For 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?
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.
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.