9 Eye-Opening Tips for Short Term Rental Agreements

Getting into short-term rentals?

Don’t just open your doors, open them smartly with a short term rental agreement.  As a host, this legally binding document is your safety net, protecting your property investment while setting clear expectations with guests.

You need this agreement — it covers everything from rental terms to payment policies, giving both parties peace of mind.  Discover why you should take the time to create a rental agreement  as I walk you through must-have sections, pitfalls to avoid, and tips to make the process smooth.

Create a short term rental agreement that covers you while delivering 5-star hospitality. Let’s get you started on the path to short-term rental success!

TL;DR

• Short-term rental agreements are legally binding documents for rentals under six months.
• They cover stay details, fees, responsibilities, and dispute resolution.
• Customized agreements are essential for effective protection.

What is a short term rental agreement Airbnb?

A short-term rental agreement is a document that outlines the terms and conditions of a rental property for a period typically less than six months. It’s a legally binding contract between the host (the property owner) and the guest (the person renting the property).

This agreement includes various important details such as the duration of the stay, the rental fee, payment terms, security deposit details, cancellation policies, and house rules. For instance, it may specify pet policies or restrictions on smoking within the premises.

It also defines the responsibilities and liabilities of both parties. For example, it may detail who is responsible for property damage or maintenance issues that arise during the stay. This agreement is instrumental in resolving any disputes that may occur during the rental period.

The short-term rental agreement can provide specifics about any penalties for late payments or violations of house rules. By laying out these terms clearly from the onset, both parties can enter into this arrangement with a clear understanding of their rights and obligations.

The contents of these agreements may vary based on local laws, regulations and personal preferences of the host. Therefore, you should consult with a legal professional when drafting your short-term rental agreement to ensure you’re adequately covered.

Why do you need a short-term rental agreement?

In addition to its legal benefits, a short-term rental agreement can contribute to smoother operations for hosts because it helps to manage guest expectations better. It clarifies what they are allowed to do within your property and what they need to avoid doing to prevent misunderstandings or disagreements later on.

What to include in a Short Term Rental Agreement

Your short-term rental agreement serves as a binding contract between you and your temporary tenant. Let’s explore the key elements that should be incorporated into your agreement.

Step 1: Basic Information and Contact Details

Your short-term lease agreement should state the full names and contact information of both the host and renter. This detail establishes the identity of both parties involved in the agreement.. Include this information at the very beginning of your contract to explain who is involved.

Host: Full Name: John Doe Email: john.doe@example.com Phone Number: (123)-456-7890

Renter: Full Name: Jane Smith Email: jane.smith@example.com Phone Number: (098)-765-4321

Identify  the rental property as part of your short-term rental agreement. This section should include the address and any distinguishing features or identifiers that distinguish your property from others.

Property Identification: Address: 123 Main St., Anytown, USA Unique Identifier: Charming two-bedroom cottage with blue exterior

The purpose of including this particular detail in your vacation rental agreement is twofold. For one, it helps eliminate any potential confusion by clearly stating which property is being rented out. It can also serve as a form of protection for you as a property owner. If any disputes arise during or after the rental period about which property was rented, you have clear documentation specifying the property involved.

It’s important to note that while these details might seem basic, they form the foundation of your rental agreement. Without this information, your contract could be considered invalid or unenforceable. So, take the time to get these details right.

Rental Property Description: Include a detailed description of the rental property in your short-term rental agreement. This should include the type of property (e.g., condo, apartment, single-family home), number of bedrooms and bathrooms, and any significant features or amenities.

Amenities could range from a pool or hot tub to a fully equipped kitchen or high-speed internet. Highlighting these details is key to setting clear expectations for your guests and avoiding potential disputes.

Example: “The property is a 2-bedroom, 2-bathroom condo located on the top floor. Amenities include a fully equipped kitchen, air conditioning, high-speed Wi-Fi, washer/dryer facilities, private parking space, and access to the building’s fitness center and outdoor pool.”

In addition to the address and description,  provide specific instructions for accessing the property. Whether it’s a smart lock code or instructions on where to pick up keys from a neighbor or local business, this information provides a smooth check-in process for your guests.

Example: “The property is located at 123 Main Street, Apartment #4B, Cityville, State 12345. Instructions for key pickup will be sent via email two days prior to check-in.”

