Vacation rental refunds become one more complication from COVID-19

By on May 28, 2020

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Dr. Chris Lalik, who lives in Barrie, Canada, made a $3,200 down payment for a rental home he booked in Salvo for the week of May 16. While visitors were allowed back on the Outer Banks by then, Lalik had another problem. Due to the COVID-19 pandemic, the border between the U.S. and Canada is closed to non-essential travel.

Last fall, Victoria Harriston, of Williamsburg, VA and her group of family and friends from along the East Coast made a $5,200 down payment on a beachfront house rental. But seven people in that group are over 65, and five have underlying medical conditions. When COVID-19 hit, they tried to reschedule their May 31 booking, but were told their best option was to cancel and hope their week got re-booked so they could be reimbursed.

In accordance with the North Carolina Real Estate Commission’s (NCREC) position, would-be visitors to the Outer Banks were entitled to refunds for payments on rentals for the period between mid-March and mid-May when the area was shut down to visitors. Conversely, many visitors who had reservations after the May 16 re-opening were ready and eager to come down for a long-awaited vacation.

But there are also more complicated situations — like those involving Lalik and Harriston – involving money paid for a vacation that won’t or can’t be taken after the bridges opened. And in the unprecedented situation created by the COVID-19 outbreak, some property management companies say they are working with the property owners to handle matters like these on an individual basis — while noting that the decision is firmly in the hands of the vacation rental owner.

Monica Thibodeau, owner of Carolina Designs, said that, “As a company owner, I’m trying to navigate this and get through these on a case by case basis…[The rental properties] are individually-owned homes and each homeowner’s needs and abilities to accommodate a request are different.”

Doug Brindley, owner of Brindley Beach Vacations, said his company has had 800 cancellations since the announcement of the May 16 opening. If guests want to book for a different time, his company asks the homeowner if they are willing to do that. “We’re not allowed to make that decision,” Brindley said. “If the owner allows that and the guest says yes, we make that happen.”

The Outer Banks open and the rules change

The NCREC ‘s legal position — stated in a March 19 letter and clarified in early May — is that the state’s Vacation Rental Act requires brokers and owners to refund any and all funds when access to vacation rental homes is obstructed – which was the case when the area was closed to visitors.

In a related situation, about 200 people who booked vacation rentals for the period during the bridge closure have formed a Facebook group in an effort the get the refunds apparently owed to them by one Hatteras property management company.

But as NCREC Legal Counsel Janet Thoren told the Voice, once the Outer Banks opened to visitors, “there’s no provisions for refunds. They would be contractual in nature so they would have to look at their lease agreement, and then go to their insurance provider, if they did purchase travel insurance.”

With the May 16 opening, vacationers who may not be able to travel or consider it to be unsafe due to potential virus exposure, have had to make the difficult decision whether to cancel and potentially lose thousands for dollars – or keep their plans to travel to the Outer Banks.

Outer Banks Association of Realtors (OBAR) CEO Willo Kelly said the biggest concern she’s heard from people with upcoming vacation reservations goes like this: “I have people coming in from all over different places where there are hotspots of COVID-19 and I don’t feel safe and I don’t feel comfortable.’”

In response, Kelly said, her office has been pointing to NCREC’s position that refunds are not due if the county is open, acknowledging that it’s not the most welcome news. “The only thing I can say back was, ‘If we are deemed fit, inhabitable and accessible, then the responsibility of honoring your lease is on you.’ That’s a hard pill to swallow,” she said.

That’s the case with Lalik, the Canadian doctor, who expressed frustration after trying to contact the real estate company to resolve the situation, something that still hasn’t happened.

“We looked forward to getting some warmth before the summer,” he told the Voice.  “I’m sure I’m not the only one, I’m sure there are lots of families that are stuck in this and you know, this is bad PR,” he asserted.

Harriston said her group was eagerly anticipating an Outer Banks vacation, but once COVID-19 started spreading, her niece, Nekole Johnson, began contacting the realty company. Johnson said she wasn’t able to communicate with the company until early May when she was advised the owner was unwilling to change the reservation and that her best option was to cancel in hopes the property could be re-rented and she could be reimbursed. As of May 26, Johnson said the property was still listed for rent and she hadn’t heard back from the real estate company.

“This just seems unfair,” Johnson asserted. “This seems like it’s profit over people, over safety. We don’t think it was fair that it wasn’t taken into consideration as to why we didn’t feel safe front a health standpoint.”

Thoren said the NCREC has received a number of complaints regarding grievances over vacation plans during the pandemic, and North Carolina Department of Justice Communications Director Laura Brewer told the Voice that her department has received 53 vacation-related complaints from the Dare County area.

‘There was a lot of confusion’

With the uncertainty surrounding when the Outer Banks would open to visitors, property management companies, renters and owners were left in limbo awaiting that decision.

