If you are renting out a property that is not your primary residence for a short period of time, it’s essential to make sure both parties involved have agreed upon the expectations. The agreement should legally cover both the tenant and the landlord and outline important occupancy details as regulated by local law. To help prevent any misunderstandings and unpleasant surprises later in the process, here are some things you should include in your rental agreement. 

Why Make a Short Term Rental Agreement?

The primary reason for a rental agreement is to clearly and concisely outline both parties’ responsibilities. Since the property in question is being rented out temporarily, it’s essential to make sure both parties understand the goals or intentions of this arrangement. This will help prevent any misunderstandings later in the process that may lead to tension or arguments. An excellent way to accomplish this goal is to describe in detail all pertinent information regarding the property so that both parties have a clear understanding of what they are getting into. This includes any information about major appliances, furniture, and other items included within the lease agreement itself.

What is a Short Term Rental?

A short-term rental is a rented property for an extended period of time (typically weeks or months) but is also used by the owner for other purposes. A landlord may use a property for various short term rentals to bring in extra income during times when the home may otherwise be sitting idle. This type of arrangement is often referred to as a vacation rental and may be arranged through various platforms, including Craigslist, VRBO, Airbnb, and HomeAway. While this type of setup has its benefits (for both tenants and owners), it’s important to ensure all tenants involved understand their legal responsibilities within this agreement. Many investors use their short-term rentals as vacation homes, while others try to fill them for the entire year. Typically, short-term rentals have a higher rental rate than long-term rentals, which means more revenue for real estate investors.

How to Rent a Short Term Rental

Understand Local Laws Around Short Term Rentals

Many states have passed state legislation that regulates short-term rentals. These legislations may vary from city to city. As a result, it’s important to know the local rules before embarking on a short-term rental project. If you plan on renting out a property throughout the year, make sure you have proper documentation that proves your compliance with all relevant rules and regulations first. Some states and cities have a very relaxed approach, while others will be more strict about how and when you rent short-term rentals. If you are just starting out doing short-term rentals in the area, try speaking to a local real estate attorney or another real estate investor in the area who knows the rules. 

Assess Your Personal Liability

Understand that you will be exposed to various legal risks when renting out a property in the short term. This is especially true if you are renting to a tenant who will be living in your property. You may be responsible for any damages that occur as a result of normal wear and tear, as well as any damages caused by the tenant’s negligence. If you are allowing pets on the premises, keep in mind that you will expose yourself to significantly more risk. Make sure to consult a legal expert before starting to invest in short-term rentals. They will be able to advise you regarding your liability if any incidents happen like theft or damage. 

Consider Adding Coverage for Property Damage

If you are concerned about potential property damage or liability claims down the line, it may be an idea to add additional coverage related to these risks into your agreement. Many companies can offer to rent short-term property owners coverage for either personal property (household items) or work-related items. This may help to protect you if a tenant is negligent in some way. Most companies offer different levels of coverage depending on the amount of money you are insuring.

Screen Tenants Thoroughly

The best way you can proactively avoid theft or damage to your short-term rental property is to vet your potential tenants properly. Don’t just accept any offer that comes in. Ask your tenants questions and get a good understanding of their level of responsibility before offering them a rental agreement. 

 

The 13 Most Important Things to Include in a Rental Agreement

Although there are many other things you may want to cover in a short term rental agreement, a good starting point would be to outline the following ten law-related items:

1) The Agreement Expiration Date

This section should outline the end date of the rental agreement as well as any extension periods if necessary. It’s crucial to ensure that both parties know when this agreement will be ending so that they can plan accordingly. This is especially important for landlords who might want to unload their property at some point in the future. 

2) Any Additional Fees

It’s important to regularly review and update all relevant fees associated with this agreement.

3) Property Details

Your rental agreement should have a clear and concise section detailing the property, including its interior. Make sure everything is clear and easy to understand. 

4) Tenant Information

In this section, you should add all of the tenant’s information about who is renting the short-term rental. This includes their name, current address, phone number, and start date of the rental agreement. 

5) Payment Information

You must include the amount they must pay in your rental agreement, when it is due, and how many days past the due date they have before fees or termination occurs. 

6) Outline the Security Deposit

You will want to charge a security deposit to protect yourself from any damage to your property financially. Having a security deposit will also help ensure you get tenants who are more respectful of your property, as they know they will be held financially accountable. If everything looks good at the end of the rental agreement, they will receive their money back. 

7) Include Tenant Responsibilities

Make sure to include a section about the responsibilities of your tenants. Explain what is expected of them in terms of keeping the property in good condition. 

8) Define Your Cancellation Terms

The cancellation terms should detail how long a tenant can cancel their rental agreement and what must be done to do so. Most companies will require you to complete a notice of cancellation form or are able to charge a fee to cancel your agreement if it is not completed within the required amount of time. 

9) Allergies & Pets Policy

If you plan to allow pets at your rental property, be sure to include a section on your pet policy and if any additional fees apply for bringing one. Make sure also to have a policy if you do not allow pets. 

10) Amenities

Suppose you plan on providing any amenities to your tenants. In that case, it’s essential for you to include a section in your rental agreement outlining what they are and what is expected of them as far as using these amenities. This can be things like cable, internet service, furniture, or even parking spots. 

12) Include Proper Legal Language

You will need the proper legal language to ensure that your rental agreement is binding and that each party understands their responsibilities. 

13) Signature

Make sure to leave a spot for your tenant to sign to make the agreement legally binding. You need to include yourself as one of the parties needing to sign this document.

Summary

Once you have completed the rental agreement, make sure it includes a section that states your summary of all of the clauses that are included in the agreement. This gives you a quick way to summarize all of the important information for your client. 

Many people who are looking to rent out their properties or apartments will need to use an online rental agreement form creator. Having a template much like this will provide you with plenty of space to list what your tenants are signing and give them ample information on what they can expect from their rental unit. It is always best to ask for some help from an attorney when drafting up any legal documents, but their services can often be quite costly.

For more tips on real estate investing and how to manage your properties, make sure to check out our other articles.