Step 2: Rental Period and Rates

Your short-term rental agreement should include the rental period. This includes both the start date and the end date of the lease. Stating the rental period ensures that both parties—the property owner and the renter—have a mutual understanding of the duration of stay.

Specify how much the renter needs to pay for staying in your property. You should include:

• The total cost for the entire stay.
• The rate per night, week, or month, depending on your agreement structure.
• The due dates for payment.

Outline the payment schedule. Whether you require full payment upfront, or payments are divided over the course of stay, make this clear in your agreement.

Here’s an example:

The agreed rental period is from June 1, 2023, to June 30, 2023. The total cost for this period is $2,000. Payment is due in two installments: $1,000 is due by May 15, 2023 (before check-in), and the remaining $1,000 is due by June 15, 2023.

Step 3: Payment Terms and Security Deposit

When it comes to the Payment Terms in your short-term rental agreement, it is important to be clear. You should specify the accepted payment methods. Vacation rent payment methods may include credit card payments, PayPal, or any other online payment platform.

Provide details when these payments should be made. Is it a lump sum due before the rental period begins? Or perhaps you require a deposit up front with the balance due at a later date? Make sure each point is addressed in your Airbnb rental agreement.

The Security Deposit section is equally important. This is an amount of money held by you, the property owner, to cover any damages caused by the renter during their stay. The specifics of this deposit should be clearly outlined in your short-term lease agreement.

Address the following points:

• How much is required for the security deposit?
• When and how should this deposit be paid?
• What conditions must be met for the deposit to be fully refunded?
• How soon after the end of the rental period will the deposit be returned?

Step 4: Cancellation and Refund Policies

Include your cancellation and refund policies in your short-term lease agreement. This section lays out the conditions under which a guest can cancel their reservation and what refund, if any, they may receive.

Your cancellation policy should provide instructions on how to cancel a reservation.

Conditions for Canceling the Reservation: The conditions for canceling a reservation should be outlined. For instance, you might stipulate that guests must notify you of their intention to cancel at least 48 hours before their scheduled check-in. This gives you time to adjust your scheduling and potentially find new renters.

Refund Policies Based on Timing of Cancellation: Your refund policies should be directly related to the timing of cancellation. Many hosts adopt a tiered approach. For example:

• Full refunds for cancellations made two weeks or more in advance.
• 50% refunds for cancellations made less than two weeks but at least 48 hours in advance.
• No refunds for cancellations made less than 48 hours in advance.

Remember, these are just examples. Your policies will depend on factors such as the popularity of your rental property and how quickly you can find replacement renters.

Step 5: Guest Responsibilities and House Rules

A short-term rental agreement or vacation rental agreement must outline guest responsibilities and house rules. These expectations serve as guidelines for how guests should behave during their stay. They also help maintain the property owner’s peace of mind by setting boundaries for use of the property.

Your short-term lease agreement should stipulate behavior expectations such as:

• Respect for neighbors (no loud music or parties)
• Proper disposal of trash
• No alterations to the property without prior consent
• Adherence to check-in and check-out times

The agreement should also specify house rules, which could include:

• Smoking policy (is it allowed, and if so, where?)
• Pet policy (are pets allowed, are there any size or breed restrictions?)
• Noise policy (quiet hours, limitation on gatherings)

It’s a good idea to ask guests to acknowledge that they have read and understood these rules before their stay begins. This way, both parties are on the same page from day one.

Each property is unique so tailor these guidelines according to your specific needs and circumstances. It’s your responsibility as a host to set boundaries that protect your property while still providing a comfortable environment for your guests.

Step 6: Maintenance and Repairs

A short-term rental agreement should clearly outline the responsibilities of both parties in regards to property maintenance and repairs. Start with general upkeep of the property.

As a rule, regular cleaning and minor maintenance tasks are typically the responsibility of the renter during their stay. This includes maintaining cleanliness, taking out the trash, and keeping appliances in good condition.

However, any serious issues or damages that arise fall under the umbrella of the property owner’s responsibility. This can include plumbing or electrical problems, major appliance malfunctions, or structural damage to the property.

To handle these situations effectively:

• The agreement should include a detailed procedure for reporting any issues or damages. This ensures that problems are communicated promptly and can be addressed as quickly as possible.
• Contact details for emergency services or a designated repair person should be provided.
• The contract should also specify who will bear the cost of significant repairs.

