What to include in a Short-Term Rental Agreement

As a property manager or host of a short-term vacation rental, whether you list your property on OTAs or solely rely on direct bookings, having a short-term rental agreement in place will help you protect your rights. By having a legally binding document that clearly spells out the rules of agreement between you and your guests, you are looking out for yourself in the future, saving you time, money, and stress in case of conflict with guests. It is the intelligent thing to do for yourself and the property you are renting out in the short term.

Top 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. Maintenance
9. Right to cancel
10. House rules

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 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 more than 30 days long. Agreements however may be different depending on the state, county, and city laws applicable to the 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 the OTA’s rules for host and guest conduct. Different OTAs have different rules however and while platforms like Airbnb and VRBO offer hosts insurance policies that cover up to $1 million in damages and injury liability, 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:

• Short-term rental agreements can serve as a filter for bad guests, as they are less likely to choose a vacation rental that asks them to sign a legally binding agreement that can hold them responsible for bad behavior.

• These agreements are also helpful to guests as they are made aware of the rules and conditions governing their vacation rental, as well as the penalties they can incur for breaking them.

• Because guests are clear on what they can expect from the very beginning, it lessens your chance of receiving a bad review due to misplaced expectations on the part of the guests.

• You can easily take legal action to receive compensation for any damage to property caused by your guests.

• You can make sure you are not held legally accountable for illegal behavior on the part of your 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.

• In the rare case you are encumbered with a guest who simply refuses to leave your property, having a short-term rental agreement they have signed will make it much easier for you to get them evicted.

• Short-term rental agreements are also helpful when you are submitting a claim with your insurance provider to claim damages caused to your property by guests.

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 are renting out, whether it’s a condo, castle, tent cabin, etc. The platform through which the guest booked your property could also have an impact as different OTAs can have different cancellation policies, for example, that you would be bound to adhere to. The short-term rental agreement for a guest booking directly on the other hand will give you more of a free hand. 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 however are some important information and clauses that you should 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

Include your full name, current home address and phone number, and birth date as well as the same for all guests who will be staying at your property.

3. Rental Period

Make sure you use the correct dates of arrival and departure in the agreement as incorrect dates could make the agreement invalid. In case there is a change in dates, ensure your guests sign an updated agreement. Also include the check-in and check-out times. Don’t forget to specify if they are AM or PM.

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 throw unauthorized parties inviting more people on your property and recuses you from liability in case unpermitted guests are injured.

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. Also 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 however they will most likely be making payments through the platform which will remit your payment to you.

6. Limit Liability

No matter how carefully you have maintained your property, it is impossible to completely prevent accidents from taking place. Make sure you 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. It is always advisable to have insurance in case 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 be required to enter the property during the guest’s stay, as well as the period of notice you will give guests before entering, for example, 2 hours or 8 hours. This helps avoid any disputes when you are forced to enter your property while it is occupied.

8. Criminal Activity

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 will protect you and your vacation rental from criminal prosecution.

9. Right to Cancel

Outline the circumstances under which you will be allowed to cancel your guest’s stay or evict them from your property – if they break the agreement, for example - as well as the circumstances under which guests can cancel the agreement. In the case your guest has come to you through an Airbnb or VRBO booking however, you and your guest will be bound by the cancellation policy you have chosen on the platform.

10. Maintenance

Explain your expectations of guests in keeping your property clean and neat. You should remember however that 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 cannot 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.

11. Contact Information

Include current contact details for your guests to check with you in case they have questions or have an emergency. These can include phone numbers, email addresses, social media accounts, etc as long as you respond without delay.

12. Entrance

Explain how guests will gain access to your property, where they can pick up and drop off the keys for example as well as their responsibility in the interim to keep them safe and not let them out of their possession.

13. House Rules

Outline all the rules and conditions that you expect guests to follow when staying at your property. These can include rules like refraining from smoking, not bringing pets, or not throwing parties. It can also include regulations governing the neighborhood where your property is located, such as parking and noise levels.

Things To Note

Here are some things to consider to ensure the effectiveness of your short-term rental agreement.

Disclose Early

While it is within your rights to expect guests to sign a short-term rental agreement, you do need to let them know of your expectation before they make the booking. Both Airbnb and VRBO require you to mention the agreement in your listing description.

Consult a Lawyer

It is advisable to consult a licensed attorney to draw up your short-term rental agreement, making sure you are fully protected and the agreement is legally binding.

Update Regularly

Ensure your short-term rental agreement is updated to be fully compliant with all relevant laws and does not go against terms and conditions imposed on you by OTAs you may be listing on. (Both laws and OTA conditions can change often.)

Clarity is Key

Make sure the agreement is clear, covers all the bases, has been drafted in a manner that is legally binding, and includes the signature of both parties. The language used should be straightforward, leaving no room for interpretation.

Dangers of Lead If the property you are renting in the short-term was constructed before 1978, you should provide guests with a pamphlet explaining lead-based dangers in the dwelling.