Managing Vacation Rental Homes
February 2, 2018 |
With the rise of vacation rental home websites, like Airbnb and others, many have sought to expand their practice to include the management of vacation rentals. There is a difference between a vacation property management and traditional property management. One difference is that a vacation rental is for a short-term (usually a week) while a lease usually involves a longer term, like a year or more. Additionally, the occupant’s right to possess the property differs between a vacation rental and a regular lease.
Another unknown difference is that one subjects a manger to License Law and one does not. In short, why is it that a real estate license is required for those that manage real estate rentals, but a license is not required for those renting a room for a few nights or a week. What is the difference? Understanding the difference requires first defining what constitutes a license or a lease.
A “license” is a personal, revocable, and non-assignable privilege, conferred either by writing or parole, to do a particular act or series of acts upon another’s land without possessing any estate therein. One who possesses a license pertaining to real estate has authority to enter the land in another’s possession without being a trespasser. A license does not create an interest or estate in land. A “licensee” is a person who enters the premises of another by permission or acquiescence, for his own pleasure or benefit. By way of example, a hotel guest is a mere licensee who acquires rights, but without passing any proprietary interest in, the land. Therefore, when you stay at a hotel, you can be removed if you fail to pay or breach any other terms of occupancy. There is not an eviction, notice or hearing. This is because your right to possession is limited solely to the right to occupy the room.
A license to use or possess real property does not fall within the definition of real estate set forth in R.C. 4735.01(B). Because the guests at a hotel, extended stay or vacation rental are only granted the temporary, personal, revocable, and non-assignable privilege to use the premises, they hold licenses, rather than a tenancy or other legal interest in real estate. Consequently, management activities are limited to the management of those licenses, not the management of real estate for sale or rent as contemplated in R.C. 4735.01(A).
Examples of scenarios where licenses are granted as opposed to a leasehold interest in the premises are a hotel, even extended stay, vacation rental, and a hunting license. Persons dealing in the issuance of licenses are not required to be licensed as real estate agents. Nonetheless, licensure is absolutely required for those managing leasehold property or representing landlords or tenants.
Managing rental property (i.e. more than just vacation rentals) typically involves the negotiation of a long-term lease agreement, payment of a security deposit. In a lease, the tenant is afforded certain statutory rights (and a higher-level possession). To recover possession, the landlord must provide notice to the tenant and file an eviction in a court. Only with a court’s approval can a landlord recover possession of the property.
If you are thinking about moving into property management of vacation homes or other properties where short-term possession is contemplated, you still should make sure your arrangement with the owner is documented in writing and terms of occupancy are clearly spelled out for any occupants. Importantly you need not be concerned about any licensure issues through the Division of Real Estate.