Making Guest Agreements Enforceable

By William May
Published: 11/10/03 Topics: Comments: 0

If you have a problem with a guest, is your guest agreement enforceable in court? If they don't pay. or cause damage. or disturb neighbors can you take immediate and effective action? If you are a long time rental owner, property managers or have owned or managed a business this week's column may seem pretty basic.

But even experts need to sit down every now and then to review their Guest Agreement with a fresh perspective. Because situations changes and the way in which Guests select and buy vacation rental time continues to evolve rapidly. What worked last year might cause you trouble next year. Reviewing your contract could save you thousands of dollars.

FRESH PERSPECTIVE:
To start with you might want to log onto (VROA.org)VROA.org and download any of the free sample Guest Agreements. You will notice there are really three distinct methods of contracting with guests. You might want to review some of the samples while considering whether your current method is sufficient and whether another method would suit you better.

The first is the VERBAL METHOD - and that is to simply to not use an agreement. Believe it or not there are a large number of owners and even some property managers who choose this system. They just take the reservation (probably over the phone) and hope the guest shows up. If they do thy they hope there are no problems. And if everything goes smoothly, before, during and after the occupancy, then the Agreement really wasn't necessary. I hope you are not seriously considering this method. Should any problem arise your recourse to law enforcement officers or in the courts will be based on verbal agreements and innuendo. You may have lost your rights as a landlord and may be left with egg on your face. I won't go on any further about Verbal contracts because its a terrible way to rent your home.

The second method is the CONTRACT method - where you have your attorney prepare a written agreement in a somewhat traditional lease agreement format. This is a great way to make sure you have the Guest's written approval of rental home use. It would include the dates of occupancy, rules of conduct, charges for damages and other costs, and how disputes would be handled. The only practical way to use a contract is to have it prepared as a form with fields that you fill out depending on the circumstances. This agreement is then forwarded to the guest for signature, then returned to you to confirm the booking.

The third methods is the TERMS & CONDITIONS Method - and this is what most traditional (Non vacation rental) lodging establishments use. When you check into a Hilton, Hyatt or Mariott you will sign a small card and a credit card receipt. The card says you are renting a room and agreeing to comply with their Terms & Conditions. They should, of course, have those Terms available for you to review and many hotels have them posted in the lobby or even in your room. What's more, "Transient Accommodations", often defined as any lodging less than 30 days in length, are governed by specific state or even local laws. And those statues are sometimes posted on the back of the door in each unit. You've probably noticed these postings but have never read them. By signing the card the guest is agreeing to abide by the establishment's rules whatever they may be.

COMPARING METHODS:
Until recently, we used the Contract Method for our homes. It has some advantages. The Guest is put on very clear notice as to the positives and negatives of the rental. In the unlikely event you find yourself in court the Guest will find it difficult to defend himself for behavior or situations that violate conditions specifically addressed in the paperwork. Of course that doesn't prohibit the guest from claiming a full refund on rent for the silliest of reasons but it does help. I've heard the strangest of stories. Like the one in Palm Springs who thought the highly developed "English Garden" of the home was just too overgrown. No document will help you avoid these weirdos, but a good one will cut down on the chances that you'll have to deal with them.

On the other hand, the Contract Method gums up the works sometimes. Although you have accepted a Guest's reservation by phone, they have not really really agreed to pay for it until the Contract is prepared, mailed and returned. That can take 5 to 15 days in most cases. Yet during that delay you have taken the dates off the market, may have turned away other guests and have less chance of forcing the original guest to pay if they don't return the contract. Also, some Guests are very adverse to signing any paperwork. If you have a career in business you may be usd to signing contracts and other documents. Many people are not. They can go their entire lives signing only a home purchase agreement, a checking account start up and little else. Contracts scare them - even if they are dying to stay in a Hawaii bungalow, an Outer Banks beach home or a French Villa.

Recently we have switched our rental units to the Terms and Conditions Method of operations to accomplish several objectives (A downloadable sample is on the website). I suspect our reasons make sense for a great many other owners. The first is simplicity. Even with the Contract Method we thought it wise to post our Terms and Conditions on our website and in every home. We anticipated including them in the new "Guest Manual" we are preparing to be left in each home. That meant writing and periodically upgrading three or more documents.

Instead, now we have switched to using a pre-printed "Terms & Conditions" document that is simply attached to each booking, published to the websites, posted as a notice in the home and included in the Guest Manual. We have been able to condense it to a readable 2 page form.

GUARANTEED RESERVATIONS:
It has been our policy to only accept what in the lodging business is referred to as a "Guaranteed Reservation." This well known industry standard is used for guests who may be arriving late at night and want to make sure their hotel room will not have been sold to someone else. So they choose to "Guarantee" the reservation which means they are charged for the night even if they fail to show up entirely.

