When renting out a vacation home, a homeowner should use a vacation rental contract. A rental contract is an agreement that spells out the obligations of the homeowner and the renter to ensure that both parties understand exactly what the agreement is. The contract also protects each party in case the other does not hold up their end of the bargain.
Steps
Sample Contract
Part 1
Part 1 of 4:
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Create a title for your contract. The title of the contract should reflect the contents of the agreement and should be centered at the top of the document in bold type.
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Describe the parties and state the date the contract will be signed. A "party" is a person involved in this transaction. [1] X Research source When describing a party, include each person's name and the title by which they will be referred to throughout the contract, e.g, "Guest," "Homeowner," or "Tenant."
- For example, “This Vacation Rental Agreement is being entered into by John Smith, “Guest”, and Jane Doe, “Homeowner”, this 12th day of May 2009.”
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Describe the property being rented. Succinctly state the address of the property and what furnishings and/or appliances are included.
- For example, “The property is located at 1212 Main Street, Lakeview, MN 55555, is furnished, and includes a refrigerator, oven, stove, and dishwasher.”
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State the duration of the lease. Include the date upon which the Guest may enter the premises and the date upon which the Guest must vacate.
- For example, “This lease begins on June 1, 2009 (“Check-in Date”) and ends on September 30, 2009 ("Check-out Date").”
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Part 2
Part 2 of 4:
Stating the Rent and Security Deposit Terms
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State the rent and security deposit payment terms. Specify the amounts of the deposit and payments, the dates upon which each payment is due, and the beginning and ending dates of the payments. Include the forms of payment accepted (cash, check, money order, or credit card) and the address where payments should be mailed or delivered.
- For example, "Guest shall pay to Homeowner a deposit in the amount of $500 due upon execution of this Agreement, and then $1150 on the 1st day of each month, beginning on June 1, 2009, and ending on September 1, 2009. Payment shall be in cash or personal check or money order made payable to Jane Doe, and mailed to Jane Doe, 4981 Jefferson Blvd, Lakeview, MN 55555."
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State the security deposit refund policy. Generally, repairs for accidental damage to the property are paid out of the security deposit. [2] X Research source Your contract should include when and how the deposit will be refunded, as well as under what circumstances the deposit will not be refunded.
- For example, "All deposits will be refunded by check payable to the first Guest listed on this agreement within forty-five (45) days of Guest's Check-out Date. If any amounts are subtracted from Guest's refund of deposit, an itemized invoice will be provided to Guest along with the remaining deposit refund, if any."
- If the homeowner allows guests to purchase a non-refundable deposit waiver in lieu of paying a security deposit, this information should be included in this section. (Note that some states prohibit non-refundable deposits.) [3] X Research source
- The contract should clearly state the guest's responsibility to pay for damage in cases where no security deposit is collected and where the cost of the damage is greater than the security deposit.
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State the cancellation policy. A guest may unexpectedly decide to cancel a reservation. An unexpected cancellation means that the rental property will be vacant until the homeowner can find a replacement tenant. Prepare for this possibility by stating how a guest should cancel a reservation, and what consequences will occur if the guest cancels on short notice.
- The homeowner might recommend that the guest purchase travel insurance to cover the cost of an unexpected cancellation.
- For example, “Should Guest cancel his or her reservation, in writing, at least twenty-one (21) days prior to the Check-in Date, one hundred percent (100%) of the deposit will be refunded. All other cancellations will result in no refund of the deposit. Homeowner recommends that Guest purchase travel insurance to cover the cost of an unexpected cancellation.”
- Cancellation may also be due to "force majeure", as discussed below, meaning the Guests (or their travel insurance) could claim they did not "cause" the cancellation and thus are not responsible for missing the "no refund" deadline.
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State any credit card policy. If the homeowner requires the guest to provide a valid credit card number for incidental charges and damages, state the terms of the credit card policy in this section.
