Short Term Rentals: What Hosts and Guests Need to Know

Real Estate - September 4, 2017
Woman searching online for a short term rental home.

Websites like Airbnb, and Homeaway have made it easier than ever to rent out your home or apartment to guests. For travelers, these websites make booking a stay easy and offer competitive rates. There are some important legal considerations for both the hosts and guests who use these websites. These include local regulations, liability insurance coverage and protecting yourself from scams. The following tips will help you avoid common problems and make informed decisions. If you have any legal questions contact your LegalShield provider law firm.

  • Are you permitted to rent or sublet your property? Local laws vary on short-term rentals. Some cities have sought to limit these rentals to preserve tax revenue or maintain the quality and availability of housing in certain communities. Before you consider hosting, check the state and local laws. If you are part of a homeowner’s association (HOA) you will need to consult your bylaws to determine whether you are permitted to rent out your home. Homeowners may also be restricted from renting their home by the terms of their mortgage. Renters who consider subletting apartments should review the terms of their lease carefully.
  • What is the worst that could happen? You have probably heard stories about listings that were not as advertised. Far worse are horror stories of properties being severely damaged by guests. There have also been cases where a guest refused to leave under squatter’s rights, which created a legal and financial nightmare for the host. For every one of these stories there are thousands of no hassle reservations and great stays but to prepare and protect yourself it is important to consider these potential complications. The key is understanding the law before you become a host. Guests should carefully review rules and terms to understand their rights in the event of a dispute.
  • Does the existing homeowner or renter’s insurance protect the host from liability? The answer depends on the specific coverage the host maintains. Some policies explicitly prohibit renting or subletting the insured property. It is important to review your policy carefully. Airbnb and some other booking companies now offer secondary liability insurance for hosts. Again, make sure you understand the policy and coverage limits before you have an issue.
  • What types of scams are common on these sites? Both hosts and guests should beware of scams, which have grown more sophisticated and difficult to identify. Watch out for incredible listings at prices that are too good to be true. Also, beware of hosts that request funds via wire transfer. One thing is certain, if you wire money you will never get it back. If you do pay or communicate outside of the system you may forfeit your eligibility for a refund. Keep all payments and messages inside the listing website’s system.
  • How important are reviews? Reviews are extremely important for listing sites. They help identify troublesome guests and bad hosts. Read reviews carefully before making a reservation and look for warning signs about the rental and the host. Do reviewers praise the rental unit but complain about dealing with the host? Is the location worth the potential hassle?
  • What if a guest or host has no reviews? New users do deserve some extra scrutiny but keep in mind everyone starts somewhere. Has the user been verified or vetted by the listing site? Do they reply quickly to your messages? Ask a lot of questions and make sure the answers make sense. If you are skeptical see if you can set up a phone call or Skype chat through the listing site to confirm the host is legitimate.

Read more about the potential risks for landlords associated with the short-term rental industry in this Investment News article that quotes LegalShield law firm lawyer Robert Bellitto, Jr., “Renting out a second home is no vacation!