Any experience with a non-paying renter?

[SharonD]

For you frequent renters: have any of you had experience with a non-paying renter? Did you cancel the confirmation or how did you handle the situation?

I guess if you rent enough weeks it's bound to happen sooner or later, but this is the first time I've had a problem, so I'm still surprised by it. I admit that I've been "too nice" and have listened to (and believed) "promises" for 2 months (the final payment was due 2 months ago; the check-in date is about a month from now). I do have a contract with the renter that spells out the terms. It's not a huge amount of money but I will lose a few hundred dollars on the m/f if the renter doesn't pay.

I could deposit the week with II up to 2 weeks before, and just take a flexchange with it. But I am worried about the renter showing up in this place with no place to stay (I assume she already has plane tickets) -- it's President's Day week and I don't think there will be other availability. On the other hand if I just let her go I doubt if I will see the money later.

Any advice appreciated....

 

[camachinist]

The rental agreement should cover such contingencies...

In our case, our intervals remain advertised for rent and I assemble a waiting list (if applicable), even after we've received the 50% deposit I require at signing (which is equal to our MF's for that interval. If the renter doesn't pay at the 60 day (prior to occupancy mark), then I go to the list and retain the renter's deposit (which covers the MF's ) as liquidated damages. If no new prospects appear, we go enjoy our interval on the recalcitrant renter, as it is only a 5 hour drive away.

All of these nuances are covered in the rental agreement, which the renter signs.

Possibly because of the cost of these intervals (1500-2500 per week), it discourages renters from walking away. I'll know more as more time passes and we have more experience. So far, so good

BTW, the renter doesn't get the confirmation number (in our case Marriott) for the interval, nor does the resort get the transfer of use letter, until the renter has made the final payment. If they were not to pay, I would advise the resort in writing of the possibility of them using the interval fraudulently and to be aware that we do not affirm their right to use it.

In your case, if you're not going to occupy, I suggest you do the above, and deposit the week, or you could list it here or on eBay to rent it as distressed.

Hopefully you will get some other advice....

Good luck!

Pat

 

[Dave M]

I'm sure you realize you have waited way too long to drop the hammer. I require a deposit of 50% with the signed contract and the balance due early enough so that I can try again to rent the week if I don't get payment. The contract clearly states that failure to pay the rent installments timely is grounds for cancellation of the contract, with a refund of amounts I received only to the extent that I am able to rent the week again without loss of what I would have netted from the original renter.

At this point, you have few choices. You can send one last message or (preferable) phone her, indicating that unless you receive payment via overnight mail tomorrow, you will cancel the contract and you will hold her responsible for any loss of rental income if you are not able to rent the week again for the same amount.

Then tomorrow, if payment is not forthcoming, place an ad on the TUG Last Minute Rentals forum. And, yes, consider a last minute deposit with II, as you propose.

I wouldn't worry about her showing up and having no reservation. As long as the contract you used allows you to cancel for failure to pay in a timely manner, you should be safe. Just be sure to tell her in writing that the contract is canceled.

Remember, this is not a friendship that you are concerned about ruining. This is a business transaction. You kept your end. She didn't keep hers. Cancel it.

 

[T_R_Oglodyte]

I've never had to face the situation because I don't consider a unit to be rented until the unit is paid for.

Until the money arrives I continue to keep the listing open and will accept bids. If someone else gets their money in ahead of another person, it goes to the person whose money arrives first. If two people express interest at almost the same time, the rental goes to the person who gets his money in first.

Did you look at the sample rental terms in the TUG Advice pages?

 

[SharonD]

Thanks for the advice everyone. I do use a modified version of the TSToday contract -- I have received the deposit with the contract and her final payment was due 90 days before check-in. I think the contract and rental terms were solid, but I agree it was a big mistake to wait so long. This would have been much easier to handle at 90 days before check-in then it was now.

She doesn't have e-mail so all communication has been on the phone, which is also part of the problem. I did have some reason to trust her that isn't important now... live and learn.

I will follow the advice to cancel unless I receive the money in the next few days. Thanks again, everyone.

 

[MOXJO7282]

I do as Dave M does, but I ask for 60% deposit and balance due 90 days prior. I also make it clear that if for some reason they need to cancel after sending the deposit, I will gladly refund all payment(s), that I recover if I re-rent, if not, the renter unfortunately is SOL, and I keep the deposit. On my properties 60% covers more than my MF, and with the 90 day window I build in, I never really put myself into potetentially losing situation.

The one time I got slightly burned was on ebay, when someone won an auction, and then started palying me by stalling the deposit and bidding on another auction to see what he could get cheaper. I had plenty of time to relist, so I wasn't hurt monetarily, but you still have to be careful who you deal with.

The one thing about Marriott, not sure if it is unique, but I can change the name of the reservation without penalty, as many times as I want, so I never have to worry about someone not paying balance and still trying to use the unit. They could have a piece of paper, but if it doesn't match the system, they won't be given the room.

It really is buyer beware, so if the seller gives themselves enough time to relist they should be OK.