Step 7: Liability and Insurance

Address liability and insurance in your short-term rental agreement. This section of your agreement should detail the limitations on liability for both the host and the renter.

As the property owner, you must specify that you will not be liable for any accidents or injuries that occur on the property during the rental period. This includes incidents like slips, falls, or any other types of mishaps which could potentially lead to legal claims.

On the other hand, renters need to be aware of their responsibilities and potential liabilities while residing in your property. They should understand that they might be held liable for damages caused by their negligence or willful misconduct.

The vacation rental agreement also needs to outline insurance requirements. For instance:

• Does the renter need to have personal liability insurance?
• Does your homeowner’s insurance provide coverage for short-term rentals?
• Are there additional coverages you need to consider as a host?

Some listing platforms offer host protection insurance, but this may not cover all scenarios. For example, Airbnb’s host liability insurance covers bodily injury to a guest (or others), damage to or theft of property belonging to a guest (or others), damage caused by a guest (or others) to common areas, like building lobbies and nearby properties.   But it doesn’t cover damage or injury resulting from something done intentionally and there are other exclusions.

Hosts are encouraged to maintain their own insurance policies suitable for short-term lease agreements.

Step 8: Dispute Resolution

Your vacation rental agreement should include instructions for dispute resolution to protect both property owner and renter.

Process for Resolving Disputes: The agreement should outline the steps taken when a disagreement occurs. Typically, this involves notifying the other party of the issue, discussing possible solutions, and if necessary, seeking third-party assistance.

Mediation: Mediation is a common method used to resolve disputes without resorting to legal action. This involves a neutral third party who helps both sides reach an agreement. Your short-term lease agreement should specify whether mediation is required and how the mediator will be selected.

Arbitration or Legal Action: When mediation fails to resolve the dispute, arbitration may be needed. This process is similar to court proceedings but less formal. An arbitrator (or panel of arbitrators) makes a binding decision after hearing arguments from both sides.

In some cases, legal action may be necessary. If this happens, your contract should state which laws apply (usually those of the area where the property is located) and where any legal proceedings would take place.

Step 9: Additional Considerations

When you’re putting together a short-term rental agreement, it’s important to pay attention to specific elements that can differ depending on the platform or type of rental arrangement you’re working with. Home sharing platforms like Airbnb and VRBO each have their unique guidelines that should reflect in the agreement.

Platforms like Airbnb provide their standard ‘Host Guarantee‘ which offers protection for up to $1 million in damages around the world. However,  this guarantee is not a substitute for homeowner’s or renter’s insurance. With this in mind, your agreement should not solely lean on this guarantee but also cover key areas you wish to protect.

On the other hand, VRBO, operates slightly differently from Airbnb. This platform leaves much of the agreement details to the discretion of the property owner. Outlining all terms in your rental agreement is critical.

Will you allow subletting?  If so, include specific clauses that outline permissions for subletting. If subletting is allowed, detailed guidelines should include how long a guest can sublet and if approval is needed prior to subletting.

Compliance with Laws and Policies

Compliance with relevant laws and Airbnb policies should be part of your short term rental agreement. Research and understand the state and local laws that apply to your rental property. This could include zoning regulations, noise ordinances, or even specific rules about short-term rentals.

State or local laws may vary significantly. For instance, some states require short-term rental owners to obtain a business license, while others may have occupancy limits for short-term rentals. Your responsibility is to make sure that your rental agreement doesn’t contravene any of these laws.

For example, in Arizona, Scottsdale and Tempe require short term rental owners to register their property, obtain a license and comply with occupancy rules.    Scottsdale’s website lists specific areas that impact your short term rental agreement including:

• Scottsdale has ordinances regarding unruly gatherings and parties at rental properties.
• Regulations exist for vacation and short-term rentals in Scottsdale, including family size limits and usage restrictions.

Research State and Local Laws: To avoid any legal issues, check with your local city or county office to understand the specific regulations in your area. Consult with a real estate attorney who specializes in short-term rentals. Review local homeowner association (HOA) rules if applicable.

Airbnb Policies: Airbnb has its own set of policies that hosts must comply with. These include rules around discrimination, safety standards, and transparency about the property and its amenities. Misrepresenting your property or failing to adhere to these requirements can lead to penalties such as suspension or removal from the Airbnb platform.

