What Is a Vacation Rental Agreement?
A vacation rental agreement is a short term lease agreement that is required when a person wishes to rent out his property for a short period. It is a contract that solidifies the legal relationship between the parties to the lease transaction. The term of this lease is generally up to thirty days. This agreement lays down the terms and conditions of the contract and the obligations of the owner and the renter.
It is a relatively simple agreement that only lays down how the property is to be used and what is acceptable on the property. This agreement must be used by any person who is renting his home to the public for a vacation or for a weekend. Having all the details written down and agreed to between the parties helps to protect the owner if the renter causes any damage to the property or breaks any of the rules that have been laid down in the agreement. It is advisable that this agreement must be signed before the renter enters the property of the owner.
People Involved in a Vacation Rental Agreement
The people involved in a vacation rental contract are the person who is renting out the property, i.e., the owner and the person to whom it is rented, i.e., the renter.
Purpose of a Vacation Rental Agreement
The purpose of a vacation rental agreement is to lay down the terms and conditions under which the property has been leased to the renter. It also states the duties and obligations of the renter and how he shall use the leased property.
This agreement is necessary even if the renter is staying for a short period of time. Every single person who gives out his/her property on rent as a holiday home or even for a weekend trip is recommended to have this agreement in place. Such an agreement should be insisted upon by the owner, even if he/she is renting out his/her property to a known person or a friend. This will save the owner from any misconduct on the part of the renter and also give him/her multiple remedies in case of any transgression or wrongdoing. Any damage that the renter causes to the property will be covered under this agreement and thus will protect the interests of the owner. Any misuse of the property will be prevented by this agreement.
At the same time, this agreement will also protect the renter from a cancellation without any reason by the owner or any other act of the owner that breaches the clauses of the agreement.
Contents of a Vacation Rental Agreement
A vacation rental agreement contains important clauses as to how the short term lease will operate and how the property is supposed to be used by the renter. The agreement should specify how the payment is to be paid and what percentage of it will be returned if there is a cancellation. In most agreements, the check-in and check-out timings are mentioned in the agreement itself. A clause detailing which acts will be carried out by the renter at the time of the checking out may also be included. This includes duties such as the washing of utensils, throwing garbage, returning keys, etc.
A clause that talks about the conditions under which the renter is allowed to cancel his/her bookings should also be included. This will lay down the time frame within which he/she can cancel the booking and the amount of the advance payment that should be refunded back to him/her. The agreement should also mention how the tenant is liable to maintain the property and the steps that they should take towards this end. The owner must be given access to the house upon giving a twenty-four-hour notice to the tenant, and the right must be given effect to in the agreement.
The rental agreement should also contain any house rules that may be applicable, such as ‘no pets’ or ‘no smoking.’ The maximum occupancy of the house should also be mentioned.
The most important clause of the agreement is the ‘breach of agreement’ clause. Acts on the part of the renter, which amount to a breach of the agreement must be clearly laid down, and the remedies for them must be given.
How to Draft a Vacation Rental Agreement?
The following are the steps to follow while drafting a vacation rental agreement:
- The owner should consult a lawyer who can help draft an agreement that will protect the rights of the owner and make sure that all the important details and remedies are provided for in the agreement itself.
- The owner should decide the amount of rent that will be payable by the renter and the method of such payment. He shall also take into account what percentage of the amount shall be payable as advance. The amount of the advance payment that will be returned to the renter in case of cancellation of the booking should also be decided by the owner.
- The owner should also decide upon the maximum occupancy of the property. This will help the owner have a remedy in place in case more people turn than were originally promised.
- The agreement should be drafted in a balanced and fair manner while providing for the obligations and duties of both parties to the agreement.
- The events of defaults should be laid out clearly, and the remedies for them also must be provided.
- The agreement should be signed by both parties, and each party should keep a copy of the agreement.
Negotiation Strategy
- The basic negotiation procedure is to ensure that the contract is fair to both the functioning bodies and that their gains are protected.
- It must be arranged such that the agreement is fair and balanced and benefits both parties.
Benefits and Drawbacks of a Vacation Rental Agreement
Below are the benefits and drawbacks of having a vacation rental agreement:
- A major benefit of the agreement is that it provides solid evidence of the property being leased to the renter.
- The agreement will serve as evidence of the terms and conditions under which the property has been leased. This can prevent any miscommunication or confusion between the parties as to the agreed terms.
- It helps to secure the interests of both parties. Each party has remedies available in case of a breach by the opposite party. Therefore, the owner and the renter can rest assured that their rights have been protected under the terms of the agreement.
- If this agreement is created, the owner has the right to terminate the lease in case of a default on the part of the tenant and the right to recover actual damages. His/her remedies will be written down and can be used as evidence before a court as well.
- If such an agreement is not in place, there may be very limited remedies available to a party in case of breach of any clause or obligation by the other party. It may become very difficult for a party to prove that a breach has occurred or that there was a particular obligation that was not performed. Hence, it is always advisable to note down every little detail in writing.
What Happens in Case of Violation?
Generally, short term rental agreements have a clause that talks about the actions to be taken when a party to the agreement breaches the clauses of the said agreement. The agreement will mention the acts that amount to a violation of the agreement(1) and the remedies for them. Such acts may include any damage caused to the property(2), consumption of drugs or alcohol on the property, the disturbance caused to neighbors, or where there is a higher number of people on the property than the maximum occupancy allows. If the renter does not comply with the clauses of the agreement and the rules laid down by the owner, the owner has the right to evict such renter and also forfeit the rental payments and security deposits. In cases where the renter does not vacate the house at the end of the lease term, he may also be liable to pay a fine for each extra day.
In conclusion, this vacation rental agreement is needed when a person rents out his property for a short period of time. It is important to lay down the terms and conditions of the lease. The agreement also spells out the duties and obligations of the owner and the renter. This agreement comes into play whenever a person rents out his/her house as a holiday home.
In order to protect his/her rights, he/she creates this agreement, which serves a legal framework for how the property can be used and which acts are not allowed on the property. Such an agreement is extremely important and provides the owner with a legal backing if any damage occurs, or in a circumstance where there is a court case and the court needs to verify the terms of the lease. Hence, it is always recommended that this agreement should be created even in case the renter stays for a single day, or the renter is a friend or a known person.