Monica Thibodeau of Carolina Designs said the May 16 opening took her by surprise.

“It was a surprise for me personally, just based on everything I thought I understood,” she recalled. “But again, we didn’t know until we knew, and we knew ten days out, so that was really keeping us busy with just keeping everyone informed.”

Once the opening occurred, she said, “I call it like a seesaw where [the obligation] changed from the homeowners’ responsibility to the guests’ responsibility. Plus, with the size of the homes that we manage, and people coming from everywhere, there was lot of confusion, there’s fear. There’s a drop out of groups due to job loss” or people whose jobs are on the frontlines of battling the pandemic.

For his part, Doug Brindley of Brindley Beach Vacations, acknowledged that there are some people who should not travel during this time based on health risks. “But that doesn’t mean that everyone else should make them whole because they are unable to travel,” he said.

If guests want to cancel and get their money back, Brindley noted that there is no responsibility on the part of the owner to do that.  “However, we are all booking like crazy,” he added. “So, there is a very strong possibility that if you go ahead and give me more than two days’ notice and you cancel your week, we will likely sell it and you’ll get a refund.”

Kelly said OBAR has been fielding calls related to vacation rental concerns during the pandemic for roughly six weeks. She acknowledged: “It’s just been very trying, and the unknown makes it even more challenging.”

One by-product of the rental refund issue that is still to be resolved is the situation with the Facebook group formed by people who are trying to get refund from the Surf or Sound Realty Co. on Hatteras Island.

One member of the group, Jessica Somers, along with several others who emailed the Voice, said they are frustrated, asserting that the real estate company hasn’t adequately communicated with them and that they still haven’t received refunds for down payments and deposits from vacations during the bridge closure. Surf or Sound did not respond to multiple attempts by the Voice to reach them for comment.   

Advice from the experts: NCREC’s Janet Thoren says that if consumers purchased travel insurance, they should check with the company to determine if their policy covers their circumstances in the pandemic. Laura Brewer, of the North Carolina Department of Justice, said that those with complaints who are renting through a licensed real estate broker first should contact the NCREC to file a complaint. If the complaint, however, is regarding a travel insurance company or about an online rental platform, they should contact the NC DOJ at 1-877-5-NOSCAM or ncdoj.gov/complaint.

 


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Comments

  • hightider

    It appeared obvious from the beginning, that the decision to open the beachs to renters was to force the hands of people who had paid deposits in advance, to the benefit of the rental companies. They closed the loophole for the renters to get their deposit back. This type of underhandedness will create more ill will than if the OBX had remained closed.

    Thursday, May 28 @ 11:04 am
  • scales of balance

    More focus could/should be had in a follow up article regarding the travel insurance component of this complex situation.

    Thursday, May 28 @ 8:10 pm
  • Robin L Ames

    dollars over sense

    Thursday, May 28 @ 9:15 pm
  • CheetahOBX

    I solved this problem years ago…..I stopped leasing my joint out…problem solved.

    Thursday, May 28 @ 10:00 pm
  • Lou Briccant

    “scales of balance”, for what seems like the 10,000th time travel insurance isn’t refunding anyone for any “pandemic” related reasons… they’ve all taken the stance that a “pandemic” is a foreseeable event. And just telling them you don’t want to go any longer also doesn’t grant you a refund… please do some research.

    Friday, May 29 @ 11:46 am
  • Trashcan Man

    At least one rental house was destroyed by the Atlantic Ocean last night in Rodanthe and several others had to be evacuated. Do you suppose these people will get their money back? Of course not….the rental company will offer to re-locate the tourists and if they refuse, too bad is my guess. Or some sort of pr-rata deal will be offered, either way not what the tourists contracted for.
    Let’s follow-up on that as well, Michelle.

    Friday, May 29 @ 11:50 am
  • Frequent OBX Flyer

    I love OBX, have been a faithful visitor for 15 years with my whole family. I am a frontline RN working in a NJ ground zero hospital.
    We did not sign a lease by mistake and as a family, decided to cancel this years reservation. Not only did Resort Realty refuse to refund our deposit, but, charged our credit card for the rest of the rent without a signed lease. As far as travel ins, they told us that would have made no difference and our deposit would have not been refunded. This will certainly make me think of going somewhere else.

    Friday, May 29 @ 12:57 pm
  • hightider

    Frequent OBX Flyer – I am sorry you were cheated out of your refund – and I do consider it cheating. Thank you for risking your life to assist those in need in your home state. I am in awe of the bravery of all front line health care professionals during this unprecedented medical crisis. But that said, I am grateful that you and your family cancelled; Dare county does not need anyone from a ground zero hospital in a hotspot state coming here. This is going to be a long hot summer between covid, civil unrest, and the hurricane season. People, please stay home.