Regards.
Joe

 

[camachinist]

The one thing about Marriott, not sure if it is unique, but I can change the name of the reservation without penalty, as many times as I want, so I never have to worry about someone not paying balance and still trying to use the unit.

That's interesting Joe.... I've sent NCV the letters regarding useage by our renters, but our name remains on the reservation that exists on Marriott's web site, even during their stay. Additionally, last year, the renter added additional nights while there, at 500/per, and this reservation showed up on my account during their stay. I'm wondering if that is why we got the referral points, even though we never signed them up for a friendshare or anything else....hmmm

Pat

 

[Dave M]

I'm not sure there is anything different between what you and Joe do, Pat.

I do it all by phone. I call and add a name to the reservation, allowing the renter to check in. If the renter changes, I call, ask for the first renter's name to be deleted and add a new name. In all cases, my name stays on the reservation. Never had a problem.

 

[camachinist]

Thanks Dave. I've always done everything via fax directly to the resort. I'll try your way next time. I'm assuming you call reservations, yes? Not the resort.... reason I mention that was that, when I called NCV to inquire about the mysterious nights showing up on my account, the resort directed me to the reservations number.

Pat

 

[Spence]

I do as Joe does, but I ask for 50% deposit and balance due as soon as they receive confirmation (which is the same day I get their deposit). I also make it clear that if for some reason they need to cancel after sending the deposit and/or full payment, I will gladly refund all payment(s), that I recover if I re-rent, if not, the renter unfortunately is SOL. On my properties 50% covers more than my MF, and with the window I build in, I seldom put myself into a potentially losing situation.

The couple times I got slightly burned was late rentals (when I trusted the person within a week of check-in and made the reservation for them), one time the renter never sent the money (the phone number I had turned out to be their computer line and was never answered but was often busy) when I threatened small claims court (they lived within 30 miles of me) they sent a check saying they were planning on paying at the end of the month (two weeks after their stay). The other was a bounced 'remainder' check that the renter eventually made good in installments.

One thing about Sunterra, not sure if it is unique, but I can change the name of the reservation without penalty, as many times as I want. I can also cancel the reservation entirely if outside of 60 days with no penalty.

 

[Dave M]

I'm assuming you call reservations, yes? Not the resort....

Yes, that's what I do.

 

[cycart]

Why would you not ask for 100% payment up front?

 

[huestous]

Why would you not ask for 100% payment up front?

I've always wondered this as well.

I require 100% payment upfront with clearly defined stipulations for changes or cancellations.

Why do others assume the risk for someone else changing their plans?

 

[Blondie]

I do much as the others and have the final balance due about 3 months before checkin. That way it is either paid or I rent it elsewhere. Give the renter 48 hours and if she doesn't follow through deposit the week. Tell her in advance that you are ginving her a deadline and if she doesn;t pay she loses out- period.

 

[camachinist]

Why would you not ask for 100% payment up front?

Because it gives me an advantage over someone who does Also, it gives me the opportunity to price the interval a bit higher, and offer a "discount" for advance payment. It also makes me look a bit more like Marriott, with whom a customer can cancel nearly up to the day of occupancy.

Also, my agreements are written such that, if the renter defaults on the final payment, I can retain the deposit as liquidated damages.

It's all about marketing

Pat

 

[Hoc]

My rental agreement provides for a 50 percent payment at the time of rental, with the remaining 50 percent due up to 1 month before the rental. It also provides that, in the event that the second payment is not made, the deposit is nonrefundable and considered liquidated damage for the failure to comply, and that I can re-rent or use the property as I see fit.

The first payment usually covers my annual maintenance fees, plus a little extra.

 

[JoyC]

Use Paypal

We do rentals just like most of you: 1st 50% deposit required to book a reservation, and the balance due when the confirmation is received by the renter.

We use Paypal account to accept payments. It is easy and fast, no excuse for "check is in the mail" or "My wife forgot to mail the check". This is
specially useful for renting a unit close to the check-in date. If the payment is under $500 (per transaction) - no fee from Paypal; 3% charged for payment over $500.

JoyC

 

[taffy19]

Do you need a commercial PayPal account for this? We have done our rentals like Hoc has done above but never had a problem. We also removed our name from the reservation after the renters paid 100%. If they had to cancel or didn't pay at the last minute, we would have used the condo ourselves as it is not far away.

Recently, I called the Marriott to ask if we could rent our lock-off unit or give it to a Veteran family while we were staying there in the one br unit and how this would work with having two families checking in at separate times and with credit card charges. Marriott said that would be no problem and can be done. We may try this another year but not this March because our friends are coming for a few days, they told us now.

 

[camachinist]

Paypal charges a transaction fee for every transaction which involves a credit card (they require the recipient to have a "premier" account or commercial account to accept credit card payments). Personal accounts can accept non-credit card funds (funds from another PayPal account) up to a certain amount (I haven't had one in years), then they're locked until the next cycle.

The reason I don't use Paypal is because of the fees and because, if a buyer/renter uses a credit card, they can make life difficult for us if they've a mind to (inquiries/disputes). They can do that even if the actual stay is months away, after the stay, as the clock starts ticking when the service (rental) is provided.

