Understanding the World of Airbnb Co-Host Contracts: An In-Depth Guide

What is an Airbnb Co-Host Contract?

A co-host agreement is one of the most important documents involved in property management when it comes to renting on any platform, but it becomes even more important when managing short-term rentals like Airbnb. This document is a formal contract that establishes the terms and boundaries of the relationship between co-host and property owner. It is not something that can be simply decided over a glass of wine at the bar. Why do you need this type of property management contract? Well, if you don’t have something like this, the "relationship" with the property owner could end in an ugly legal situation where it really helps to have that prior agreement in writing. Having a contract under which both parties are bound , will help you in that situation.
The co-host agreement for an Airbnb property is essentially a contract that outlines the expectations that the host and co-host have for one another. It also makes it so both parties are equally responsible for the relationship, thereby helping to make sure one person doesn’t take advantage of the other. For example, let’s say you decide to hire a co-host to manage your property. Once you hand over the reins to the co-host, they might think that, because they are now the "manager", they no longer have to worry about paying the cleaning crew and making sure the space is clean and presentable before any new guests arrive. If you don’t have a co-host agreement, there is a good chance that you will not be able to prove that you ever had any expectation that the co-host was supposed to work in a certain way.

Essential Components of a Co-Host Contract

A robust method of contractually defining the roles and responsibilities of a co-host is to enter into a written agreement incorporating all the key elements regarding the parties’ obligations including but not limited to:

(1) Responsibilities.
(2) Payment and commission considerations.
(3) Performance expectations including periodic reporting.
(4) Duration of the agreement.
(5) Conditions necessary for termination of the agreement.
(6) Consequences of a party’s failure to comply with any provision of the Agreement.
(7) Disclosure about advertising and trademarks.
(8) Non-competition agreement regarding the preservation of trade secrets.
(9) Ownership of information.
(10) Confidentiality agreements.
(11) Limitations on liability.
(12) Procedures for conflict resolution including mediation and arbitration.
(13) Methods for acquiring ownership.
(14) Collection procedures for Advanced Payments.
(15) Indemnification and defense obligations.
(16) Freedom of Assignment.
(17) Time frames for approvals, payment and notice provisions.
(18) Independent Contractor provisions.
(19) Compliance with applicable law and applicable regulations.
(20) Insurance requirements.

Advantages of Using a Co-Host

Having a co-host is highly beneficial for Airbnb property owners. For instance, the co-host can handle day-to-day property management and help relieve your property of the burden of booking international guests across different time zones.
Co-hosts also help with guest communications and managing incoming bookings. Each co-host has independent login information and can operate the management and booking side of the property without needing to bother the owner. For owners who enjoy the touch each week or broken up by bookings, the co-host can also help handle the cleaning process between bookings. The co-host allows the owner to take advantage of listing a property on two different platforms (i.e., Airbnb and VRBO) by removing the scheduling conflict of double-booking a guest that comes in on one platform and another guest on another platform. A co-host can also help alleviate the process of sorting through the dozens of reviews found on listing platforms. Rather than an owner struggling to create an efficient filing system allowing them to sort the reviews by complaint type, a co-host can sort through the reviews based on the category of the complaint. Through asking leading questions to the reviewer, a co-host can help the owner look professional and invested in solving the review and frustration of an international client.

Common Mistakes and How to Eliminate Them

A common problem with co-host agreements can be miscommunications. Both parties need to be aware and agree on the services being provided. Specific details need to be worked out on when the co-host will take care of various tasks, including "after checkout" duties; payment for services provided; charges related to late checkouts and early check-ins; methods of communication while a co-host is working at the property; etc. If these issues are not ironed out before moving forward, they can lead to disagreements later on. فرين لحسابات فورتنايت
Another potential pitfall is assuming the co-host relationship will be like hiring a property manager. But the two roles are fundamentally different. A property manager has a fiduciary responsibility to the homeowner for the maintenance of the property. Your co-host, on the other hand, requires some trust. Since the co-host is not hired as "management", you will have to trust them in making such judgment calls as whether or not they need to cancel a night’s reservation due to a water main break. You have to be able to confidently hand over the property to them and let them go. While your co-host and cleaning service can collaborate on the ground, make sure you have outlined how they will communicate and work together in case something goes wrong.
Another area to watch out for is handling emergencies. How will the co-host and cleaner handle situations when something goes wrong? What procedures are in place for them when they wake up at 2 a.m. and the AC is out? What protocols are in place for reporting to you and coordinating with a repairman? Will you be notified of the problem immediately, or will they just handle it themselves?

