Top 15 Things to Include in Your Short Term Rental Agreement

Whether you’re an Airbnb homeowner or vacation rental property manager, whether you list properties on one or many OTAs or solely rely on direct bookings, having a short term rental agreement in place will help protect your rights.

Having a legally binding document that clearly spells out the rules of agreement between you and your guests creates a safety net for the future, saving you time, money and stress in case of conflict with guests. It’s a smart move for both you and your property.

15 things to include in a short term rental agreement

1. Property details
2. Names of all parties
3. Rental period
4. Occupant limits
5. Fees and payments
6. Liability limitations
7. Host right of entry
8. Check-in process
9. House rules
10. Criminal activity
11. Right to cancel
12. Maintenance
13. Prohibition on sublets
14. Penalties for breach
15. Cost of lawsuits

What is a Short Term Rental Agreement?

Also known as a short term lease agreement, a short term rental agreement is a document that outlines the responsibilities of the property owner or vacation rental manager, referred to as the Lessor, and the short term tenant, referred to as the Guest.

The document must include all the information and rules required for a guest to undertake a short term rental of the lessor’s property. A short term rental is generally considered to be not longer than 30 days.

Agreement clauses can be different depending on the state, county and city laws applicable to your property.

Why is it Important to Have a Short Term Rental Agreement?

When you list your property on an OTA and a guest books it, both of you are bound by that OTA’s rules for host and guest conduct. Different OTAs have different rules, and while some platforms like Airbnb and Vrbo offer hosts insurance programs that cover certain damages and liabilities, having a short term rental agreement will ensure you cover all the bases and protect yourself and your property from damage and liability to the fullest extent that the law allows. Other advantages of having a short-term vacation rental are:

• Filter out bad guests as they’re less likely to choose a vacation rental that asks them to sign a legally binding agreement that can hold them responsible for bad behavior.

• Guests are made aware of the rules and conditions governing their vacation rental and the penalties they can incur for breaking them.

• Because guests are clear on what to expect, it lessens the chance of receiving a bad review due to misplaced expectations by guests.

• Easily take legal action to receive compensation for any damage to property caused by your guests because terms are spelled out and you are not bound to OTA decisions alone.

• Make sure you’re not held legally accountable for illegal behavior by guests while staying in your property.

• Vacation rental agreements can help you during tax season, serving as proof that can lead to exemptions on other taxes or deductions on expenses.

• If you get stuck with a guest who refuses to leave, having a signed short term rental agreement will make it much easier to get them evicted.

• Short term rental agreements are also helpful when you are submitting a claim with your insurance provider for property damage caused by guests. In fact, many short term rental insurance providers require hosts to use one.

What Should You Include in Your Short Term Rental Agreement?

The fine-print of a short term rental agreement will depend on the type of property you’rerenting out, whether it’s a condo, castle, tent cabin, etc.

The OTA through which the guest booked your property can also have an impact as different OTAs have different rules. You can have more of a free hand with the short term rental agreement for a guest booking directly.

The short term rental agreement will also have to comply with all applicable laws in the city, county and state that your property is located in.

Here are some important information and clauses that you should definitely include in your short term rental agreement.

1. Property details

Your short term rental agreement should contain a clear and full description of your property, such as the number and types of rooms, and include all furniture, equipment and other amenities available inside the property as well as the condition in which they can be found. This prevents guests from claiming later that something was ‘already broken’.

Specify any areas of the property that guests are not allowed in such as a shared lawn or facilities such as a swimming pool that they are not allowed to use. Also include the exact location of your vacation rental as this can affect what laws and regulations will apply to your property.

2. Names of all parties

Make sure to include the full name and address of every adult guest who will be staying in your property. Identify each of them as a Guest and have all of them sign the agreement.

This provides full protection as each guest is now considered to be legally responsible for all terms of the agreement. This includes the rent you are charging them for the duration of the stay and the proper use of your property. This also allows you to end the stay and ask your guests to leave if any of the guests breach your short term rental agreement and not just the person who booked the stay on the OTA.

Include your or the homeowner’s full name, current address, phone number and birth date so there is no misunderstanding on who the Lessor is.

3. Rental period

Use the correct dates of arrival and departure in the agreement as incorrect dates could make the agreement invalid. Conversely, it could also lead to your short term guests being considered long term tenants and falling under the statutes of those laws, giving them additional rights.

In case there is a change in dates, ensure your guests sign an updated agreement.

Include the check-in and check-out times. Don’t forget to specify if it’s AM or PM.

Spell out penalties if guests check in before or check out long after the specified time. This can be a late checkout fee or other penalty.

4. Occupant limits

The maximum number of occupants you can allow to stay on your property will be determined by health and safety regulations applicable to your property’s location. You can however choose to lower the limit for your own convenience.

Mention the sleeping arrangements you have made for the maximum number of guests you will allow, as well as safety measures such as the number of fire extinguishers and where they are placed.

Naming the maximum number of occupants you allow on your property will allow you to take action in case guests bring in extra unauthorized guests or host an event or party without your permission.

5. Fees and payments

Define all the fees that your guests will be paying, including the agreed nightly rate, cleaning and other service fees, as well as any taxes that you will be collecting to remit to the government and the date when payment is due.

