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Short-term / Vacation Lease Agreement

A short-term “vacation” lease agreement is a form used for renting out a property for a brief period of time, typically under one (1) month. They are commonly used by the owners of vacation homes and condominiums to lease their property during summer months.

Also known as a:

  • “Vacation lease”
  • “Guest rental agreement”
  • “Summer rental agreement”

Contents

What is a Short Term Lease Agreement?

A short term (vacation) lease is a form used for binding tenants to a leasing arrangement which typically lasts for a period under one (1) month. The form-type is used for renting out vacation properties, summer homes, and other units that are not designed for year-round occupancy by a tenant.

Short-term vs. Periodic Lease

Although short-term and periodic (month-to-month) leases are used for offering non-permanent tenancies, they differ in several ways:

  • Lease Term – Like standard leases, short-term leases have a fixed end-date. However, instead of leasing property for one (1) year, the term is one (1) week or month. Periodic leases, on the other hand, have no set end-date and continue to renew on their own until a party decides to terminate it.
  • Rent Prices – Periodic leases often have higher rental rates in exchange for being able to terminate with minimal notice, although both types have notably higher rates than standard leases.
  • Property Types – Short-term leases are almost exclusively used for vacation properties and short stays. Periodic leases, on the other hand, are geared towards those that may need to live in an area for several months or longer.

Despite their differences, they are both similar in that they are more commonly used for furnished rentals, are not for permanent/long-term renting, and involve higher rental rates in comparison to long-term rentals.


How to Rent Out a Vacation Home

Step 1 – Prepare

Set a Timeframe

Unless the rental will be leased year-round, the landlord/owner should pre-determine the months they intend to lease it. This ensures they don’t bind themselves to a timeframe in which they cannot physically lease out the rental. If using AirBNB, specific times can be blocked out, simplifying the process.

The rental will also need to be fully compliant with local and state short-term lease ordinances. Ordinances can include installing smoke detectors in each room, not renting out the entire property (owners must live in a portion of the rental), registering as a short-term rental and/or obtaining the necessary licenses, and more. This process should not be rushed due to the potential for severe consequences.

Understand Tax Implications

You’ll have a much easier time with tax issues on your short-term vacation rental if you treat it as a business from the get-go and keep meticulous records.1

The 14-day rule by the IRS determines how the vacation property will be taxed. If the vacation home is rented for fourteen (14) days or less in a year, any rental income earned is tax-free. This classifies the property as a “personal residence”. This also means rental expenses can’t be deducted. Renting for a day over fourteen (14) total days and the property is classified as a “vacation rental property”.2

Assuming the property will be leased for longer than fourteen (14) days in a year, the owner should be diligent in tracking and recording all expenses and income. This will help immensely when it comes to tax time.

Clean & Take Pictures

The pictures that a landlord takes of their property do more than just display the rental. They convey the level of effort the landlord has in the entire process. High-quality photos tell prospective renters that the owner is serious about the rental and that they put effort into the entire experience. For those that don’t have a professional camera or the know-how to take high-quality pictures should hire the help of a professional photographer. The cost of having professional pictures taken mainly depends on the size of the rental, the experience of the photographer, and the number of pictures taken. Landlords can expect to pay anywhere from $200 to more than $25003.

Step 2 – List the Rental

Once the owner has fully cleaned and prepared the property, ensured compliance with local ordinances, and obtained any required licenses, they can begin accepting reservations. The landlord can use one of the many available apps for listing vacation rentals can make the process significantly easier, which include:

Step 3 – Research + Approve Tenants

Once a tenant shows interest in renting, the owner should take some time to research the applicant on social media. Unless the applicant is signing a lease for over a month, they will be highly unlikely to complete standard screening practices (i.e. a rental application). Airbnb allows the owner to see the applicant’s profile, which shows any reviews they received from previous bookings. Because vacation renters typically pay up-front, owners shouldn’t worry about verifying the applicant’s income, employment, etc.

Step 4 – Approve the Reservation

If the applicant is trustworthy in the eyes of the owner, they should go about accepting their booking request. Once approved, the owner should go about collecting payment from the renters. If Airbnb or a similar app was used, payment is accepted automatically upon permitting the reservation. If the owner is renting the property by another means, they will need to collect payment using a payment service such as Paypal, Venmo, Facebook Messenger, or Apple Pay. Receiving funds in-person is not recommended, as it opens the risk for the renter moving-in and leaving the rent unpaid. Once the tenant is moved in, they are considered a tenant under state landlord-tenant law. This means the owner would need to take the standard eviction process for removing them (which costs owners time and money).

Step 5 – Check-in & Check-out

Depending on the preferences of the owner, the check-in process can vary. The owner/landlord could be there to personally meet the renters, give them step-by-step instructions with keypad entry, and so on. As stated before, the most important part about check-in is that the owner collects payment before permitting the tenant to enter the premises. Once the tenant moves into the property, the landlord should be available in the event the renters have a question, have a repair request, and more.

For check-out, the landlord can create a set of instructions for the tenant. This can be as simple as “please put all dirty linens in the washing machine, close all windows, leave all keys on the kitchen counter, and lock the door behind you – Thanks!”. The check out time should also be clear for the renters. Overall, the check out process shouldn’t be overly burdensome on the renters, as their departing memories should be on how great the stay was – not on how much effort they put into cleaning it.


