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.
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.