We use that policy basis for the entire reservation. Once made its non-cancelable. Doing otherwise allows guests to hold your home out of the market while they take the 5 to 15 days to really make up their minds. In some ways vacation rentals are like nightly lodging. But in other ways we are more like a traditional long term rental. We are giving guests full access to what may be a $100,000 to $1,000,000 (or more) asset and to take that asset off the market while the buyer tries to make up their mind and shop for alternatives is simply not wise. In major cities you can test drive a $250,000 Rolls Royce but if you want to put one on hold for two weeks they will politely decline.

Vacation home owners should do like wise. So our reservations are Guaranteed and Non-Cancelable. We will accept a "Request for Cancellation" and if, and only if, the dates are resold we refund the Guests payment less a rebooking fee of 15% or rent or $100 whichever is greater. My reasoning? Because you can't take possession of any other highly valuable commodity in the world and then return it without a reason simply because you've made other plans. Plus having to sell the same dates twice is too much work and unreasonable for the Guest to ask of us. We can only earn the rental once but we need to get compensated for doing double the work.

BOOKING CONFIRMATION:
When accepting reservations on the Terms and Conditions Method we use a short "Booking Confirmation" form that is prepared and sent to them. Ours is an Excel form and may be more detailed than many owners will prefer. (A downloadable sample is on the website). It is very careful to state that the Guest has ALREADY made a GUARANTEED reservation which this document is just confirming. We do ask them to sign and return the Confirmation as an acknowledgement of receipt. And, according to our Terms and Conditions, we can cancel the booking if they fail to do so.

To the Confirmation we attach a copy of the Terms and Conditions (This is disclosed in the Confirmation) along with our "Guest Rules." These forms are easier to read than a traditional contract. The guest need only return the Confirmation by mail or fax. The Rules and Terms are very fair to both parties. We never experienced many questions when we utilized the Contract methow but the number of questions has dropped and that saves time.

I've also observed that customers are less likely to argue about what they see as unbending conditions of their purchase. We do not alter the Terms and Conditions under any circumstances and there is nothing wrong with getting that message across in this way. If you feel our policy is too strong consider this example:

THE NORDSTROM STORY
Most folks are familiar with the Nordstrom Department store chain which was started here in Seattle. Everyone knows if they buy something at Nordstrom and are dissatisfied they can return it for a cheerful refund. They are renowned for their fabulous customer service. The employees are Nordstrom bend over backward for their clients. However - - if you want to see how firm Nordstrom is on their "Terms and Conditions" try this. Pick out some clothes, go the counter and present your Nordstrom Charge card. Then turn over the sales slip before signing and cross out the legal language on the reverse side. They may love you at Nordstrom's but you won't get the clothes. There are things they will do for you and things they will not. Vacation Rental Owners should be at least that careful in their legal dealings.

ON YOUR WEBSITE:
Lastly, let me emphasize that is very important for your Terms & Conditions to be posted on your website. Ours our linked on our footer information that appears on every page of the website. They can quickly find the Guest Rules as well as the Terms and Conditions. With so many of our leads coming from the Internet this is the perfect way to make sure Guest can not say they were unaware of our policies. And by the way, the good guests never mind and actually appreciate knowing what to expect.

SAMPLES ON LINE:
You can download samples of Contracts, Booking Confirmation and a Terms and Conditions form on the website (VROA.org)VROA.org. Before using any sample forms always have your attorney review them. We can not guarantee they are appropriate for you or your area.

Please see the website section for other ideas:
- Unwelcome Guest List
- Forms & Contracts FREE downloads

INPUT:
As always I seek your input. Please share you tips, techniques compliments and complaints on this or any other subject by writing me at Director@VROA.org.

HOME OF THE WEEK:
With winter setting in you might want to pull a chair up to the fire at the David White's Rock Creek Cabins next door to the Great Smoky Mountains National Park in North Carolina. Great location and they're pet friendly. See www.RockCreekCabins.com

*** If you want your place considered for Home of the Week please drop me an email.

FEEDBACK:
Just wanted to say how eye-opening your "test" was to me. It's obvious there's a lot of room for improvement amongst owners and property managers. I know for myself, I'm a nut about replying asap to email or phone inquiries. But even though I'm in the communications business, I would never think to pick up the phone and call people if they had emailed me first. I'd just return their email with like kind. You're right though--there's nothing like establishing a "personal" relationship with an inquiry. Thanks for the reminder. As a new member of just under a month, I've really enjoyed your site and its information. I think my vroa membership will definitely be money well spent!
- Amy, Petersburg Michigan

Thanks Amy. Kind words keep us going. One of the great benefits of working for VROA is getting to talk to nice folks like Amy from all over the world.
- Wm. May

Author: William May – Volunteer, Vacation Rental Association
Blog #: 0035 – 11/10/03