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Contracts? But they promised they could ..……!!!!!


Most of us would not purchase a new set of tires without a warranty contract, have dental work without a scope of services contract, accept a professional position without an employment contract, purchase a home – car – motorcycle or boat without a purchase contract or even take a cruise vacation without a registration contract. So why would you NOT have a contract for possibly the largest investment you might have in a vacation rental property? A management contract that spells out what the property owner can expect in regards to rental revenues, commissions, sales tax liability, housekeeping, inventories, guest interaction and security of their investment.


In this industry, a hand shake contract could lead to potential legal battles with unscrupulous “agents”. They may show you a slick high gloss brochure outlining their vacation rental property management program, they will promise you the world but deliver far less. Now a handshake is still an acceptable form of a contract when it comes to agreements for things like lawn care, pool cleaning or even the kids that shovel snow from your driveway. But when it comes to possibly your largest investment you will ever make and could affect your retirement plans, a contract is imperative!


Recently an explanation was offered by a property manager who does not use contracts. They stated, “why do I need a contract? If you don’t like me or I you, we can part ways with no problem?” But without a contract outlining each other’s obligations, how do you force the agent or owner to perform? What would happen if they just left town with rental monies owed to you or refunds owed to guests? What proof do you provide to the judge?


Now to add to your concerns, what if the property manager decided to have a side business in your common areas like renting out canoes, bikes, etc..? Who would be liable if someone got hurt? Correct, YOU, because it was conducted on your property


As you can understand, there are perils associated with not having a contract. The negatives far outweigh the positives of having a relationship for managing your investment without a contract.

So, what should a contract for managing a vacation rental include?


1) Names, address and contact information for all parties.

2) Length of time the contract will be in force and cancellation policy

3) Duties of the Owner

4) Duties of the Agent

5) Costs involved with management, repairs, bill paying, housekeeping, et.. Date to receive rental revenue and administrative duties

6) Responsibilities of the owner to provide inventory items, limitations of agent’s ability to collect and/or handle expenditures.

7) Marketing strategies including travel agents, tour operators, online travel agents (Expedia, Travelocity, etc…) partnerships and expenses.

8) Sales tax collection and distribution, accounting records, guest information/history and other services to insure proper care of the property.

So no contract is like giving your property manager free reign with your retirement investments???? Good idea? Not so good Idea? Your call.