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Specify how the homeowner will confirm that the rent has been received. Typically, a guest pays rent to the homeowner each week or each month by mailing a check. The contract should specify how the homeowner will communicate a confirmation that the rent payment has been received. This will help prevent misunderstandings over whether rent was paid on time.
- For example, "Upon receipt of each rent payment, Homeowner will communicate confirmation of receipt to Guest within 1 business day via telephone, email, or text message."
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Part 3
Part 3 of 4:
Stating the Rights and Obligations of the Parties
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Describe any guest conduct which is prohibited. Setting ground rules may be helpful to keep the rental property clean and safe. You may wish to include:
- Rules regarding pets. For example, "No pets are allowed," or "All pets must be kept outside on leashes."
- Rules regarding minors, parties, and overnight guests. Many landlords do not allow minors to rent the property, or allow tenants to throw parties or host overnight guests who are not listed on the Rental Agreement.
- Rules regarding smoking. For example, "Guest understands that the rental unit is a non-smoking unit, and agrees to smoke only in the outdoor designated smoking areas."
- You might also state, in no uncertain terms, that Guests are not allowed to violate any criminal laws while on the premises, and that doing so may result in immediate forfeiture of the right to stay, subject to local procedures.
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Describe the guest's obligation to leave the property in good condition. A good guest will leave the property clean and in good condition. However, reasonable people may differ on their definitions of "clean." Define your expectations clearly to avoid confusion and disagreement later.
- For example, "Guest shall leave the property swept and vacuumed, with washed appliances and bath fixtures, and trimmed lawn."
- If the homeowner has provided pillows and linens, state who will be responsible for laundering those items. For example, "Guest shall launder all soiled linens prior to vacating the property."
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Describe the homeowner's right to enter the property. A homeowner may wish to enter the premises to inspect the property or make repairs. [4] X Research source However, setting rules for entry is courteous and respectful of guests' privacy. State the time of day the landlord may enter, as well as how much notice the homeowner must give to the guest before entering.
- For example, "Homeowner may enter the property to inspect or make repairs between 9:00am and 5:00pm. Homeowner must give Guest twenty-four (24) hours' notice of Homeowner's intent to enter the property. Guests may waive the notice period by giving specific consent on a case-by-case basis. Homeowner shall always knock and wait to see if there is an answer before entering."
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State any other rules or regulations regarding the property. The property may be subject to rules that are outside of the homeowner's control. For example, if the rental unit has a designated parking space, or if street parking is restricted, state the guest's obligation to abide by those parking rules. If the local Homeowner's Association prohibits certain conduct, state those rules as well.
- Consider local laws regarding requirements for notice and termination of the lease and the potential for eviction proceedings to legally remove any tenants or guests who decide to overstay their welcome. Some states have separate laws for evictions from "short-term or vacation rentals" that might apply to your situation.
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Part 4
Part 4 of 4:
Adding Additional Clauses and a Signature Block
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Consider a "choice of law" clause. A "choice of law" clause allows the parties to agree upon which country or state's law shall be used to settle any dispute which may arise under the contract. [5] X Research source These clauses are particularly helpful when the homeowner and guest ordinarily reside in different countries or states.
- For example, "This agreement shall be governed by the laws of the state of Alabama. Each of the parties irrevocably consents to the exclusive personal jurisdiction of the federal and state courts located in Alabama, as applicable, for any matter arising out of or relating to this Agreement."
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Consider indemnification and "hold harmless" clauses. These clauses protect a homeowner from liability for any loss or damage occurring at the rental property. An indemnification clause obligates a guest to compensate the homeowner for harm to the property. A "hold harmless" clause means that the homeowner is not liable for harm or loss. [6] X Research source Thus, the homeowner cannot be held accountable for accidental injuries or harms that occur on the property, or items lost or stolen from the property.
- For example, "Guest agrees to indemnify and hold Homeowner harmless from any liability for personal injury, property damage, or loss or theft of personal property sustained by or caused by Guest or parties invited onto the property by Guest."