    Saturday, May 30 @ 3:45 pm
  • Tom Wright

    The North Carolina vacation rental laws were not written to protect the renter–they only protect property owners and the rental agencies. In September 2018 I did not receive a refund for having to evacuate early due to a hurricane and in September 2019 I did receive a refund when my vacation was delayed due to a hurricane. If you are required to evacuate or if you can not come because the OBX are closed–you should get your money back. They hide behind the “insurance requirement.” And they want me to rent a property–what a joke,

    Sunday, May 31 @ 3:45 am
  • Kbryant

    We rented a home for April and paI’d in full. Road closures made it impossible for us to access the home. The realty company (Surf or Sound), feels that this is not their problem and refuses to return any money. So, I have no vacation, no money and a lot of anger towards the OBX area. Never again!

    Sunday, May 31 @ 2:19 pm
  • Tom Wright

    Maybe property owners and rental companies will soon realize that not refunding rental payments due to hurricanes and other closures such as COVID-19 is dishonest. Hiding behind the insurance requirements is even worse. I am getting all these emails trying to entice me to rent a property–what a joke.

    Sunday, May 31 @ 2:39 pm
  • WindyBill

    TO KBRYANT! Contact the North Carolina Real Estate Commission. They will see to it that this is fixed.

    Monday, Jun 1 @ 12:42 pm
  • MBush

    We booked a house for April 4th- 11th 2020 through Surf or Sound Realty. When DARE County was closed due to COVID 19 we first heard from Surf or Sound, letting us know we would not be receiving any refund. After the North Carolina Real Estate Commission stated vacation rental companies were required to return renters money we received an email from Surf or Sound stating they had decided in all fairness to return renters money.
    I contacted Surf of Sound Realty several times. I was told they were in the process of processing refunds, and if people would stop calling they would be able to process them more quickly. Well Surf or Sound did refund renters through the end of March. They then quit answering the phone and responding to emails.
    This is the email I received from Sur or Sound Realty on Friday, May 29, 2020.

    Dear Guests,

    After much consideration, we have decided not to issue cash refunds to guests who had reservations between the dates of 4/4/20 and 5/15/20. We are however offering a dollar for dollar credit towards another stay either this year or next year. Hundreds of guests have already accepted this offer.
    Dare County’s decision to close the road was not something that could not have been anticipated and is neither the fault of our guests or our homeowners. We feel the offer of a full credit towards another week in 2020 or 2021 is the fairest resolution for both parties.
    This offer is a change from our long-standing policy and lease agreement, which very clearly states that there are no refunds for access issues. We have never before offered any form of compensation for road closures, which are fairly common occurrences on Hatteras Island. However, because of the unprecedented nature of this event, we wanted to do something to help our guests. This option will only be available until June 19, 2020, so we encourage you to take advantage of it soon.

    Option #1 – Switch your spring vacation to fall 2020 and we will try to match your same rate.
    We may be able to switch your spring vacation to a relaxing vacation in the fall for the same rate. Travel Insurance, if purchased, can be transferred to the new dates of stay.

    Option #2 – Apply what you paid for your spring vacation to summer 2020
    We have limited availability, so please act quickly if you would like to apply your payments to a 2020 summer week. Travel Insurance, if purchased, can be transferred to the new dates of stay.

    Option #3 – Switch your 2020 vacation to a week in 2021 in the same home
    This option affords you additional flexibility if your remaining 2020 vacation time is uncertain.
    Please click here to complete this form, indicating your preferred option.
    We are, of course, aware of the North Carolina Real Estate Commission opinion suggesting that we provide cash refunds. However, we believe that opinion is wrong and would have long-lasting implications for our business on Hatteras Island. We do apologize for the delay in arriving at this decision. There were many different factors, which all needed to be carefully considered. We realize that not everyone will be happy with our decision but we feel that it represents a fair compromise for all parties.
    ——————————————————————————————————————————-

    How can this company legally return some renters money and not others when the situation for closing was due to the closing of Dare county?
    How can this company legally tell their customers, yes they will receive a refund and then ignore any correspondence when refunds were not received and then decide “sorry we changed our minds, no refunds”

    I am so frustrated and I will let every social platform be made aware of how this company operates. I will also be contacting the State Attorney General, the Better Business Bureau and any other outlet I can find.

    Monday, Jun 1 @ 1:15 pm
  • Trashcan Man

    Very short-sighted and foolish on the part of this rental company to fall back on such a offer. Think about it….the owner is still out a week of income whether it is refunded or re-scheduled and on top of that has likely lost at least that customer and likely more as well as damage to their reputation [such as it is] that can not be undone. It suggests that many of these owners are so over their heads in debt that they are desperate for income now. Where would they be or will be when an extended closure occurs, like Ocracoke last year?

