My Vacation Rental Was Damaged, Now What?

Mike Stachowiak —  August 6, 2013

"Broken Reflection" from Flickr, by shinealightFor most vacation rental owners, property damage from careless or destructive guests is rare; screening, renter restrictions and damage deposits — as at least some would argue — help reduce the risk for outright bad guests.

But when you’re left facing post-rental repairs or extreme cleaning, should you keep the damage deposit, pursue a bigger claim (when warranted), or take a deep breath and move on?

Document everything

Before you decide what to do next, carefully document the damage with photos that are stamped with both the date and time and make detailed notes so you have a record to refer to later.

You may not be the first person on site, especially if you don’t live near your vacation rental, so have proper protocol in place for your property manager, cleaning crew or anyone else who may be there.

For example: ask them to contact you first, then take photos on your behalf if you’re not in a position to get to the home right away.

Consider the impact

Whether or not to pursue a claim is always a subject for debate — with so many variables, there isn’t a right or wrong answer.

Some owners choose to let these issues pass, particularly small incidents, and chalk it up as a learning experience or “the cost of doing business”. This may be to maintain goodwill with otherwise great guests, or it could be to avoid the hassle.

There’s also the risk that withholding a damage deposit, even when completely justified, could result in a negative review on a listing site — something that causes concern for many owners. That potential for impact has motivated some owners to stop collecting security deposits in favor of property damage protection insurance, a decision that has its own list of pros and cons.

Whether you’ve opted for insurance or a deposit, once you’ve recorded the damage you should contact the previous guests to ask what happened — the sooner the better. Neighbors may also be able to help “fill in the gaps.”

It can be best to give your guests the benefit of the doubt; you can generally tell the difference between damage that’s insubstantial, accidental, or blatantly destructive. While some guests may be upset by a decision to withhold part of their deposit, people are often willing to pay for repairs or negotiate another mutually-acceptable arrangement.

Weigh your options

If you decided to reclaim at least part of the expenses incurred, there are a number of options to consider.

Hold onto the damage deposit
If you require a deposit, holding onto some or all of it is generally the easiest option. However, once cleanup begins, get written estimates and receipts for all repairs or replacements. Be reasonable about the repairs; you’ll have a hard argument if you decide it’s a good time to upgrade. HomeAway shared helpful sample letters you can reference if withholding some or all of a damage deposit.

Check with your insurance agent
If you’re considering making a claim against your property insurance or property damage protection insurance purchased by your guests, check with your insurance agent to make sure you’re clear about both your options and any longer-term implications (i.e. impact on rates).

Consider possible legal options
Even with good documentation of damage and repairs, you may run into difficulties — like a renter contesting charges you bill to their credit card, or repair costs that run higher than the damage deposit — and need to consider whether the situation is worth escalating. If this is the case, be sure to discuss your options with a lawyer and balance the situation against both your time and energy; going to court to pursue a claim can be a bigger headache than you might think.

Thinking ahead…

Get into the habit of keeping up-to-date photos of your vacation rental on-hand — particularly if you make improvements or replace furniture — and ask new renters to report any damage as part of their check-in procedure so you both have a record of the condition of your property. VacationRental.org has a helpful article that discusses other things you can do to help prevent disputes in the future.

How do you manage incidents and accidents with your vacation rental? Tell us your experience and advice in the comments section below.

photo credit: shinealight

Mike Stachowiak

Mike Stachowiak

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Co-founder at MyVR.com. Mike Stachowiak is an entrepreneur, technologist, and active member of the start-up community in Silicon Valley. He has a vacation home in North Lake Tahoe and has been active in the vacation rental industry since 2009. You can find him on Twitter and Google+.
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2 responses to My Vacation Rental Was Damaged, Now What?

  1. Was it you who stayed in one of our properties this weekend? We had a property trashed over the weekend. Your timing on this post is uncanny!

    My first inclination was to call the Sheriff and press charges. On my way to the property, I called the guest and told him what was happening and what I was going to do. He asked me to assess the damages and call him back. Getting there, it was bad, but not as bad as the housekeeper described.

    I took pictures of everything, and called the guest back. We have to replace linens and the housekeeper took 10 hours to clean the property instead of 3.

    Several things that we are pondering because of this incident:
    1. This was the only one out of over 1,500 guests we have had a problem with in the past year. Don’t re-write everything and change all of our policies just because of one guest. Don’t create a lot of extra safeguards and procedures for yourself and your guests that may not really be necessary and affect your rental occupancies.

    2. Do we have enough information to actually press charges against an individual? Does our rental agreement explicitly give us permission to charge their credit card for the damages or will their challenging the charge result in use eating the expenses? What is our procedure to document damages, contact the guest, charge their card and collect for the damages.

    3. Damage insurance really only protects you and your guests for accidental damages, not intentional damages. If you file a claim for a wild party, the claim will probably be denied.

    4. We emailed the pictures and the list of costs to the guest, and he has offered to make good on the expenses related to his stay.

    5. Do we change everything just because of one guest? I don’t know. . . we are looking at our screening processes to see if we should have caught this one, I took the reservation and looking back, he gave me clues that I should have caught. But other people say some of the same things, and they didn’t trash the property during their stay.

  2. Jonathan Murray
    Jonathan Murray August 7, 2013 at 9:01 am

    Sounds like you may have really dodged a bullet with your own experience, Tom. And you make some really outstanding points. I personally struggle to find the right balance between protecting myself and my home, and not having overbearing paperwork and policies for renters. You make a good point to pause before completely overhauling everything based on one renter.