The REINSW Helpline has recently been inundated with questions about what to do when an owner decides to sell their holiday property.
Do you have any procedures in place for when an owner decides to list? And what happens with future bookings and deposits? Below are in-house procedures from holiday leasing agents as examples of what others are doing in the market.
Simone Koen - Visit The Entrance
At Visit The Entrance we have a provision in our Terms and Conditions if the property is sold.
All forward deposits are accepted on behalf of the present owners of the accommodation. Should ownership change, we cannot accept responsibility for arrangements or decisions made by the new owners.
All deposits should be held in trust for the guest until arrival at the property. This allows the agent to be able to refund any forward deposits in full if ownership changes.
The new owner has the option of taking up the bookings, but is not legally bound to take them as in a residential tenancy, where a sale was subject to the existing tenancy.
Richard Crowther - Professionals Forster Tuncurry
Listing a holiday rental property can unnerve potential guests, as there is a possibility a booking will not be honoured. We certainly try to avoid this as much as possible and we always discuss with prospective vendors the practicalities of this situation.
We are often reluctant to take further bookings in such cases, but in reality this can be difficult as a vendor will naturally want their property to continue to provide an income source and also advance bookings do assist in the sale price. Prospective purchasers see greater value and demand for the property through advanced bookings.
If the property is no longer going to be a holiday rental, then our focus immediately shifts to addressing our guest’s needs. We contact them as soon as legally practicable and explain the circumstances. Our priority is to try to relocate the bookings and discuss all alternative options available. In some cases where we have no alternatives, we will even contact other accommodation providers to try and assist the guest. At the end of the day, if nothing was available, then a full refund would be given to the guest.
Deposits for future bookings are always held in trust until after the guest has departed and the service has been delivered, so there is never an issue with recovering funds from an owner and refunding deposits. Our holiday Terms and Conditions address this scenario in detail.
Rebecca Cribbin - Beach and Bay Holidays
At Highlands Holidays and Beach and Bay Holidays, we are exclusively holiday rental managers. We have a set of terms in our agency agreement, which cover listing the property for sale – these terms help protect the guests and help to cover our costs when a property is sold. The terms are:
Property Sale
Should the Principal decide to list the property for sale the managing agent requires the following:
- Please discuss the potential sale with the managing agent prior to signing an agency agreement to sell.
- Provide notice in writing outlining the details of the sale and the sales agent who will be dealing with the sale after signing an agreement.
- The sales agent must make appointments for inspection with Highlands Holidays and pick up the keys from the Highlands Holidays office. The Agent can only allow sales inspections when there are no guests at the property. Sales agents are NOT to be supplied with keys.
- The managing agent will negotiate with you the principal as to how far out further bookings are taken.
- All guests with existing bookings must be notified in writing by Highlands Holidays that the property is on the market for sale. They then have the right to cancel their booking. If they do this then you the owner will be charged a $250 cancellation fee for each and every cancellation.
- Should the property successfully sell, the managing agent requires notice that a sales advice is pending and as soon as exchange of contract is actioned, the Principal should provide a date for the final booking. Highlands Holidays will then relocate all of the bookings. This will be done at a cost to you of $250.