Licence Agreement - Holiday Rental

This Short Term Licence to Use Property is for use by property owners or property managers who are renting out a property for a short time (such as holiday rentals). It is not for use for long term property rentals.

This document outlines the responsibilities of the person renting out the physical space, (referred to in this case as the owner, although it could include a property manager or some other person who does not actually own the property), and the short-term tenant, (referred to in this case as a guest). When renting property out, even to friends or family members, having a written document that outlines all of the terms and conditions of the rental is a necessity. With rental properties, so much can happen between the parties that having everything agreed to in hard copy beforehand will make any disputes down the line a lot easier to deal with.

In this document the owner gives the basic information about the rental property - things like how much it will cost, when and how the payments should be made, and what the term is. In a short-term rental, however, what's different is that there are usually also more day-to-day details included, like any specific rules for the rental (things like what areas can and can't be used, whether pets are allowed, whether smoking is permitted, etc) and more specific information (such as check in or check out times).

The document should contain as much as information possible to let the guest know what is expected and how to behave and also to ensure the owner is protected in case things go wrong.

What is the difference between a licence and a lease?

This document is actually set out as a "licence" rather than a "lease". Many property owners prefer a licence over a lease for short term rentals, for a few reasons.

Firstly, a lease gives the tenant (or guest) the right to exclusive possession of the property. This means they have the right to keep the owner of the property out of the property. This can pose a problem for property owners if, for example, the guest does not leave when they are meant to. A licence, on the other hand, gives the guest the right to access the property during the term of the licence, but the guest cannot prevent the owner from entering the property. This can make it easier to remove the guest at the end of the relevant time period (if the guest does not leave when they are meant to), or in the event that the guest causes problems.

Furthermore, if the agreement is found to be a lease, then residential tenancy laws may apply. This means that if the tenant (or guest) does not leave the property when they are meant to, the owner will have to go through the lengthy eviction process under residential tenancy laws, and it could be months before they are able to remove the tenant.

In recent years, particularly with the emergence of Airbnb and other similar services, some renters have begun seeking to "sublet" properties that they do not actually own. For example, a person might be renting an apartment, but subletting it via Airbnb when they go away for work.

Many long term residential leases in Australia include terms that prevent people from "subletting" the property. In some cases, subletting by using a lease is prohibited, but using a licence is not. Therefore, some people in these circumstances use a licence rather than a lease for these short term arrangements as a way to try to avoid breaching their own lease. Anybody considering this sort of activity should pay close attention to the terms of their own lease, because if they breach it they may risk being evicted.

In addition, they may need to consider the relevant laws in their particular area. These issues have been considered recently by courts in some jurisdictions, with the consequence that short term licences to use property may actually be considered a lease, regardless of the fact that they are called a "licence". See our discussion of "Applicable Law" below. If in doubt, seek legal advice.

Australian Consumer Law

The Australian Consumer Law ("ACL") may apply to some holiday rentals. The ACL provides some protections to consumers, when they are transacting for goods or services from a business. It may not apply to a one off transaction between private parties (for example, between individuals).

For example, it may apply if an individual person hires a holiday rental from a travel company. However, it may not apply if an individual person is just hiring out their beach house.

If the Australian Consumer Law applies, then the host must meet the minimum standards set out in the legislation. Further information about the Australian Consumer Law is available on the Australian Consumer Law website.

If the person preparing this document is unsure whether the Australian Consumer Law applies, they may consider seeking legal advice.

How to use this document

Holiday rentals are currently receiving a lot of attention from Australian authorities. Laws vary from one place to the next, and are constantly being updated. Therefore, an important first step for owners or managers of a holiday rental, is to check local laws to ensure that they are in compliance. If in doubt, seek legal advice.

This Agreement will help a property owner or manager to create a document that has all the information and rules required for a guest to undertake a short term rental of the property. Here, the owner can list basic information, such as guest names and addresses, dates of the rental, and check in/check out times. The owner will also be able to include more detailed information, such as a list of specific, written rules for the rental of the space.

The owner will have the option to charge a security bond, to cover any damage which the guest may cause to the property. Overall, this Agreement will provide everything needed between the parties to ensure a good relationship between the owner and the guest.

One way or another, the guest will need to agree to the terms of this agreement. The most common way to do this is print the agreement out, and have it signed by both the guest and the owner. For example, many owners or property managers keep a pile of printed copies on hand, and provide a new one to guests each time a new guest checks in. Some details can be added by hand (such as the accommodation fee and check in/check out times), and then the owner and guest can sign the document.

In other cases, owners may use the agreement online. For example, if bookings are made through a website, then this licence agreement can spell out the general terms and conditions (such as the property address, cancellation policy, and house rules). The other details such as guest name, accommodation fee and check in/check out times may need to be provided separately.

If using the document online, then owners may need to consider how they ensure that the guest has actually agreed to the terms of the agreement. In order for the agreement to be legally binding on a guest, the guest will have to actually be aware of them, and will have to agree to them. So firstly, they will need to be published on the website.

Some owners make the agreement available somewhere on the website (usually on a separate page, accessible via a hyperlink) and claim that by using the site, guests agree to the terms of the agreement. This is known as a "browsewrap" agreement.

Other websites make the user take positive steps to confirm that they have read, understood and accepted the agreement. For example, sites might have a popup box that contains the entire agreement. The user has to scroll to the bottom of the agreement and then check a box (that is otherwise unchecked) to say "I have read and understood this agreement and agree to be bound by it". This is known as a "clickwrap" agreement.

Websites that use clickwrap agreements often also make sure that the "I agree" box appears on the same page as the entire agreement (so that the user cannot argue that although they checked the box, they did not actually see the agreement). It is also common for websites to bring specific terms to the guest's attention if those terms might be seen as particularly unfair on the guest.

Applicable law

Leases and licences in Australia are generally subject to the laws of individual states or territories. State laws will cover general contract principles.

The decision in the Victorian Supreme Court of Swan v Uecker (2016) VSC 313 considered the differences between a sub-lease and a licence.

Each state and territory may also have its own legislation which may deal with short term accommodation, including (but not limited to) fair trading legislation, tenancy legislation, planning and development legislation and strata development legislation. In many regions, legislation, regulations and/or codes of conduct for short term rentals are also being developed. Therefore, if the owner or manager of the holiday rental has any concerns about their legal situation with regard to the property, seek legal advice.

In addition, the Australian Consumer Law may apply to the agreement.

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