A Short-term Rental Agreement, also known as Vacation Rental Agreement is a contract that is created between a property owner (landlord) and the tenant.
The contract usually lasts between one to thirty days long. It stipulates all the terms, conditions, and expectations that the landlord has regarding the vacation stay of their renter.
This short-term rental agreement is different from an apartment lease agreement in the manner such that the short-term contract is usually for a short renting period of a property.
The vacation rental agreement highlights what the property owner is supposed to do and also the rules and the responsibilities meant for the tenant. With the responsibilities in place, penalties should be listed to prevent any disagreements between the property owner and their renter.
A short-term lease agreement is also known as:
- A vacation rental agreement
- A short-term rental agreement
- A vacation lease agreement
- A vacation rental contract
- A vacation rental short-term agreement
- Short-term house rental contract
- Short-term residential lease agreement
All these terms are used to describe a short-term lease agreement in the rental industry that targets property owners of vacation homes and their tenants.
Note: The short-term lease agreement must observe the applicable State laws to be legal and valid. Property owners must keep in mind that if their vacation homes were built before 1978, the law required them to furnish the structures and complete the Lead-Based Paint Disclosure Form.
The vacation rental contract is mostly used for high-end structures like:
The agreement will relay all the information that a property owner expects the tenant to be aware of during the rental period.
When is Short-Term Rental Agreement Required?
The vacation rental agreement should be used if a property owner is leasing out their furnished property for a few days to a few weeks. A period of one to thirty days is usually how long most short visits last. If the property owner is leasing out through online platforms, like Airbnb, the best way to be protected is by having the lease agreement. That means, whether it is being leased for a night or to friends, a short-term rental agreement is required.
With this agreement, the landlord is protected from any damages that the guests might cause during their stay. That means that the guests will have to pay for any damages that happen during their visit. Also, the guests will be held liable for any violations of the contract. The landlord can even cancel their bookings instantly and be protected from any lawsuits.
The landlord is also safe from renting out their property to unsuitable and stubborn guests who might cause issues during check-out time. Using the short-term rental agreement, the landlord is protected from any form of miscommunication. This is because the guests will be expected to uphold all that is mentioned in the agreement fully.
Note: A different type of agreement is required if the guests stay for more than 30 days. This is called the month-to-month or fixed-term lease agreement.
Significance of Short-Term Rental Agreement
A property owner should prepare and have the vacation lease contract signed before allowing their tenants to move in for their short vacation stay.
This is because this rental agreement will benefit the landlord in the following ways:
To save tax payments
When it comes to saving on tax payments, this is applicable when the property owner is renting the vacation property for less than 14 consecutive days. This is because such a period will require the landlord to pay taxes on rental income. Having a short-term lease agreement exempt the property manager from such claims and deduction, hence saving on taxes as a business expense.
To avoid inconvenience between host and guest
With the contract, homeowners can have clear stipulations of what is expected from them as the hosts and what their guests are supposed to do. This way, all inconveniences will be avoided.
The contract will act as an understanding between the host and guest concerning issues like guests paying for something they have broken, guests not partaking in anything illegal when on the premises, or even guests checking out on the agreed-upon day.
The short-term rental agreement allows a property manager or owner to take insurance for their vacation property. This way, they are protected from having to spend from their pockets in case of damages caused by their tenants.
To save expensive attorney fee
With a legal contract, the tenants are aware of what is expected from them, which saves the landlord from the expensive attorney fees required in case of lawsuits. Both parties in the agreement will be legally expected to uphold the contract.
That means that in case of a lawsuit, the property manager can support their claims and avoid spending extra money on attorney fees trying to prove their case.
According to the contract, the short-term residential lease agreement allows the property manager to gain legal security in the form of a security deposit that the tenants must pay. With a security deposit, the landlord is able to sort out any troubles that the guests might have caused during their stay, hence avoiding losses.
The Short-Term Rental Agreement Template
The short-term rental agreement template is a document that provides all the information needed for a property owner to prepare the contract for signing before leasing out their vacation property to the tenants or guests. It helps to reduce the time spent preparing the contract and guarantees that all details regarding the property being leased, rules, responsibilities, etc., are all included.
A property manager just needs to download the template and update it accordingly.
Components of a Short-Term Rental Agreement
Since a property owner understands how important it is to prepare a short-term rental agreement when renting out, here are the essential components that must be included in the contract to make it valid and make the rules clear for the guests or tenants.
Concerning state laws
Before preparing and using the short-term or vacation rental agreement, the property manager should first check and confirm the State laws surrounding vacation rentals. There are States that do not accept this agreement; others usually attach taxes to the contract, while some States have specific requirements that should be met first.
In states like Texas, specifically in Austin City, the contract is only viable if the property owner leases it for less than thirty days at a given time.
The property owner should use simple and clear language to provide details about their vacation rental property. This information should give a description of how the structure is and the outdoor space available for the guests.
Guests (rental party) and maximum occupancy
The lease should also contain all the information about the rental party, including their name, address, and phone number. In addition, the date that the agreement becomes effective and valid should also be specified and included in the agreement. This way, the guests are aware of when they should arrive at the vacation property.
Every guest who will also be available should have their details noted down, even if they are not the one who did the booking. The property owner should also specify the maximum occupancy of their rental property. The maximum occupancy is the number of guests allowed in the property at one particular time. It is important to be clear about the maximum occupancy as justified by the fire code regulations.
The sleeping arrangements of the guests present should also be included. With this section well highlighted, the landlord is protected in case they choose to take action against a guest who brings more people than the allowed number of people. If these guests receive visitors and the maximum occupancy is surpassed, the guests will be liable for any injuries and/or damages.