I know others use PayPal for buying and selling timeshares, as well as renting; I've been using it long enough (about 7 years now) and have had enough bad experiences (with buyers) to be a bit leary.

Pat

 

[cycart]

PayPal charges a fee for all receiving transactions if you have a premier account, whether it's by credit card, bank transfer or existing funds. I found this out the hard way when people tried to pay me on eBay w/PayPal via credit card. I originally had a personal account, then upgraded to a premier account to accept the credit cards. Now I'm charged a fee to receive all payments.

JoyC-What kind of PayPal account offers no fee if under $500? Can you accept credit cards?

 

[JoyC]

cycart, among all payments, we received two in full, which were under $500. Now, as I understand, they may pay through their bank accounts, not credit card.

camachinist, thank you for sharing the Paypal experience. We will be more careful in future transactions when using Paypal.

JoyC

 

[PerryM]

Way too nice

You guys are way too nice – I ask for 100% full payment upfront and I always get it and I prefer PayPal.

Out of the many rentals I’ve made over 5 years I’ve never had anyone not win an eBay auction or click a buy order and not pay me within 3 days. My rental contract and eBay terms specify 3 days to contact me and within 10 days I get paid the full amount. I contact the renter on a daily basis and ask for the status of payment if PayPal has not been used. On the few occasions that a person doesn’t want to use PayPal I demand the renter send the Cashier’s check via Priority Mail and I want that tracking number.

If they want to finance the vacation I point out that they can use their VISA or Master Card thru PayPal. I highly recommend that the landlord get 100% up front and then there is no monkey business by the renter.

Out of all the rentals I’ve done I only had one renter, a repeat renter, asked to get out of the contract. They booked a week 52 at MountainSide in March and the wife got pregnant – I left the burden of finding a renter on their shoulders. After 30 days they found a renter at the company where the husband works. Funny how they will help you rent your week when their money is on the line.

My rentals offer the renter a fantastic discount over prevailing rents – the least they can do is pay the rent.

P.S.
After the pregnancy issue I recommend that all renters buy a renter's insurance policy. I give the links and state that for about $250 their entire vacation is covered. I don’t believe any of my renters have actually done this but I could be wrong. Place the burden of something happening to the renter in the hands of where it belongs – an insurance company.

 

[brucecz]

We have buried nonpayers but I am not saying where .

We get 100 % upfront and also have in our contracts a non cancelation policy and have hd only one person who had us rerent out their 2 rented weeks after they ran into marriage problems 3 months before their check in date.

In that case we where able to get the full rental price for the first renters because it was not a last minute situation.

We thing I learned from my first years of doing rentals is not to save weeks for someone that has not made any payment.

With getting 100% down you can then procedd to wrap up all the needed paperwork for that rental and not have to spend time chasing your money, etc.

Bruce

 

[camachinist]

Perry, that's the difference between having an established rental program and starting one. One has to find ways to attract renters who otherwise might go with the "name brand" landlord

I like your idea of promoting financing of vacations through PayPal (and use of credit cards); I just need to get over the memories of the early years and some of the bad things which happened. PayPay(l) is a more mature animal today.

Just remembered my wife has a merchant account with VISA at her salon....hmmm

Pat

 

[PerryM]

Snidely Whiplash here!

Pat,

I’m not sure what you are asking, if anything. I’ll guess.

Whether you have 75 rentals under your belt or 0 there isn’t that much difference.

The KEY determining factor is the rental rate. Ask too much and you don’t rent, ask too little and you kick yourself in the butt. That takes time to finesse. Don’t assume you should be asking the same price all the time! However, NEVER, did I mention NEVER, have different rental prices at the same time for your week – NEVER!

Constructing a “mouth watering” ad is crucial. You can use MS Word and construct a great ad and then eMail it to interested folks that inquire. Of course the best is to have your own web site – costs $100 per year and you need something to publish like MS Word or I like MS FrontPage.

However, when you deal with a renter you must put on your “Snidely Whiplash” hat. Link: http://en.wikipedia.org/wiki/Snidely_Whiplash You must put on your Landlord hat when dealing with renters – that’s from the start to the end of the rental.

By this I mean YOU are in charge and must deal with renters with a firm hand. You can’t act indecisively – your renter will smell blood in the water and either walk over you or get scared of you. I am amazed how a person, I’ve never met, will pay my PayPal account $3,000 rent + $300 security deposit and wait for me to add his name to my reservation – I personally would never do such a thing. But I’ve never had anyone, over 5 years of renting timeshares, balk at doing this.

Once you’ve done this for a while you will get repeat renters who I give a 10% discount to and I have a bounty system where a repeat renter can get an additional 10% if they bring a renter to me. At large offices the word spreads that skiing at Whistler or swimming at Maui can be had for great rental rates and the accommodations are 5-star. Over half my rental business comes from repeat renters and they are now bringing me new renters.

In conclusion: Off load the responsibilities of financing your renter and insuring their vacation. I know there is a temptation to do both but that’s why there are credit card companies and insurance companies.