    Tuesday, Jun 2 @ 1:49 pm
  • WJC

    Received the same email from Surf or Sound on May 29, 2020 printed above by MBush……no refund. Had vacation paid in full and scheduled for May 9. Heard from SOS on May 6th and they stated they would refund the entire cost if we did not want options 1 -3 (rent during the summer, the fall, or next spring). They asked for our patience as they were only up to the refunds for late March, early April.
    When I called Surf or Sound on June 1 to check the status of my refund (you have to call the accounting office, because no one else is answering the phone, and all the mailboxes are full) , I was informed that the email sent to me on May 29th is their new policy, no refunds despite their earlier promise, and you only have until mid June to make a decision.
    I called the NC Real Estate Commission who returned my call in less than an hour. They indicated that I could file a complaint, but they cannot compel SOS to return the funds. According to the NCREC, only the courts can make SOS return the funds, although SOS is being investigated by the NCREC at this time.
    I took out the trip insurance which has protected me in the past – Hurricane Maria! – but as someone said earlier, the trip insurance does not cover PANDEMIC!
    So, when all is said and done, what can we do? NC law, 42A – 17, B, Accounting; Reimbursement supports refunds….check it out. But who is going to enforce it? Any suggestions, because the SOS deadline for a decision is coming up quickly. Choose 1,2, or 3, or lose your money.

    Tuesday, Jun 2 @ 4:32 pm
  • Melissa

    To everyone complaining you lost money….Everyone did. Get the FFFF out if you don’t think OBX is for you. YOU WON’T BE MISSED!! Trust me these sand banks were here before you and will be better off without your selfish attitudes.

    Tuesday, Jun 2 @ 10:40 pm
  • Susie

    With the difficulty of the situation we have all faced, if someone left a deposit for a home during a time we did not allow them in, they are owed a refund. The rental business isn’t always easy; but don’t go buying a home to rent that you can’t afford to cover if times get tough.

    Wednesday, Jun 3 @ 7:23 pm
  • hightider

    Susie – I agree with you! The commenter (since gone) who posted the nastiest comments last month and repeatedly said he would come back and buy up all the foreclosures and then us hick locals could “bait his hooks and pour his drinks” is one of those people. He was stupid enough to post his name, that he had sold his rental home the day before, and he would come back next year and buy the local hicks out. As a PI, I have databases that show quite a bit. This big shot’s home in VA was a 250K home but he overextended himself with an almost 1 million dollar rental machine in Corolla that he bought Feb 2019. So he thought he was going to get rich off an investment he could not afford and covid disrupted his plans. He had one good year and then a disaster. Owning rental property is speculative; if you are the over-extended type who blows the deposits to cover your expenses, rather than putting them in escrow, you made a bet on yourself and lost.

    Friday, Jun 5 @ 4:45 am
  • Responsible Renter

    Our family has the same story. We rented a large beach house from Carolina Design Realtor for the week of June 7, 2020 for a family reunion and celebration of two 80th birthdays and a 60th anniversary. We started calling Carolina Design Realty as soon as the Covid-19 started to spread. We were extremely concerned because we had people coming from six states, including the epicenters of Fairfield County, Connecticut, Massachusetts and California. We also had two that are employed at two different hospitals in New York and an emergency room nurse. There were also several high risk immunocompromised and cancer people that were coming. The concern was not only for those people that were at high risk but for the residents of the Outer Banks. There was considerable risk of spreading the Covid-19 pandemic to the residents of the Outer Banks. There seemed to be no concern for the residents living there.
    We lost the deposit of $10,000 because money seemed to be the primary concern not the heath and safety of many people during a major pandemic. Your governor, Ray Cooper decided that a house sleeping 50 people from many different states was a “household”.
    Where is the logic in that? What were his motives?
    We loved the Outer Banks and have many great memories but Unfortunately we will not be returning the Outer Banks.

    Tuesday, Jun 9 @ 11:54 am
  • Paul Larkins

    Unlike others we booked our reservation for a period after OBX reopened but weren’t really anxious to go since members of our party were unable to attend due to the financial crisis as a result of the pandemic. We did ask if it was possible to get a refund but were told that even if they could re-rent at the full rate the unit for the period we booked, we would only get a “partial” refund at best. Not withstanding the two of us on fixed incomes wound up financing the rental and kept the booking. Much to our chagrin we spent the majority of the time in a unit not worth the money we spent having found many faults including poorly managed appliances, one sided mattresses that had been flipped upside down (try sleeping on a bed of non padded coils) and cups and glasses that were stuck up in the pantry that were clearly used and unclean. After putting up with this we decided to report the issues but could not get anyone to answer the phone. We finally left a day early stopping by the Salvo office (that was staffed) and stated our displeasure. I was told the complaints would be reported to the manager, but I don’t suspect I will ever get any response after reading this report. Buyer (in this case renter) beware!

    Saturday, Jun 13 @ 7:14 pm