Key Takeaways
- A well-crafted short-term rental agreement protects your property, sets clear expectations for guests, and helps you operate your vacation rental professionally.
- Key elements like payment terms, house rules, liability waivers, and emergency procedures should be clearly outlined and customized to your unique property.
- Working with a property management company or legal expert can simplify the process and ensure your rental agreement complies with local laws and industry best practices.
One of the most essential tools you need as a short-term rental host is a well-written rental agreement. A short-term rental agreement is your legal safeguard, a clear guide for guests, and a key part of running your vacation rental like a professional. We at Vacation Los Cabos will walk you through the benefits of such an agreement as well are its key elements.
Why You Need a Short-Term Rental Agreement
A short-term rental agreement protects you in the event of property damage, cancellations, disputes over rules, or other unexpected situations. The agreement serves as a binding contract between you and your guests. It outlines what both parties are agreeing to. It also acts as a paper trail that can help if you ever need to make an insurance claim or take legal action.
Key Elements of a Vacation Rental Agreement
What you include depends on your property type, its location, and your unique expectations. That said, every short-term rental agreement should cover a few fundamental sections:
Names and Contact Information
Start by clearly identifying who is entering into the agreement. Include your full name and the full names and contact information of all adult guests staying at the property.
Property Details
Describe the rental property in detail. This includes the exact address, number of bedrooms and bathrooms, and any special amenities included in the rental.
Rental Period and Check-in/Check-out Times
Specify the check-in and check-out dates and times. Clear arrival and departure times help you manage turnovers more smoothly and avoid any overlap between guests.
Payment Terms
List the total cost of the rental, including nightly rates, cleaning fees, taxes, and any deposits required. State when and how payment is to be made, and include your cancellation and refund policies.
Security Deposit and Damage Policy
Explain if a security deposit is required, how much it is, how it will be collected, and the process for refunding it. Also, describe your procedure for addressing damage or missing items.
House Rules and Use of Property
House rules may include limits on the number of guests, quiet hours, pet policies, smoking restrictions, or rules about parties and events.
Maintenance and Emergencies
Let guests know what to do in case of a maintenance issue or emergency. Provide contact information for yourself or a designated property manager, and give basic instructions on where to find circuit breakers, fire extinguishers, or first-aid kits.
Local Laws and Regulations
Include a statement that both you and your guests must comply with local laws and ordinances, including zoning laws, occupancy limits, and any short-term rental licensing requirements.
Liability Waiver and Indemnification Clause
Include language that limits your liability for guest injuries or accidents during their stay, especially if your property includes pools, hot tubs, fireplaces, or other potential hazards. Note that this clause won’t make you immune to legal issues.
Custom Clauses for Unique Properties
If your vacation rental has unique features, such as shared spaces, off-grid utilities, or access to outdoor recreational gear, consider adding clauses that address those specifically. For example, if you’re offering bikes or kayaks, you could include a waiver of responsibility clause for those amenities.
Sending and Signing the Agreement
Once your agreement is ready, it should be sent to the guest as soon as a booking is confirmed. You can use e-signature tools or simply have them print, sign, and return the document by email. Be sure to send them a signed copy for their records, and keep a digital file for yourself. If you’re using booking platforms, you’ll need to check if they allow you to require a separate agreement.
Keeping Your Agreement Updated
Short-term rental laws, tax requirements, and even platform rules are constantly evolving. Review your agreement at least once a year, or whenever there are changes to local ordinances, your pricing structure, or your house rules. It’s also a good idea to have an attorney review your agreement to ensure it complies with state and local laws.
Common Mistakes to Avoid
Many first-time hosts make the mistake of using overly generic templates found online. You also want to avoid using vague language, skipping cancellation policies, or forgetting to include your legal rights as a property owner and real estate investor. Another common mistake is failing to enforce the agreement once it’s signed.
Working with a Property Management Company
If the idea of drafting legal documents or managing guest relations can seem overwhelming, you don’t have to do it all alone. A professional property management company can be an invaluable partner in your short-term rental business.
They bring experience in creating and enforcing short-term rental agreements. They typically have legally sound templates that can be tailored to your local laws and market. More importantly, they handle the logistics—from guest communications and bookings to maintenance and emergency issues—allowing you to enjoy the income without dealing with the stress.
Working with a full-service property management company also provides peace of mind. They can perform regular property inspections, vet guests, and ensure your property is not only profitable but also protected. For many vacation rental owners, especially those managing their properties remotely, a property manager becomes an essential part of long-term success.
Bottom Line
A short-term rental agreement is a critical foundation for your vacation rental business. It defines expectations, protects your investment, and helps create a professional experience for your guests. As with any business tool, it should be crafted with care and regularly updated to reflect your evolving needs and local legal requirements.
If you’re unsure where to begin, consider working with a legal expert or a professional property management firm to build a solid agreement from the start. Talk to Vacation Los Cabos if you have more questions!
