THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, March 23, 1996 TAG: 9603210273
SECTION: REAL ESTATE WEEKLY PAGE: 24 EDITION: FINAL
COLUMN: ABOUT THE OUTER BANKS
SOURCE: Chris Kidder
LENGTH: Long : 115 lines
Mail Bag: An Edenton reader and his family had rented the same house for the same week from the same company for years. This year, the rental brochure arrived and he found that ``in'' season had moved to include his family's vacation week. Rent for their favorite house was increased from $1,330 to $1,650.
``I would like to know what you think of the practice of switching seasons without notice to those of us who have been faithful renters year after year. I think it is poor policy,'' he wrote. The reader also questioned whether the cottage owner or the rental agency made the change.
Owners have the final say in rates and dates, said the rental manager involved in this case, but the company makes recommendations that most owners follow.
In this particular case, the reader wanted to rent the last week in August as he had in past years. Due to a periodic shift in season dates, necessitated by calendar changes from year to year, his week became an ``in'' season week in 1996.
The actual ``in'' season didn't expand, the rental manager explained. It's still 11 weeks as it has been for the last three years. ``That's pretty standard down here,'' she said.
The reader made a pre-reservation last summer (it's not a reservation because, at that point, rental companies don't have signed contracts from their owners in hand for the next year). Because of this, he was notified in November by the rental company of the season shift and subsequent rate increase. Without a pre-reservation, he wouldn't have known about changes until the rental brochure arrived in January.
Since rates and dates for an upcoming season aren't finalized until contracts are complete - usually by the first of October - the rental agent wondered what more she could - or should - have done to give notice and make this customer happy.
In response to a column earlier this year about N.C. Senate Bill 1054 dealing with advance rents for vacation cottages, a cottage owner shared her views.
``We own a house on Ocracoke which is rented on a weekly basis. The advance rents are maintained by the Realtor, who deposits them in an interest-bearing account. We receive our rents at the end of each month after occupancy; therefore, we cannot spend the rent before the house has been occupied,'' writes the owner.
``If some Realtors are creating problems for themselves and others by paying owners in advance, then this should be handled in another fashion. Who sets the rules and standards for Realtors? As we see it, legislation will only legislate Realtors out of business.''
This issue of advance rents has been a sticky one for the real estate community. Real estate agents dreamed up this idea of giving owners their rents in advance because it fueled real estate sales. With income spread more evenly throughout the year, rather than concentrated in the summer months, more people are willing to take on the expense of vacation property.
Advance rents also provide better cash flow for real estate companies. Agents can't take their share of rents until money has been disbursed to the property owners.
There have always been agents who saw the potential for problems and disagreed with the practice of advance rents. They have not been able to persuade their colleagues to police themselves in this matter. In many cases, they have been forced to adopt the advance rent policy because cottage owners, given the choice, choose companies that give them their money up-front.
Advance rents became accepted practice a little over 10 years ago. But a rash of vacation-disrupting storms brought it to the legislative forefront when the North Carolina Real Estate Commission and the Attorney General's Office began receiving complaints about refunds.
Real estate agents argue that the advance rent policy can't be undone because too many owners have purchased property dependent upon rents to help them meet monthly mortgage payments. Less frequently mentioned is the rental agents' dependence on the regular commission checks.
Senate Bill 1054, sponsored by a Wake County legislator, has passed the Senate. It is being considered by the House Business and Labor Committee. The North Carolina Association of Realtors is the state's largest trade group. I wouldn't bet on the legislation going any further than where it is right now.
In reference to another recent column on vacation rentals, I heard from Tina Tice, Wright Property Management, Kitty Hawk, on behalf of the Outer Banks Association of Realtors Property Management division.
I wrote that to secure reservations, renters must pay a ``deposit.'' Tice points out that ``the North Carolina Real Estate Commission has determined that the word deposit' cannot be used when referring to an advance rent payment.''
``Their ruling is that any monies collected as a deposit must be refundable, such as a security deposit or a cleaning deposit.''
Tice is right to make this distinction because the refundability of advance rent is at the crux of many vacation rental misunderstandings and the situations addressed by Senate Bill 1054.
Most vacation renters sign contracts spelling out that advance rent will not be refunded in full if reservations are canceled by the vacationer. Contracts also stipulate that weather-related refunds may not be possible.
Rental companies try to work with customers who find themselves needing to change their vacation plans. Rescheduling with a full credit or small fee to cover the cost of additional paperwork is a common solution.
If rescheduling doesn't work, renters usually must wait until the property is re-rented to get a refund. Cancellation fees vary according to circumstances and how late in the season the cancellation is made. The fee can be hefty.
If a property is not re-rented, the standard rental contract gives the agency and owner the right to keep all advance rent. This is not the common practice; rental companies are in the business of making customers happy.
Bear in mind, though, that real estate agents work for the property owners in rental situations. No matter how much goodwill rental agents might have, the purse strings are controlled by owners who sometimes insist on following the letter of their contracts. MEMO: Send comments and questions to Chris Kidder at P.O. Box 10, Nags Head,
N.C. 27959. Or e-mail her at realkidd(AT)aol.com
by CNB