How to Be a Great Host

The key to a successful vacation rental doesn’t rely on the property. It’s the entire experience, with the landlord/manager playing the most pivotal role. Happy renters result in 5-star reviews, great word of mouth recommendations, and a rental that rarely sits vacant. Not to mention that the more desirable the rental, the more landlords can charge for a nightly rate. To keep guests happy, owners should keep in mind the following:

Keep the Rental Clean & Simple

When arriving at the rental, the guests shouldn’t see any signs of the previous renters. Additionally, the small things count. Dusting, washing the floor, cleaning linens, and taking out the trash are just a few of the tasks that the landlord should be doing between each guest. Moreover, everything in the rental should not only work, but it should also be in great condition. Renters shouldn’t go to make a cup of coffee only to see limescale and old coffee grounds in the machine, for example.

Apart from cleaning, the rental shouldn’t feel customized to the owners. Family portraits, clothing, and other personal belongings should be nonexistent in the rental. If you wouldn’t expect to see it in a hotel, don’t include it.

Be Responsive & Polite

When a guest has a question, the landlord should be quick to respond with an answer. The same goes for inquiries from prospective renters about the rental. Additionally, landlords should be quick to put their ego to the side and apologize for any issues that come up during the rental period. Cutting the renters a discount or providing the renters with a lower rate on their next stay might not completely resolve the situation, but it will make the renters feel as though the host truly cares about their needs.

Anticipate Needs & Questions

Providing instructions for things that seem not-so-obvious to the average person should be included. Additionally, the owner should take the time to ensure the property can accommodate the needs of however many guests will be in the property. If the owner is used to having between two (2) or three (3) guests, and they approve a reservation for a party of five (5), they need to ensure the rental has enough towels, kitchenware, spare linens, etc. for all five (5) renters.

Go Above and Beyond

The best way to make a lasting impact on renters is to provide more than the basic necessities. Additionally, the owner should ask “why are they staying in my rental?”. If the vacation property is located in a city geared towards music, including a map of the best live-music bars and the date and times of local concerts would make the renters feel appreciated. In other words, put the extra effort in to distract the rental experience from the rest of the pack. The reviews will be worth it.

How to Write

Download: Adobe PDF, MS Word (.docx), OpenDocument (.odt)

Step 1 – The Parties

In this section the landlord will need to write:

  1. The date in which the agreement is being entered-into (day, month, and year);
  2. The full name(s) of the guest(s);
  3. The guest’s mailing address;
  4. The full name of the landlord (their name); and
  5. The landlord’s mailing address.

Step 2 – Premises (the Rental)

This is where the guest will be staying. Enter the full address, including the unit number (if applicable) of the rental.

Step 3 – Rental Term

This section covers how long the guest will be living in the rental. Write the day, month, and year the guest will be moving in and out of the rental, including the times in which they will be entering and exiting. Check either “AM” or “PM” for both dates.

Step 4 – Payment Information

  • Section (a) is what the guest will be paying to rent out the property for the rental term established in step 3. First, write the rental rate ($) for each night (third field), followed by the total number (#) of days the guest will be living in the property, and finally, multiply the rate by the number of days and enter the result in the “equal to $…” field.

  • Section (b) is where the landlord includes other costs included in the total rental price. If there are any applicable costs, check the appropriate box, and write the total cost ($) of the fee. Any unique or unlisted costs can be written in the “Other” field.

  • Section (c) allows the landlord to specify a deposit that the guest must make prior to moving-in. Check the corresponding box as to whether the deposit should be refundable or not (it typically is). Then, enter the amount ($) of the deposit and the number (#) of days it is due prior to the guest moving-in. If the landlord will make the deposit refundable, enter the number (#) of days after the check-out date they will have the deposit returned. Note: State landlord-tenant law often requires deposits be returned within a certain number of days, typically under one (1) month.

  • Section (d) is where all of the costs should be added up.

Step 5 – Payment

Check the payment method(s) that the guest can use to pay for the rental.

Step 6 – Parking

If the guest has a specific parking space they can park in, check the first box, enter the number (#) of spaces, and describe where the guest can locate the spots to park. If they have to park on the street or have access to a general lot, check the second box.

Step 7 – Trash Disposal

In section twelve (12), write how the guest should go about throwing away their trash (e.g. “the large green dumpster behind the building”).

Step 8 – Keys

On the two (2) lines provided, write where the guest can pick up the keys for the rental and where they can drop them off upon moving out.

Step 9 – Pets

If the landlord allows pets on the premises, check the lower box. Then, write the number (#) of pets and the types that are allowed (dogs, cats, birds, etc.). If pets are forbidden, the first box should be selected.

Step 10 – Contact Info

This field, while optional, gives the guest a means of contact if there is an emergency or important question during their stay. The landlord can write their full name, address, phone number, and email address.

Step 11 – Governing Law

Enter the name of the state that the rental property is located in. The written state’s landlord-tenant laws are the ones that apply to the agreement.

Step 12 – Lead Paint

This section is required per Federal law. If the rental property was built prior to 1978, the second box should be checked. The landlord should then provide the guest with a pamphlet on lead-based dangers in the home. If the property is newer than 1978, the first box can be checked.

Step 13 – Additional Info

If there are any additional terms, conditions, or requirements the landlord would like to include, this can be written on the provided lines.

Step 14 – Signatures

Both parties will need to write their signatures (hand-printed or eSigned), the date in which they signed, and their full printed name. If there is only one (1) guest, the second guest signature field can be left blank.

Optional – Booking Confirmation Form

The last page of the agreement is an optional form that can be delivered to the guest prior to moving-in. It provides an overview of their booked stay and establishes the upfront deposit they are required to pay (or have already paid), among other important information. The name of the guest should be written in the [Guest Name] section, and the name of the landlord or manager should be written in the [Owner / Manager] section.

Sources

  1. 10 Tax Tips for Airbnb, HomeAway & VRBO Vacation Rentals
  2. What are the Tax Rules for Vacation Rental Property?
  3. Why Professional Photos Boost Bookings for Your Vacation Property