Tax Obligations: Rental income is generally taxable. You must provide proof of your taxable or non-taxable rental income to the IRS.

Here are a few steps that can help manage your tax obligations:

• Keep records of all income received and expenses incurred.
• Consult with a tax professional to ensure you’re taking advantage of all applicable deductions.
• Use IRS Form 1099-MISC to report rental income.

Key Considerations for Your Rental Agreement

A detailed short term rental agreement is not just a piece of paper. It’s a tool that protects the rights and responsibilities of both parties involved – the host and the guest.

Rights and Responsibilities: A short term rental agreement outlines what each party can expect from the other, including their rights, obligations, and responsibilities. This clarity helps to prevent misunderstandings and keeps things straightforward for everyone involved.

Minimizing Risks: For Airbnb hosts, a rental agreement minimizes potential risks. It sets clear rules about property usage, payments, damages, and more. This could mean fewer disputes, less damage to your property, and better experiences for you and your guests.

Financial Protection: Rental agreements also help you avoid costly legal fees. If a dispute arises, a rental agreement can provide guidance on resolving it without having to go to court.

What if you don’t use a short term rental agreement?

Without a short-term rental agreement, you may face potential difficulties, including:

• Lack of Legal Protection: A rental agreement serves as a legal document that safeguards your rights as a property owner. In its absence, you would be vulnerable to disputes and potential damages without any legal recourse.
• Misunderstandings: Without clear terms set out in an agreement, misunderstandings can arise about the responsibilities and expectations of both parties. This could lead to conflicts and a negative rental experience.
• Financial Risks: The rental agreement often includes details about payment terms, deposits, and cancellation policies. Without this, you may encounter complications with receiving timely payments or dealing with last-minute cancellations.

While it might seem easier to forego a rental agreement, the risks involved make it a critical part of any short-term rental process. It provides legal protection and ensures clarity and mutual understanding between you and your guest.

Wrap-Up

A customized short term rental agreement that has been reviewed by a legal professional is invaluable for your short-term rental business.

While template starting points have merits, tailoring an agreement to suit your specific property, local laws, and risk comfort level is key for true protection.

Likewise, transparent communication with guests about policies from the outset prevents misunderstandings. Drafting a comprehensive agreement takes effort but pays dividends by safeguarding your property investment and establishing clear expectations.

Take the time to develop an agreement that provides you with the coverage, clarity, and confidence needed to succeed as a short-term rental host.

Airbnb Rental Agreement FAQ

How do you send the short term rental agreement to a guest?

Online Platforms: Many short-term rental platforms like Airbnb allow you to share documents with guests. You can upload the agreement on the platform and request your guest to read and acknowledge it before they confirm their booking.

Email: You could also use your property management software to email the agreement directly to your guest. Ensure they reply with an acknowledgement of having read and understood the terms.

Physical Copy: In some cases, you might prefer to hand over a physical copy of the agreement at the time of check-in. Make sure your guest signs it before they start their stay.

What if the guest doesn’t sign the short term rental agreement?

As a real estate investor, if a guest refuses to sign the agreement, here are some steps you can take:

Initiate a conversation with your guest to understand their concerns. They might have objections or doubts about certain clauses in the agreement. Try to address these issues and offer clarifications wherever necessary.

If the guest’s concerns are valid, consider revising the agreement. However, ensure that any changes still protect your rights as a property owner.

If a guest persists in refusing to sign the agreement even after discussions and possible revisions, you may need to refuse their booking. It’s critical to protect your property and adhere to your policies.

In complex situations where a resolution seems challenging, it might be beneficial to consult with a legal professional for guidance.

Where do I get a short term rental agreement template?

There are several online resources available that provide customizable templates, which can be tailored to fit your specific needs. Websites such as Rocket Lawyer, and LawDepot offer a wide range of legal documents, including rental agreements.

You should also consult with a real estate attorney or property management company. They can provide professional advice on the terms and conditions that should be included in your agreement to protect your interests as a property owner.

If you are part of a homeowners association (HOA) or similar organization, they may also have standard rental agreement templates available for use. These typically adhere to local laws and regulations, making them a reliable choice.

Also, note that laws governing rental properties vary by location. You may need to consider local legislation when drafting your rental agreement. Some jurisdictions may require specific clauses or disclosures in order for the agreement to be legally binding.