Mention the security deposit that you will collect beforehand and the circumstances under which you will not be refunding it to the guest, as well as the methods of payment that you accept.

If your guests have come to you through an OTA such as Airbnb or Vrbo they will be making payments through the platform, which will then remit your payment to you.

If you upsell experiences or amenities, include their full details in the agreement.

6. Limit liability

No matter how carefully you have maintained your property, it is impossible to completely prevent accidents from taking place.

Have a clear and strong clause in your short term rental agreement that limits your responsibility in case your guest is injured while on your property. Vacation rental nsurance is always advisable if you are forced to pay compensation in such an instance.

7. Host right of entry

You may need to enter the property while it is being occupied to sort out a maintenance issue with your handyman in tow or because of an emergency.

Include a clause in your short term rental agreement specifying the instances you may need to enter the property during the guest’s stay, as well as the period of notice you will give guests before entering. You can also state that you can enter the property without notice in case of an emergency. Don’t forget to define what constitutes an emergency.

This clause will help avoid any disputes when you are forced to enter your property while it is occupied.

8. Check-in process

Explain how guests will gain access to your property. This can be how and when they can pick up and drop off keys or their unique code to the smart lock and the period for which the code is valid.

If you are still using keys, mention that it is their responsibility to keep them safe and not let them out of their possession until their stay ends. You can also impose a penalty for lost keys.

9. House rules

Clearly outline all the rules and conditions that you expect your guests to follow during their stay.

This can range from not smoking inside the house and parking to not using the swimming pool after 10pm, not being excessively loud or bringing pets. If you do allow pets or smoking in certain areas, go into detail on the conditions that apply.

If you are a host who expects guests to do a few chores, like laundry or dishes, mention them and how you expect your guests to go about each activity.

If there are cameras in your property, mention where they are, what they cover and the access and use of the footage that you as property manager have.

Include a provision making guests liable for any lawsuits or other claims that may be brought against you because the guest broke a local regulation you have specified.

10. Criminal activity

Include a clause precluding you from responsibility in the case of your guests making bookings under false pretenses or engaging in criminal behavior during their stay in your property. This will protect you and your vacation rental from criminal prosecution.

11. Right to cancel

Outline the circumstances under which you will be allowed to cancel your guest’s stay or evict them from your property as well as the circumstances under which guests can cancel the agreement.

Generally, if your guest has come to you through an OTA booking, you and your guest will be bound by the cancellation policy you have chosen on the platform.

12. Maintenance

Explain your expectations of guests in keeping your property clean and undamaged.

Your guests are on vacation and while you can ask them to leave towels in the laundry basket you have provided instead of the floor, you can’t expect them to take full responsibility for cleaning. This is why you charge a cleaning fee. Specify where guests should throw their trash as well as if they are expected to sort them out for recycling.

Include provisions that address repairs and replacement. Make it clear that it is the guest’s responsibility to maintain the property during their stay and pay for any damages they cause.

Mention that guests must notify you or another designated person immediately if they find any damaging or dangerous conditions in the property. For example, if there is a leak in the ceiling or a faulty plug socket. Also explain how you as the homeowner or property manager will handle the issue and what compensation, if any, the guest can expect if it affects their stay.

13. Prohibition on sublets

Many vacation rental hosts are familiar with rental arbitrage. This is where a property manager rents a property for the long term from an informed homeowner and rents it out to short term rental guests. Make sure your guests are not trying to do the same.

Subletting or subleasing by a guest can cause a lot of problems and can even be illegal. Include a clause that expressly prohibits any type of subleasing by the guest and the penalties they will incur if they do so.

14. Penalties for breach

As the person supplying the agreement, you can use a ‘choice of law’ clause to mention which country, state and/or city laws will be used if there is a dispute. This is very important for vacation rental properties because more often than not guests hail from different regions or even countries.

15. Cost of lawsuits

Include a clause requiring guests to bear the cost of any lawsuit or other claim brought against the homeowner or property manager.

Mention that guests will also have to cover the costs of lawsuits or other claims brought against them by the lessor due to a breach of the contract.

How to Make Your Short Term Rental Agreement More Effective

1. Consult a lawyer

Unless you are a legal professional yourself, ask a lawyer to draft your short term rental agreement. A lawyer can help ensure your agreement is legally viable and covers all bases.

2. Disclose early

Let potential guests know immediately that you require them to sign a short term rental agreement. Both Airbnb and Vrbo require you to mention it in your listing description.

3. Customize

Make sure you have a separate agreement for each property, taking into account the unique features, location and other considerations of each.

Customize your agreement to fit the conditions of each OTA that you list on. You can have a freer hand for direct booking guests.

4. Update regularly

To ensure your short term rental agreement is always compliant with relevant laws and OTA changes, update it regularly.

5. Clarity is key

The language used should be clear and straightforward, leaving no room for interpretation.

Key Takeaway

A short term rental agreement can be a vacation rental property manager’s best friend, if drafted well and used properly. Airbnb, Vrbo and many other booking platforms also allow hosts to ask guests to sign a short term rental agreement. But if you want to enforce your agreement you have to go to court. OTAs won’t get involved.