Are you thinking of taking Airbnb rentals while selling your house? If so, read on.
I showed a two-bedroom condo near Park City’s Main Street last fall. The agent/owner was taking Airbnb rentals while selling the property. He bragged to me that he had $85,000 in rentals booked for the upcoming season. I informed him that was going to be a problem.
Here is the source of the problem: Both Airbnb and VRBO have a policy that doesn’t allow an owner to transfer rental bookings to a new owner. If you have rented a property via Airbnb or VRBO and that property sells, the new owner is not required to honor the rental.
What to do if you’ve been renting on Airbnb while selling your house
In the case above, I informed the agent/owner that those Airbnb bookings would be of limited use to my buyer since they can not be transferred. It is the policy of the online booking companies that each rental must be cancelled and then rebooked with the new owner. That means the seller must refund the renter’s deposit for any rentals booked after closing of the property and the buyer must rebook.
The key here? There is no guarantee a buyer will rebook.
What if you were a visitor and booked a Park City condo for the week of Christmas and that condo changed ownership two weeks before? The original owner is required to refund any deposits. The new owner is not required to honor the booking. The only exception is when the rental is booked through a property management company.
How the Park City Board of REALTORS® is helping with these transfers
The Park City Board of REALTORS® has created a new contract addendum to help facilitate the transition of guests when properties sell.
If agreed upon between buyer and seller, the addendum requires buyer and seller to jointly provide written notice by email to all the guests of the change of ownership and the manner in which the rental bookings will be cancelled and rebooked. The seller can not require guests to rebook with the buyer. In addition, the buyer agrees to honor the terms of the rental bookings between the seller and a guest.
What if the seller rented the property below market value just to show there were a lot of bookings? The buyer is required to honor those rates.
So long as your HOA allows nightly rentals without restriction, Airbnb and VRBO provide owners who wish to manage their own rentals an excellent opportunity to build a profitable vacation rental investment. Unfortunately, the policy of not allowing owners to transfer rentals can create big problems for buyers, sellers and guests.
2022 Updates
This post was originally shared on January 29, 2020. With the growth of short-term rentals in Park City, this topic is still highly relevant today. Clearly, nightly rentals are beneficial to homeowners. Be sure you understand where nightly rentals are permitted in Park City. If you are ready to invest, let’s connect.
5 Comments
Hello,
I’m an attorney in the U.S. Virgin Islands and I was wondering if you’d be willing to share the addendum with me. We run into this problem a lot here and I want to propose to our Territorial Board that we adopt the same kind of addendum. We are a very tiny jurisdiction, so your help is appreciated!
We just found out the property we have leased through VRBO sold. No one told us! Our lease should have transferred like any other residential lease.
This is idiocy. Such an addendum is probably invalid, as it almost certainly violates the Terms and Conditions between the Seller (selling Host) and Airbnb (or other listing service).
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Any new owner should never be interested in allowing a former owner to keep a guest booking past closing date. The new owner has no contract with such a Guest or the Host Listing Company (Airbnb or similar). The risk and liability is insane, with no upside.
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REALTORS, leave contract law to the professionals. You have no business or expertise and are actually precluded by law from discussing legal matters.
I am closing on my house and I have a person that manages my rental on VRBO. I cannot get him to turn over the account so we can cancel and refund monies to renters. VRBO will not give me access as I am not listed on the account and do not have the password.
I feel trapped and I am responsible according to my attorney.
any help would be great.
I’m sorry I am unable to help you with this. Please contact your real estate agent or an attorney.