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Consider a "force majeure" clause. A "force majeure" clause cancels a party's obligation to perform when certain circumstances beyond the party's control arise. [7] X Research source This can specify what happens if performance of the contract becomes impossible due to catastrophic weather or some other unforeseen event.
- For example, "A party shall not be liable for any failure of or delay in the performance of this Rental Agreement if the Rental Property becomes uninhabitable or inaccessible due to causes beyond the party's reasonable control, including but not limited to acts of God, war, strikes or labor disputes, embargoes, government orders or any other force majeure event. If the Rental Property becomes uninhabitable or inaccessible prior to the Check-In Date, one hundred percent (100%) of the deposit will be refunded."
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Consider a "successors and assigns" clause. A "successors and assigns" clause specifies whether a party may assign his or her rights under the contract to a third party. This includes cases where the homeowner wants to sell the rental property to another owner, or where a guest wants to leave the property and let someone else take over the rent.
- For example, "Guest shall not assign his or her rights under this agreement, or sublet the property, in whole or part, to another party without the prior written consent of Homeowner. Homeowner retains the right to assign his or her rights under this agreement to a third party without further notice."
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Consider a severability clause. A severability clause states that if any of the provisions of the agreement are found to be unenforceable, all other provisions will still be enforceable. [8] X Research source
- For example, "If any provision of this Agreement is held by a court of law to be illegal, invalid, or unenforceable, (a) that provision shall be deemed amended to achieve as nearly as possible the same economic effect as the original provision, and (b) the legality, validity, and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby."
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Consider an "entire agreement" clause. An "entire agreement" clause, also known as an integration clause, states that this document is the complete agreement of the parties, and supersedes any prior oral or written agreements. This prevents a party from claiming later that some there was an agreement on some term, not included in the contract, that should be made part of the contract.
- For example, "This Agreement constitutes the entire agreement of the parties and supersedes all prior or contemporaneous oral or written agreements concerning the subject matter."
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Create a signature block. The signature block should include a line for each party to sign, with the typed or printed name of the party below his or her signature.
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Tips
- Use plain language that is clear and concise. You do not need to use "legalese" to write an effective and enforceable contract. [9] X Research sourceThanks
- Format your contract in a way that is logical and easy to understand. Numbered sections with bold headings help keep your contract organized and readable.Thanks
- If the definition of a word is disputable, insert the definition into the contract. For example, "Clean, when referring to the condition of the property's floors, means that wood and tile is swept and mopped, and carpet is thoroughly vacuumed."Thanks
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Warnings
- When accepting refundable deposits, homeowners may need to comply with laws regarding trust accounts. [10] X Research source The rental contract may need to include information on the bank where the trust account is located, and how interest is accrued and treated.Thanks
- Many places in the USA officially prohibit or highly regulate "short-term" or vacation rentals and may require things that include a rental tax license, zoning variance, rental license, liability insurance, fire and health inspection, or other restrictions for the "health, safety and general welfare" of your customers and neighbors. Failing to make the rental "legal" may affect your right to bind a guest to any contract.Thanks
- This article provides legal information. This article does not provide legal advice. If you need legal advice, contact a licensed attorney.Thanks
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References
- ↑ https://legal-dictionary.thefreedictionary.com/Parties
- ↑ https://www.courts.ca.gov/1049.htm
- ↑ https://www.nolo.com/legal-encyclopedia/free-books/renters-rights-book/chapter4-2.html
- ↑ https://www.landlord.com/landlord_right_of_entry_by_state.htm
- ↑ https://www.lexology.com/library/detail.aspx?g=19184c3b-3d68-427a-87f5-c7e3ef3e60f5
- ↑ https://www.ober.com/publications/2113-clarifying-confusing-world-indemnification-hold-harmless-defense-clauses
- ↑ https://www.contractstandards.com/public/clauses/force-majeure
- ↑ https://www.contractstandards.com/public/clauses/severability
- ↑ https://99u.com/articles/17023/taking-control-of-contracts-what-every-creative-should-know
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