Short-Term Rental Agreement: Should You Have It for Your Business?

Renting out your home or apartment short-term on Vrbo, Booking.com or Airbnb is a great way to earn passive income or build a successful vacation rental business. But you should also protect your property and ensure that everything runs smoothly. There are many ways to do it, such as screening guests, installing security devices, and getting additional vacation rental insurance, to name a few.

Another smart move to minimize your risks of dealing with guests who may not respect your house rules for Airbnb and Vrbo is having a short-term rental agreement in place. Read on to find out why such an agreement is essential and what key points you should include.

What Is a Short-Term Rental Agreement?

A short-term rental agreement is a legal contract between a property owner (host) and a renter (guest) that outlines the terms and conditions of a stay at a rental property. This document, also known as a vacation rental agreement, is usually meant for a short rental period (between 1 and 30 days).

A rental agreement clearly defines the property owner’s and guests’ expectations and protects both parties in case of damages or cancellations. This document spells out the house rules for guests and explains the penalties for breaking them.

A short-term rental agreement can help ensure that you and your guests are on the same page. This contract will give you peace of mind knowing that you and your property are protected in any unexpected situation, so you can focus on growing your STR business. You’ll be able to scale faster if you streamline your daily operations and make your business more efficient using vacation rental software like Hospitable.

Do OTAs allow rental agreements? Airbnb hosts are covered for most scenarios with Airbnb Standard Agreement that every guest must adhere to. However, the platform also allows hosts to ask their guests to sign a contract before staying in their place.

Remember that you must disclose the actual contract terms before booking. If you ask your Airbnb guests to sign a rental agreement without notifying them before booking, they can decline and ask you to cancel the reservation.

Airbnb recommends mentioning the short-term rental agreement in your Airbnb listing’s description. You should also include the full terms in your message flow with the guests after they make a reservation.

Vrbo doesn’t require hosts to have a vacation rental agreement, but they consider it helpful in some cases. So, the platform makes it easy for hosts to upload their short-term rental agreements as part of their profiles and save them as PDF files. This way, Vrbo guests can review rental agreements before they make a reservation. Vrbo also encourages hosts to provide their Vrbo house rules directly on their website.

Vacation Rental Agreement: Key Things to Include

Every vacation rental property is different, so the terms you should cover in your short-term rental agreement will depend on your specific situation. Still, essential things should be present in each vacation rental agreement. Here are some basic points you will want to include in your contract:

• Rental property details—provide the rental’s house number, street address, city or town, and area code, describe your rental space, and include a list of amenities you offer.
• Information about both parties—state your full legal name and the full names of all guests who will stay at your property during the rental period.
• Rental period—including the arrival and departure dates.
• Maximum occupancy—specify the number of guests allowed to stay at your rental.
• Check-in and check-out procedures—explain how guests can access your property and specify check-in and check-out times.
• Rate, additional fees, and payment terms—outline everything related to payment, including the rental rate and additional charges, such as cleaning fees, pet fees, payment due dates, and a security deposit.
• House rules—explain your pet, noise, and smoking policies, as well as age requirements, and underline the penalties you charge for breaking the rules.
• Cancellation policies—explain how a guest can cancel the agreement.
• Signatures of both parties—make sure your guests sign the agreement in the correct place because the document is completely null without a valid signature.

This list of common elements included in a typical short-term rental agreement is a good place to start when creating your own. But make sure you include terms and conditions specific to your rental property because what works at a mountain cabin won’t protect the owner of a beach house. And, of course, you should consult a real estate attorney for guidance.

Why Use a Vacation Rental Agreement?

A vacation rental agreement can benefit both hosts and guests—it protects you, your guests, and your property.

• It adds transparency. You and your guests can discuss any points before putting them into writing, which minimizes the risk of potential disputes and problems happening later.
• A rental agreement written in simple language leaves less room for misunderstanding. Your guests can ask additional questions if they’re unsure of anything and sign the document with a full understanding of what is required of them.
• Both parties are legally protected. You are legally bound to it after you and your guests review and sign the contract. If one party ignores the agreement, the other party can pursue legal action.

Not using a rental agreement could negatively affect your vacation rental business. For example, you may risk dealing with illegal squatters who refuse to leave your property or with unpleasant complaints from guests because of a lack of clear communication.

Not all hosts and property managers use a short-term rental agreement when dealing with guests. Some may worry that asking travelers to sign a legally-binding document before booking their property may put them off. And if you’re a busy host, you may not like doing more administrative work when creating a new contract for each new reservation.

This functionality also allows you to protect your assets when offering your guests unique services that add value to their stay, such as equipment rentals. For example, a good idea could be to create a bike rental agreement.

Once you create a new template or customize ours to ensure it works for your property, Hospitable automatically generates a rental agreement for every future reservation. Your guests can access it through their Guest Portal as a registration task they need to complete to finalize their booking.

Each guest must verify their identity by getting a one-time code via SMS or email. Then, they can review the agreement and add their digital signature. If the guest doesn’t sign the agreement, our system will send them a reminder two days after the booking is accepted.

You’ll find more details about this functionality and step-by-step instructions in our help article.

Final Thought

A short-term rental agreement can help ensure that guests respect your vacation rental property as much as you do. This document defines the rights and responsibilities of both parties so it can protect you and your guests in disputes or discrepancies. As a result, a rental agreement can help you avoid conflicts with guests during and after their stay.