THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, September 30, 1995 TAG: 9509280309
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
COLUMN: About the Outer Banks
SOURCE: Chris Kidder
LENGTH: Long : 122 lines
Hurricane season puts property management companies to the test. Summer may be crazy because of sheer volume of business but fall can be the time to truly try a rental agent's soul.
This fall, with tropical storms being spit off the coast of Africa like hardballs at batting practice, everyone connected with vacation rentals - renters, owners and agents alike - had their share of problems.
Let's start with renters. In mid-August, at the time Hurricane Felix barreled toward the Outer Banks, renters were paying up to $5,000 a week to vacation along our shores. Cloudy skies, rough surf and two nights in downtown Plymouth were hardly what these folks had in mind when they made reservations back in February.
Some renters headed inland to other accommodations, hoping to return and salvage part of their vacation investment. Some gave up and went home. Most would say the vacation was an expensive blowout.
And many did say it - and things far less friendly. Just ask any Outer Banks rental agent: They are the ones - not the owners - who heard it all.
Most rental brochures include brief statements about refunds due to mandatory hurricane evacuations. Some rental brochures make no mention of bad weather, in spite of the fact that since 1985 we've had at least one severe storm or threatening hurricane every other year.
But whether a rental brochure details weather-related refund policies or not, all the leases I've seen spelled them out. With few exceptions, these written policies can be summed up in two words: No refunds.
In practice, rental companies aren't as hard-hearted as all their legal posturing might seem. Although rental brochures say otherwise, most agencies gave refunds or credits for nights covered by the mandatory evacuation for Felix.
At the option of individual owners, some agencies offered their renters free or reduced-rate stays off-season as ``make-up vacations,'' in lieu of refunds; some offered them in addition to refunds.
There is no overall rule for Outer Banks real estate agencies to follow concerning refunds. Jackie Myers, chairperson of the Outer Banks Association of Realtors property management committee, points out that any across-the-board policy would violate anti-trust laws. ``We can talk about what we're going to do, but we can't agree to all do the same thing,'' she said.
Myers, who manages rentals for Twiddy & Co., in Duck, said her owners were given options for renter compensation during the recent evacuation for Hurricane Felix. ``Most of my owners offered more than a rebate for two nights,'' she said. ``In August, a lot of our renters are repeat customers. We want to keep them happy. It's just good business.''
Tim Cafferty, Kitty Hawk Rentals, Kill Devil Hills, said his refund policy - a pro rata refund for the term of a mandatory evacuation - is spelled out in his contracts with owners and renters.
Cafferty believes being up-front with a uniform policy paid off during Felix. While other rental companies were scrambling to poll owners about what to offer their renters, Kitty Hawk Rental customers were given a hurricane checklist when they arrived at the beach.
The checklist reiterated the refund policy and ``asked renters to work for their money'' in evacuation, Cafferty said, by taking garbage cans and deck furniture inside and performing other small weatherproofing tasks.
Kitty Hawk Rentals requires all refund requests to be in writing, explained Cafferty. But in return for the renters' cooperation with evacuation preparation, tenants could write ``refund'' on their checklists and return it with the keys. ``That's all the written notice I needed,'' he said. But more than 10 percent of his 550 renters during Felix didn't ask for refunds. ``I guess they just figured it wasn't anyone's fault and let it go at that,'' he said.
Kitty Hawk Rentals received about 100 requests for compensation ``over and above our policy,'' said Cafferty. Those request - including one from a renter who wanted a refund for the entire week's rent plus his food and transportation costs - must be acted on by the owners.
If you're thinking about renting a cottage on the Outer Banks during hurricane season, you'd be wise to ask ahead about weather-related refunds. If an agency tells you they have no policy because refunds are at the owners' discretion, shop around. The most renter-friendly agencies have planned ahead and can tell you what to expect.
But being renter-friendly is a two-edged sword for real estate agents. Like other agency relationships, this one between renters and owners with agents in between is largely misunderstood. Agents work for the owners, not the renters. Agents can't authorize refunds, repairs, replacements or anything else without an owner's permission.
When Hurricane Emily struck Hatteras Island a few years ago, hundreds of vacationers were sent packing by the storm and dozens of vacation homes were left uninhabitable. Some property management companies paid refunds to renters out of their own pockets because owners refused or were unable to pay them.
Some renters didn't get refunds at all. Dozens of complaints were filed with the North Carolina Real Estate Commission and the State Attorney General's Office. There were lawsuits.
Most of the refund problems seemed related to the practice almost real estate agency adopted in the 1980s of distributing rent to owners before occupancy. The state General Assembly is considering legislation to require agents to treat advance rent like earnest money in a real estate sale and hold it in escrow.
Owners and agents are on the same team in this fight. They want advance rents distributed as they are received. But they don't see eye to eye on how refunds are paid and that issue is not addressed in the pending legislation. Most agencies expect their owners to pay 100 percent of the refund cost, even though when rents are distributed, agencies deduct their commissions.
After Felix, I received calls from owners about agency commissions. ``I had no quarrel with the refund,'' said one owner, ``even though in their rental brochure they say they won't give refunds.'' She objected to paying a full commission on the return rent. Sure, dealing with Felix cost her rental company extra money, she said, but that was a cost of doing business the rental company should bear.
Myers said that some agencies did share the refund cost but that most felt they earned their commissions. Commissions cover the cost of advertising properties, managing the reservation process, cleaning, and providing guest services to renters. An evacuation, along with refunds, only doubles the work.
A rental manager's explanation of the extra work didn't cut it with one vacation cottage owner who called me. ``Their end of the business is service, our end is investment,'' said the owner. ``They're nickel-and-diming us to death.'' MEMO: Send comments and questions to Chris Kidder at P.O. Box 10, Nags Head,
N.C. 27959.
by CNB