June 21, 2018

What Hosts And Guests Need To Know About Short Term Rentals

You are thinking of renting your home, condo or cottage on Airbnb, Bookings.com and Homeaway but what are the legal implications for both the hosts and guests.  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.

  • 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. Before you consider hosting, check the 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.
  • What is the worst that could happen? You have probably heard horror stories of properties being severely damaged by guests. There have also been cases where a guest refused to leave under squatter’s rights. 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.
  • 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.  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.
  • 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?  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.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406