It is advisable for the property owner to highlight the start date and end date of the short-term rental agreement as it will mark when the guests should arrive and leave. In case the property owner changes the arrival and departure dates or the rental period, he or she should ensure that the tenant(s) sign the new agreement.
Rules and regulations
For this section, the property manager should highlight all the rules and regulations regarding their property. This might include a no smoking policy, no pets allowed, etc. With this section clearly written, the guests know the rules they should observe and the penalties they will face for breaking the rules.
Check-in & check-out procedures
The property owner should highlight the process guests undergo during check-in and check-out at the vacation property. This may include a security check or a meeting with them. Whatever the procedure, the guest should be aware of what to expect upon arrival and during departure.
Check-out procedures may include mentioning the place where the guests will drop off the key.
Rent, deposit, and payment details
The property owner should mention the rental fees to be paid and the security deposit required in this lease agreement. They should also include the payment details and the payment due date. The landlord can also include details of other services offered like breakfast or transportation and their payment details in the agreement.
The security deposit will guarantee the property manager of reduced expenses in case the guests damage the property. Also, the landlord should clarify in the renting agreement if the security deposit will be given back to the guests and conditions that will lead to the guests not receiving their deposit.
The rent and security deposit should be in line with what other landlords with vacation properties in the same location charge.
For the cleaning part of the vacation property, the landlord can include the cleaning fees that should be paid ad highlight all the activities that will be done regarding cleaning. Also, the property manager should instruct their guests on how they should arrange everything when they leave.
Amenities and furnishing
This section of the short-term rental contract should give details of all the amenities that will be found at the property. Amenities can range from appliances, safety equipment, cooking ware to personal items like toothbrushes and towels. Other amenities may include internet or WiFi, cable, soap, and shampoo.
The property owner can also mention details of how the house has been furnished and the comfort the tenants will get. It is also advisable for the landlord to mention if there are any outdoor spaces like swimming pools that the guests can access and those areas they cannot access.
Limitation of liability
This is a clause that should be included in the rental agreement to protect the property owner. This limitation of liability informs the guests that the property manager will not pay in case they suffer an accident or injury. The clause can also highlight the limited payment that the property manager will offer to the guests in case of such an ordeal.
Even with this clause, it is advisable for a landlord to have an insurance policy in place. This way, they will avoid paying for any costs resulting from injuries, damages, or losses out of their own pocket, which might be expensive.
There are three aspects that the limitation of liability should highlight:
- The clause should highlight the statutory limits in place related to the guest filing a claim against the property owner
- The clause should also elaborate on the types of losses that either the guest or property owner are willing to compensate and if there are limits or not when it comes to the compensation
- The clause should also state the losses that neither party will be liable for.
This section includes highlighting the consequences that either the guest or property owner will have to face in case they violate the contract. This might include the property manager terminating the stay of the tenant in case they violate the contract.
A cancellation policy should be included in the lease contract. The property manager should inform the guests on how they can cancel their booking and if there are any consequences for not upholding the rules regarding the cancellation policy.
The property owner can inform the guests about whether or not they will receive their security deposit back in case they cancel their booking.
After the main section of the short-term rental agreement, the property owner can also include some extra clauses that include other rules that the guests should observe.
The property owner can include an extra clause that highlights certain areas of the premises that they do not have access to.
Owner and guest signature
The final part of the agreement is the signing part for both parties so as to make the contract final and valid. The property owner and the guest must sign the agreement to indicate that both parties have agreed to all that has been mentioned in the contract.
Following are some free downloadable templates for you:
Consequences of Not Having the Rental Agreement
Property owners should always prepare a short-term lease agreement before renting out their vacation property, even though; it is for a short period of time.
Failure to which, here are some of the consequences that a landlord will be subjected to:
The IRS has a policy that exempts rentals meant for vacation, provided the renting period lasts for about 14 days at every given period. That means that as a landlord, leasing out a property for vacation visits for 14 days or less is guaranteed no taxes on the rental income and mortgage interest.
With a vacation lease agreement, a landlord can prove this and avoid extra expenses in relation to paying taxes. Without this contract, the property owner will have to face tax consequences from the IRS in case of auditing.
This contract usually indicates the date of arrival and departure that the guests must observe once they have signed the contract. Therefore, a property owner has legal leverage and can evict stubborn guests who refuse to leave the premises. They can sue them and, through the help of the court, have the tenants evicted.
However, without the lease agreement, most property owners usually undergo negative experiences with such guests and spend lots of money trying to evict these stubborn guests.
At times guests may leave after their vacation stay is over and the property owner finds that their property has been damaged. Without the short-term lease agreement, they will have to pay for the repairs and hence handle the expenses without help from their insurance.
The only way to file a claim and get the insurance to cover some of these damages is by having the contract.
Expensive attorney fees
If a property owner files a lawsuit or a claim against their guest, they will have to spend a lot of money on attorney fees trying to prove their case if they do not have the vacation lease agreement. This contract is the exact documentation they will need to win their case against their tenant regarding their rental vacation property.
Not covered by Airbnb
In case a landlord needs intervention, which goes beyond Airbnb’s resolution team, for a situation relating to their vacation property, having the contract means they can prove their argument and win in court.
A short-term or vacation lease agreement is a contract between a landlord or property owner and a tenant for a period that lasts between one to thirty days. The contract contains information regarding the property owner’s rules and regulations about staying at their vacation property.
The contract must highlight the rental period and the fee to be paid. The vacation rental agreement ensures that a property manager relays all the information needed before leasing their property to the guests. The contract also protects them from different forms of losses and shield them from paying rental income taxes. It is necessary for every property owner renting out their property, for however long, to prepare and have the guests sign the lease agreement. A landlord can use the short-term rental agreement template to prepare the contract as it will guarantee that all the information is present.