Short Term Leases

by Nicholas Walsh, PA

Some of you may have properties you rent for the summer, by the week. Our family has such a property and for ten years I have been tweaking the lease.

Our lease provides for half the lease payment to be made when the renter returns the signed lease, and I provide a date by which the lease is to be returned to me. The use of a date certain exposes those persons - we’ve had one or two – who say they want to rent and who ask for a lease but then change their minds or can’t come up with the money. The second lease payment is due 60 days before the lease begins.

I also use a cancellation clause. Notice of cancellation must be in writing. If I get it before 60 days from the date the lease is to begin, I keep half the lease payment as liquidated damages. If I get the lease payment after that date, I keep the full lease payment, “except that if Owner thereafter contracts with a substitute tenant on substantially the same terms and for substantially the same dates, one-half the lease fee shall be paid to or retained by Owner as damages.”

In setting such deadlines I don’t use phrases such as “60 days before the lease is to begin.” Instead I state dates, such as “June 23, 2015.” I have seen too many disputes over exactly what is meant by “60 days before.”

Our lease expressly reserves to us the right to treat as a cancellation by the tenant any failure to pay on time.

We also want to protect ourselves against someone getting hurt and suing us. As regular readers will know, the first line of defense against such a suit is insurance. Bear in mind that your regular homeowner’s policy probably doesn’t cover you for claims brought by persons who are paying to stay in the property. For an additional premium, we obtained a “rented to others” endorsement which takes care of that issue.

Our second line of defense is a really solid indemnification clause. Tenants warrant to us that they won’t sue us for “claims which may have been caused by the negligence or similar fault of Owner or its members or contract employees, whether suffered or incurred by Lessee, guests and invitees, or by others, for incidents occurring on or about the premises during the lease term or any holdover or early occupancy, including aboard boats.” Further, if despite this language someone does sue us, the person signing the lease has to come to our defense and pay any claim.

You might think some tenants would balk at such language, but we have never had an issue. It is perfectly correct to require tenants to sign such a contract, and the contract, if the right magic words are used, is fully enforceable. No contract can protect you against an injury caused by your reckless or intentional behavior, of course.

Some folks ask if they can use the house for a wedding. As someone who has seen plenty of high times at weddings I am reluctant to allow that. Our lease provides that “written permission of landlord is required for any party with more than 40 invitees.” That way we can make the call, require that portapotties be brought in to avoid overburdening the septic system, and so on. But mostly the clause is to prevent huge parties we aren’t told of. Along the same lines we require that “the premises shall not be occupied overnight by persons under the age of 22 unless Lessee is present.” Sorry, kids.

We have a hurricane clause, providing that we’ll issue a refund if a named hurricane interrupts the tenancy (tropical storms need not apply), with the refund determined in our discretion but reflecting the actual loss of use. We are not interested in refunding someone just because they had a rainy week.

Finally there’s the stuff laypeople call boilerplate, so often critical. For example, any suit involving the lease has to be brought in Maine. We rent to people from all over the United States, and this clause prevents the possibility of us being sued in, say, California. The lease can’t be assigned to someone else, unless we approve. And of course the lease has that clause which no contract should be without: “Should Owner enforce its right to payment, it may recover its costs, including attorney’s fees.”

It’s a two-page contract, readable and approachable and full of protections for the landowner. If you’re interested in seeing a copy let me know.

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I was going to write a column titled “Radioactive Lobster Traps” but I’ll keep it short. As many of you know, where once it was possible for a good lawyer to beat a trap molestation charge, that’s no longer the case. Marine Patrol builds good cases and they get heard not before a judge but before a DMR hearing officer. It’s very, very hard to win these cases anymore, and the penalties are harsh, typically a three-year suspension. The upshot is that no lobsterman should even think about touching another’s gear, even if it’s a trap apparently abandoned on a float or at the ramp, even if it’s ghost gear brought up tangled in yours. Just take the coordinates and let Marine Patrol know, like you hauled up a dud torpedo or radioactive debris. It’s that dangerous, almost.

Nicholas Walsh is an attorney practicing in Portland. He may be reached at (207) 772-2191, or at nwalsh@gwi.net.