the agreement protects you in the event that your guests bring other people to your property unannounced. It also places liability on the guests if those unauthorized visitors suffer injuries or cause damage.
This section should define how guests will gain entry to your property. If you have a lockbox or other key policy that guests should follow, be sure to explain that in your short-term rental agreement.
This clause is essential for every vacation rental agreement as it helps to clearly outline your house rules. Some examples of house rules and restrictions that you might consider to include are no-smoking or no-pet policies. If you charge any penalties for breaking the rules, be sure to highlight them in this section as well.
In this section, cover everything related to payment. Include the agreed-upon rental rate and the payment due dates. Also, explain the details about other services that you provide. For example, if you offer guided tours, transportation or breakfast, describe the details here.
A security deposit protects you in the event that a guest causes damage to your property. The host will return the deposit back to the guest upon his/her departure, providing that no incidents occurred. Before selecting an amount to charge for a security deposit, make sure that it is on par with what other hosts in your area charge.
Many hosts charge extra fees. Make sure that you define the cost, purpose, and required payment dates for any additional fees that you charge outside of the rent and security deposit.
This section should explain how a guest can cancel the agreement. Usually, hosts require guests to submit a cancellation request in writing.
This is where you should outline exactly what is covered by the cleaning fee. You should also give instructions so that your guests know exactly how to leave your property upon departure.
In this section of your short-term rental agreement, you should make a list of all the amenities that are available in your house. Go into detail about everything from the furniture to linens, TV, and air conditioner. Be sure to mention any outdoor areas that your guests will have access to as well.
Accidents and injuries can happen regardless of how well you maintain your property. The limitation of liability clause helps limit your responsibility if such cases occur. The clause limits the amount that the host has to pay if the guest suffers a loss while a short-term rental agreement is in place.
This clause must be reasonable and carefully drafted, so it is a good idea to consult a lawyer to review your terms. This section should include the following:
• It should state the statutory limits for the guest to bring a claim against you, the host.
• It should define the losses each party accepts to compensate with and without limit.
• It should state the losses that each party will completely exclude (specific losses that each party will not be liable for).
In any case, be sure to have insurance in place to avoid paying costs out of your own pocket if any unpleasantries occur.
This section should explain what will happen if either party violates the agreement. You can support your right to cancel their stay if guests break the terms and conditions.
You may include extra clauses in your short-term vacation rental agreement template. These will further limit what guests may and may not do while staying at your property.
If you don’t want your guests to access certain parts of the property, define this in an extra clause. For example, you can deny them access to the pool area or a particular room in the house.
Short-term rental agreements define the rights and responsibilities of both hosts and guests. It is designed to help the host avoid conflicts that may arise during and after a guest’s stay.
Here are the most common problems that a short-rental agreement can protect you from:
The Internal Revenue Service (IRS) provides a 14-day vacation rental tax exemption. This means that if you rent out your property for less than 14 days each year, you don’t have to pay taxes on your rental income.
On the other hand, if you are required to pay taxes on your rental income, you may deduct your rental expenses such as property tax and mortgage interest.
You must keep records of the dates you rented out your property to prove that your rental income is taxable or non-taxable to the IRS. Having a vacation rental agreement will provide the proof you need in case the IRS audits you.
Guests who won’t leave are a common vacation rental horror story. Having a short-term rental agreement in place will give you more leverage if you end up having to formally evict your guest via the courts.
Airbnb and other vacation rental platforms have insurance in place to cover damages to your property caused by guests. However, if you want to make a claim with your own insurance company, a short-term equipment rental agreement can come in handy.
A lack of documentation supporting your case increases the chances that you will lose a claim against a guest. It will also take an attorney more time to sort out who is liable for the claim to argue on your behalf if you did not have a short-term rental agreement in place.
If an incident occurs and you make a claim to Airbnb, your claim doesn’t have to end with Airbnb’s resolution team. If Airbnb’s standard policies do not make provisions for your particular incident, you can use your vacation rental agreement to prove your case in court.
Your Airbnb rental agreement should also be revised and updated regularly to ensure that you adhere to any changes in local or state laws. This is essential if you want your agreement to hold up in a court of law.
As you draft your short-term rental agreement, keep in mind that Airbnb will not be able to help you enforce any special provisions within your contract. Therefore, it is especially important that you speak with an attorney if any issues arise. You will most likely have to settle any breach of contract in a court of law.