Legal Aspects of a Co-Host Contract

While any local laws or regulations may not apply to the relationship between you and your employees, it is still important to be aware of them. For instance, New York City, New York, has specific regulations for short-term rentals. If someone rents a unit for less than 30 days and is not present overnight, a "hosting platform" (Airbnb) or a "hosting service" (a management company) must be either licensed or registered with New York City. Even if your co-host is acting as an agent on your behalf, and not engaging in any of these activities him or herself, he or she would technically be required to have a license. Although this is one example of how local regulations can impact your co-hosting agreement, the impact of these regulations should be determined based on the local laws of the city and state where you are operating .
Airbnb also maintains various policies and requirements that govern the relationships between Airbnb "hosts," "guests," and "employees" and "contractors." Many of these policies are currently in effect only in certain regions. If you plan to make use of these policies or offer benefits that overlap with them, or if you plan to otherwise agree to act within the bounds of these policies, that should be made clear in your agreement with the relevant parties. The penalties for violations of the Airbnb policies and requirements that apply to your relationship with your co-host could apply to you if your co-host were to violate those policies. (In other words, if you make a mistake with respect to your co-host, you would also be assuming some responsibility for your co-host’s mistakes with respect to the policy.)

How to Create a Co-Host Contract in Steps

The first step in this process is to determine whether the co-host agreement is premised upon an oral agreement or whether it has been reduced to writing in some manner already. In the event the agreement has already been reduced to writing, it is recommended that you review it to determine whether the rights and obligations are acceptable to you, and whether the agreement adequately protects your interest in enforcing the terms and conditions. One should also consider whether the compensation paid to the co-host is in line with the current market. If not, you and your co-host may need to adjust the compensation terms.
In the event, no written agreement exists, you should draft an agreement outlining all of the material terms and conditions you intend to impose upon the relationship. The agreement should address issues such as, the scope of the services to be provided by the co-host; the extent to which the co-host provides their own materials, tools, supplies, etc.; whether the co-host is to provide personal liability releases for themselves and any of their agents, employees, and contractors; who is responsible for hiring and firing of employees, including terminating the employment relationship; whether the co-host is going to be entitled to a percentage of revenue and/or a fixed fee and whether the fee will be payable on a scheduled basis or shall be determined upon the conclusion of each engagement; whether the co-host will be responsible for collecting, paying or remitting any sales, use, income or excise taxes due to the State of Hawaii and any political subdivisions; what equipment, if any, is going to be provided to by the owner of the short-term rental unit for the co-host’s use; will the co-host be entitled to reimbursement for expenses; whether the co-host can designate other agents or contractors to perform their duties or responsibilities; what the period of time will be during which the agreement will be in effect, including provisions for early termination of the agreement by either party; whether and to what extent either party can cancel the agreement and whether a fee or penalty will be assessed to either party upon cancellation, at will; whether the co-host is going to be provided with exclusive rights to act as the co-host for the property; whether the co-host is going to be entitled to collect a reasonable fee for every successful referral made of another individual or entity seeking real property management and/or short-term rentals services from the referring party, and whether the co-host is going to be entitled to damage reimbursements for any claims made against them that are not properly resolved by the insurance carrier providing general liability insurance coverage.
Finally, you should ensure that the agreement contains provisions that preserve your legal rights to enforce any obligations specified in the agreement.

An Exploration of Co-Host Contracts Through Real-World Examples

The following are a few sample scenarios or case studies where co-host agreements have been successfully implemented. For the purpose of this blog, we will look at five common scenarios and how co-host agreements have been utilized:

Startup + Expert: An investor hires a property manager to help grow the company. The property manager negotiates one-year contracts with the property owners and receives 20% of the nightly rate, plus a flat $30 cleaning fee. The agreement allows the property manager to hire people to help with cleaning and messaging, but provides that the property manager must approve any people hired in advance.
Experienced Host + Rookie: A brand new host needs someone to help with their property. They reach out to their fellow host who has plenty of extra time on their hands. They engage in a 50/50 split for any profits. The hosts have an informal agreement that the busy host will help them manage the messaging, and the new host will take care of the cleaning as they have a large family that is utilized to help with chores and other home needs . While this was originally an excellent agreement, once it became successful and revenue started to come through, the hosts quickly struggled because they had not clearly identified their roles and expectations.
New Co-Host + Portfolio: A person looking to get into the AirBnB industry reaches out to buy an existing portfolio to get into the industry. The property includes three properties, each generating $3000/month in monthly revenue. The investor considers the $900/month he will share with his new partner to be worth the effort of having a property manager, especially with the potential for them to grow the business.
Maiden Voyage: A person decides to co-host their first property only to discover their co-host is doing everything. They quickly scramble to find a new co-host to help shoulder the load.
Action + Plans: A person decides to re-acquire their old portfolio of properties in their prior city. They need someone to help them get started, and their old property manager is available to come on board to help. Both parties agree to a flat fee contract for a temporary period of time until they can determine if they want to continue.