We have a guest squatter in our vacation rental
The least you can expect when you’re in the middle of a pandemic is someone trying to ruin your business. Unfortunately, that was the case for us. Our first guest squatter is proof that anything that can go wrong will go wrong.
The squatter took advantage of COVID-19!
Back in April, we experienced the toughest month industry-wide nonetheless for our company as well. Our bookings shuttered down, and our income decreased exponentially. The whole country was in a pandemic lockdown to stop the spreading of the virus.
Like many other hosts, we took action, lowering our nightly rates and betting for lengthy stays. We identified many locals looking for bigger homes to spend the quarantine and decided to move towards that direction. We made our screening process more flexible, which did not require the guest to sign a rental agreement before their check-in
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The beginning of a nightmare
There was a point when we received an inquiry from a lady interested in one of our properties, that later became a booking. At that point, everything was ordinary, but when her check-out date was arriving, she did request an extension that we gladly process. We didn’t know our nightmare was about to start.
Unlike other hosts, we do process direct bookings, and this was a loophole our squatter exploited to get away with it. We first processed her reservation through booking.com, but we handled the extension directly. She extended her stay a couple of times more until we found out her credit card had no funds.
When we got back to the client asking for explanations, she told us “I am not paying anything, you will have to do an eviction.” She refused any phone, text, or face-to-face communication, giving us no chance to negotiate.
We called the police several times to help us to vacate the guest squatter. Nevertheless, under Florida law, this situation was taken as a civil matter, which required us to file a residential eviction with the court.
Typically, if a guest lawfully stays on the premises for more than 30 consecutive days, they acquire the legal rights as tenants (depending on the regulations of your state).
The landlord cannot do things like cutting off the power or changing the locks since it is against the law. Evicting a guest at this point can only be done through a formal eviction process via a housing court.
The cherry on top
Eviction processes are tedious and could take longer. For us, this could extend even further. On April 2nd, Florida’s governor ordered a 45-day suspension of all evictions (and foreclosures) due to the non-payment of rent related to the COVID-19 emergency.
Evictions will remain suspended until July 1st, 2020. Landlords will be free to initiate eviction proceedings after the 45 days have elapsed.
Deconstructing the facts
You might be wondering: Why did it take you so long to figure out the credit card was fraudulent? Did you notice something strange in those recurrent extensions?
The software we were using to verify the payments, took two weeks to corroborate its trustworthiness. We didn’t find anything suspicious at the moment because everything seemed to be OK with the credit cards. However, our race to increase our occupancy rates kept ups apart from evaluating our weaknesses and risks.
When you lower the price so much as we did during the spike of the pandemic, you open the door for problematic guests. If you do so, you should improve your screening process, and include other guarantees such as a rental agreement form and a security deposit, which by that time, we didn’t.
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How has this incident impacted our business?
Before this event, the property was performing exceptionally well. It also impacted our business with an incredible amount of work hours dedicated to work with lawyers and the court to process the eviction. Overall, we can estimate a financial loss of over $30,000.00.
Most importantly, our relationship with our partner owner is in jeopardy, not only for the damages these undesired guests might cause to the property but for the trust our client has deposited in us.
At the moment, it’s not possible to assess the severity of the damages. Nonetheless, we can expect extensive harm due to the aggressive and hostile behavior of the guest.
Is there any positive outcome from this situation?
Sadly for us, we learned the hard way, but in the end, this episode is making us stronger. We were able to identify failures in our operation process to improve them.
Since the incident, our procedures changed tremendously. We improved our screening process, requiring identifications, the signage of a rental agreement, and security deposits.
We also enhanced our check-in process securing all our properties entries with keypads. Currently, we’re in the process of installing security cameras to document any breach to our home rules.
In regard to technology, we acquired a real-time verification payment gateway. We also started using more features from our channel manager to make our booking process and transactions more secure.
Our advice on how to avoid a guest squatter in your vacation rental
- Be careful with direct bookings.
- Do not use a payment system that has a delay in authenticating transactions.
- Be very selective with the extensions and the guests.
- Have clear house rules, always have a security deposit.
- Do not give access to the property until the payment is confirmed.
- Always make sure to have the guests sign a rental settlement, that clearly states the parameters of their stay.
- The rental agreement should declare clearly that the property is a vacation rental property and that they agree to check-in date and check-out date.
- A clause like this will help police officers and the court identify the situation and prevent the illegal tenant from saying he or she had a residential lease.
Just imagine the immense disappointment we felt when we realized that the law protects a guest squatter more than the property owners who work hard to have investment properties.
When we decided to bring this topic to the public, our goal was to generate awareness among our fellow hosts. No business deserves to experience a terrible situation like ours, especially those that suffer the impact of the pandemic.
We hope our experience helps other hosts to take a look at their operations and perform the necessary improvements to keep their homes and their partner owners safe.
If you found this article useful, please keep in touch with us and subscribe to our weekly newsletter to receive updates about this case. If you’re experiencing a situation like this, feel free to reach out. We would be happy to share our knowledge with you.
Social Media Manager at Stratton Hospitality