It's perfectly acceptable to withhold a portion (or all) of the deposit if the renters didn't adhere to your rental policies. If you retain any portion of the deposit, you should keep sound record of the associated costs. You are only allowed to keep actual costs with the associated damages as clearly defined in your rental rules. Don't use deposits as a way to nickel and dime your renters out of more cash.

Payment Schedules:

The key to scheduling payments is to make sure you receive your money (including deposits and fees) well in advance of the guest's arrival date. Regardless of how far out the renter's arrival date is, you should request a deposit within three to five business days of the booking. And until you receive and cash the deposit, continue to accept inquiries for those same dates. It's legitimate and responsible to tell other potential renters that there is a pending booking, but request their contact information in case there is an opening.

Typically you should break the payment into at least two equal installments unless it is a last minute reservation, then request full payment. You should receive the first payment about 60 days prior to the rental date. This will give you ample time to get another renter in case of lack of payment or cancellation. The balance should be paid 14-30 days prior to the rental date. This provides plenty of time for funds to clear before you send directions, keys or lockbox codes. Remember, the more time you give yourself, the more flexibility you have with payments. With enough time, you could even split the transaction into six payments, which might be preferable for some of your guests.

Refund policy:

Be sure to have a clear refund policy in writing. It's acceptable to keep a nominal fee for cancellations made 60-90 days out, but within 60-90 days of the rental dates, you may want to establish a policy that protects you from lost revenue. If you rebook, it's honorable to refund the cancelled guest.

A bit of caution: – you could run into a situation where a renter calls you several days after you receive the deposit check and cancels due to an emergency. If they request the return of the deposit, you should do so in a prompt manner. But do NOT send them the refund until their check clears your bank. Although they represent the minority, there are people who will try to defraud you by sending a bad check and then requesting a refund before their check clears. Don't be a victim!

And there you have it, protecting you and your renters from the financial burdens of collecting money! Now go and establish a written policy which will benefit everyone.

© Christine Karpinski 2006

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