As swaths of new regulations are popping up in communities that govern how vacation rentals are done, staying legal as an Airbnb host has become much tougher, especially for renters. Most rental leases don’t provide guidance on home-sharing and this complicates the relationship between landlords and tenants. In fact, most leases outright prevent subletting, which is what renters are doing when hosting paying guests. Therefore, most renters are stuck from hosting because they don’t want to risk their lease.
This is where a lease addendum comes into play. They’re documents that add additional terms to the original lease. There are many types of lease addenda, but for purposes of this article we’re focusing on a home-sharing lease addendum, sometimes referred to as an Airbnb Lease Addendum because of the popularity of the service.
Short term rental regulations differ slightly among communities, but most home-sharing laws for a renter generally starts with having official paperwork between the landlord and tenant to document the subletting rental rules. A renter who wants to legally list their space on Airbnb will likely need to prove to their local governing bodies that they are not in violation of their lease. The best way to do this is for the renter to have a written Airbnb lease addendum, signed by their landlord in hand.
Here are a few key topics for you to understand the process of creating a lease addendum.
Can you create a home-sharing lease addendum without an attorney?
Yes. Although it’s ideal for an attorney to handle the core elements of a rental agreement, drafting a lease addendum for tenant home-sharing is easier than many expect. Services such a Letulet help renters with the agreement creation process, so that renters can make the most of their opportunity get the landlord to say “yes”. Apps such as these help by providing landlords the peace of mind that their interests are not being ignored.
One of the simplest ways for renters to get landlord approval to modify their lease is by agreeing to reasonable hosting limits as well as agreeing to a reasonable revenue share structure where the property owner gets a portion of the revenue generated by the bookings.
Airbnb hosting limits and your home-sharing lease addendum
Setting a clear limit on hosting activity is a fundamental element of most Airbnb lease addenda. The document should specify how many guests can stay in a unit at one time, the frequency booking can happen in a given month, and a cap on nights hosted per year. These guidelines are essential because landlords want to maintain a positive relationship with neighbors. While some communities are fine with frequent rentals, others prefer limiting the frequency.
Revenue sharing & your home-sharing lease addendum
Revenue sharing terms are a significant element of an Airbnb lease addendum as they make hosting mutually beneficial for the landlord and renter. The typical revenue split on Airbnb hosting is around 80% of the home-share profit to the tenant, and 20% to the owner.
Some owners demand more (say 30%+/-) because the property manager is taking an active role in the guest stay, like check in and check out. Some owners are ok with less (say 10%+/-) because the owner might benefit in other ways such as owning a store in the building that the guests use. Keep in mind, the property owner has additional risk and wear and tear on the building when short term guests use their space, so some financial compensation is helpful to offset those costs.
Since the resident is the host, and is facilitating the guest’s stay, they get the lion’s share of the profit. Revenue sharing terms must be clearly spelled out in the lease addendum so there is no ambiguity over who is getting paid what amount and when.
Defining ‘House Rules’ in your home-sharing lease addendum
House rules are an essential element of landlord/tenant home-sharing agreements because they provide guidelines on how guests should behave during their stay. Many hosts choose to prohibit large parties, big groups, loud music after hours and smoking. These house rules may be as simple as, “no pets, and no smoking.” Renters should list these house rules in their Airbnb listing to ensure guests don’t have surprises upon arrival.
Make sure your lease addendum clearly defines property access
As a landlord, when you rent out a property, there’s often a clear understanding of the places the tenant has access to. When it comes to managing short-term guests, however, it’s always a best practice to set clear boundaries on the areas they can access.
If the property features shared amenities such as a pool or clubhouse, it should be determined whether guests have the same access as residents on the lease. As an example, you might find that the parking at the property is assigned to permanent residents only, or that the rear yard area is not for guests.
What happens if a home-sharing tenant breaks the rules?
Violation clauses are standard in most leases and carry over to an Airbnb home-sharing lease addendum. These typically state that if the renter does not follow the rules of their lease agreement and addenda, then the owner has the right to terminate the arrangement pursuant to local laws. In other words, the addendum has some “teeth”. If the rules are not followed, the landlord has options for legal recourse such as eviction or claiming some of the deposit for damages.
Home sharing for renters - why a lease addendum matters
Now that many communities are taking steps to bring order and structure to Airbnb hosting, renters are facing the fact that they need consent from their landlord to list their unit. That’s why all renters and landlords who are interested in profiting from the short term rental markets should explore the option of creating a home-sharing lease addendum. As hosting in compliance with one's lease helps all the stakeholders including the neighbors and the local communities.
Keep in mind that governments are trying to ensure that property speculators are not converting long-term rental units into strictly short-term rentals because that, in theory, limits the supply of units increasing the demand to rent them. Most home-sharing laws focus on one main thing, if the host is a permanent resident. This is known as the “one-host-one-home” principle within the law. The good news for renters is that the “one-host-one-home” laws mean that renters are often eligible to be compliant hosts, because they are the primary resident of their home. The road to compliant hosting for a renter really starts with their landlord and getting from them that all important “owner permission” to home-share. Therefore, getting an Airbnb lease addendum in hand is a necessary first step for all renters who want to host in compliance and confidence.