[REN #902] Eviction Ban: Coronavirus Squatters in Short-Term Rentals

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Eviction Ban: Coronavirus Squatters in Short-Term Rentals, Real Estate News for Investors Podcast Episode #902

While many short-term rental owners can’t attract guests right now, others can’t get rid of them. There’s word that wealthy guests are squatting in fancy summer rentals because of the coronavirus ban on evictions. That’s putting property owners in a tough spot. Many are worried they could miss out on the summer tourist season.

It’s not clear if this is happening in other areas, but the New York Post writes, some short-term guests in the Hamptons are refusing to leave, once their reservations have ended. Local landlords and real estate brokers say these tenants moved into their water-front accommodations before the eviction ban went into place and are now saying they can’t afford to pay the rent, or move anywhere else. And these are not cheap places or low-income guests. (1)

Tenants Taking Advantage of Eviction Ban

One homeowner says, a guest moved into a property last October when the rent was only $3,600 a month for the winter low season. It appears that he planned to stay through April, but said he didn’t have the money to pay for the April rent and has not left.

The property owner has plans to rent the place over the summer for about $15,000 a month starting on Memorial Day weekend. Renting the home for the summer months through Labor Day weekend can bring in more than $50,000. That’s money the owner plans to use to pay for a son’s school tuition.

Another homeowner told the Post that she rented a few rooms in her house to a mother and her teenager back in the fall. They stopped paying rent in March after Governor Cuomo announced a freeze on evictions. She was getting $1,600 a month during the winter, but expected to get more for the summer season. Now she’s worried about losing her home.

Hosts Rely on Summer Season Income

Some landlords are offering cash payments and help in finding a new place, but it’s not working. These squatters apparently want to stay in the tony Hamptons area, while owners have new tenants that are ready to move in. One homeowner said, “This is when we make our money, in the summer while the tenant is looking for a free ride in the Hamptons.”

Brokers say, some property owners are trying to sell their rentals, and that tenants are refusing to let them tour homes with potential buyers. The ban on evictions doesn’t mean that the guests, or tenants, won’t have to pay, eventually. But for property owners counting on the summer high season to make most of their income, this year could be a bust. They say they can’t do anything about getting tenants out until August 20th, and by then, the season is over.

It’s a tough time for short-term rental owners. Many were not professional investors and didn’t sign professional leases. They may not understand eviction laws or how to protect themselves. And each state has different eviction laws.

For example, in Alabama, vacation rentals are governed by the Real Estate Commission and are bound by the terms of rental agreement policies. In Florida, rentals are deemed short termed public lodging establishments and controlled by Chapter 509 of the Florida Statutes. If you need to file an eviction, consult with an attorney or local property manager who understands the local laws. Document the circumstances carefully and keep them on file.

But the best way to avoid conflict starts at the beginning. Always use a legal rental contract, take before and after photos and leave clear instructions of use. For example, if you want to ensure that a person 25 years or older is at the property every evening, make sure it’s in the rental contract. 

Links:

(1) New York Post Article

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